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Despite Strong Labor Market, State and Local Government Jobs Go Unfilled

The U.S. has added 12.1 million jobs coming out of the pandemic, but the public sector has lagged far behind private employers.

By Mark Wolf  |  September 18, 2023

Doug Howard, senior vice president of Maximus, does not like the math problem the country is facing.

Mainly, that the employment equation is out of whack.

“The U.S. Chamber of Commerce says there are 9.8 million unfilled jobs and only about 5.9 million job seekers to fill them,” Howard told an NCSL Legislative Summit session on workforce issues. What’s more, the national unemployment rate is 3.5%, and the national labor force participation rate fell 66.8% to 61.7% from 2001 to 2021.”

“Where are the people going to come from? I have a colleague who tells me we aren’t producing enough babies to fill the jobs in the future.”

—Doug Howard, Maximus health and human services

“There are not enough people to fill the jobs,” says Howard, whose company partners with governments at all levels to provide health and human services programs. “Where are the people going to come from? I have a colleague who tells me we aren’t producing enough babies to fill the jobs in the future.”

So what do governments and private employers have to think about?

“We’re pulling back in some potential retirees, there are some controversial debates out there about immigration, but we have to find people,” Howard says. “Part of our job as employers is understanding the dynamics of different cultures and generations. The workforce is becoming very diverse. I saw one projection that millennials will be 75% of workforce in five years.”

Washington Sen. Karen Keiser (D), who moderated the session, says, “I don’t have a silver bullet. What can we do in state legislatures to address this?”

Public Sector Lagging

A glaring problem for states is the growing discrepancy between private and public employment.

“This is a remarkably strong labor market. The U.S. has added 12.1 million jobs coming out of the pandemic, the highest in post-World War II history,” says Jennifer Sherer, director of the Economic Analysis and Research Network at the Economic Power Institute. She notes that it took the economy over six years to return to previous hiring levels after the Great Recession, but only two years to recover after the COVID recession.

The bad news for government hiring is that the public sector has lagged far behind private employers, with several hundred thousand jobs government jobs going unfilled, and the largest part of that, she says, is in education.

“A large part of that has to do with recruitment and retention, the failure to invest enough resources,” Sherer says. “The competitive market we’re in has made it increasingly difficult for state and local govenrment to attract and retain workers.

“We’re missing the bigger picture that after the Great Recession, the losses were never fully restored. We had a significant shortfall before the pandemic added layers of challenges.”

Howard says employers are starting to see some people come back to jobs they left during the pandemic, because the wages are good, they care about the job and they like the quality of life.

“What we’re hearing from employers,” he says, “is they want a mixed bag: some people on-site and some with a hybrid model.”

Four-year degrees, he says, don’t matter as much in some jobs, especially tech.

“What government is struggling with right now is they have either really old programs that nobody can use or new ones that the workforce isn’t familiar with,” he says. “Reskilling and upskilling are imperative.

One promising approach is to create incentives for people not only to find jobs but to participate in new job opportunities. “We’ve seen increases in lot of support services that were traditionally welfare-to-work,” Howard says. “Cities and states are happy about new plants and the 1,000, 5,000, 10,000 new jobs coming in, but the reality is that company is probably going to bring in an army of recruiters and the real challenges are construction jobs to build the plant, transportation to get people to and from, and infrastructure jobs.

Bottom line, the market would benefit from more holistic policy efforts.

“You have to think about that whole ecostream when you work in economic development,” Howard says.

Mark Wolf is a senior editor at NCSL.

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