The persistent workforce shortage, particularly in the public sector, has seen a steady rise in both visibility and legislative responses throughout 2024. States have begun pursuing various strategies to recruit and retain public and private sector employees to meet the continued demand for services while strengthening pathways to the workforce.
Here’s a look at what might be in store for 2025.
NCSL Forecast ’25
This special report from State Legislatures News covers the topics NCSL’s policy experts anticipate will occupy state lawmakers’ time in 2025 legislative sessions. Read the full report here.
Hot Topic: Skills-Based Hiring
The nature of work is evolving rapidly, leading to a shift in the demand for traditional educational credentials. States face the challenge of filling various jobs, some of which do not require a four-year degree. In response, lawmakers are exploring alternatives such as removing formal degree requirements from job postings and transitioning to skills-based hiring practices, which place greater weight on job training and experience.
Considering the high demand for skilled, career-ready workers, state legislators are increasingly interested in investing in short-term and nondegree credentials, including certificates, industry certifications, micro-credentials, occupational/professional licenses, and apprenticeships. These options typically require less time and money than traditional degrees. However, they are not meant to replace those programs; nondegree credentials can complement associate and bachelor’s degrees, leading to positive outcomes for workers and employers.
Additionally, as nondegree credential programs increase, states are addressing several challenges: defining quality and establishing quality indicators, promoting the value of non-degree credentials to students and employers, validating nondegree credentials for hiring purposes, and ensuring there is demonstrated benefits to learners.
Trending: Reemployment After Retirement
States are likely to continue deploying financial strategies to recruit and retain employees—sometimes even luring them back from retirement. Following the surge in retirements during the pandemic, some retirees have returned to work for financial necessity; others seek social and emotional fulfillment. According to a recent study on retirement savings and spending, about 20% of retirees are working full time or part time, while another 7% are actively looking for employment. Another survey on older adults in the workplace found that at least 1 in 8 retirees plan to return to work in 2025.
ACTION: To date, NCSL has tracked at least 80 bills on reemployment after retirement in 2024, with more legislation anticipated by the end of the year. Many of the bills aim to change existing postretirement provisions, including caps on annual hours, earning limitations, the time required between retirement and reemployment, eligibility and penalties for exceeding reemployment after retirement restrictions.
One of the more notable state strategies: legislation that would allow retirees in certain professions to return to work without suspension of their pension benefits. With states facing ongoing workforce shortages and challenges with recruitment and retention, this strategy has become increasingly common in education, public safety and health care professions. The hope is that retirees can help address critical workforce shortages, even temporarily, and fill essential skills gaps in the workplace.
Given the shifting attitudes toward retirement, along with the rising cost of living and a tight labor market, NCSL anticipates the reemployment after retirement trend will continue through 2025 and might eventually become a permanent feature of our evolving workforce.
Hot Topic: Employee Benefits Programs
Recruiting workers is just half the challenge of building a strong workforce; retaining them is the other lift. Many states see broadening employee benefits as way to do that. One increasingly popular employee benefit is access to—and coverage for—mental health care resources, particularly for public safety personnel. This often includes providing access to counselors after traumatic events, prohibitions on retaliation for using mental health care resources, and classifying post-traumatic stress as a work-related injury for worker’s compensation.
The use of paid leave programs is another strategy states are exploring, including parental, sick, bereavement and caretaking leaves. The temporary federal programs enacted early in 2020 spurred state interest in paid leave programs early in the pandemic, and the tight labor market has continued to fuel states’ interest, especially as the public sector tries to compete with the private sector for workers.
ACTION: Over the past decade, multiple states have enacted or introduced legislation to create paid family leave programs. Historically, this has most often been done by mandating employer participation. Thirteen states and the District of Columbia have created mandated paid family and medical leave programs, and the steady growth of these benefits is likely to continue.
In the last two years, a different approach has trended. Eight states have enacted legislation to create a voluntary paid leave option. Alabama, Arkansas, Florida, New Hampshire, Tennessee, Texas, Vermont, and Virginia have created optional paid leave coverage employers can purchase through private insurers. New Hampshire’s and Vermont’s laws name one specific insurer in each state that provides the coverage, while all other states allow any insurer to offer plans.
At least six states—Georgia, Nevada, New Hampshire, South Carolina, Texas, and Utah—now offer paid parental leave for state employees for the birth, adoption or fostering of a child. New Hampshire covers these as well as specific family medical concerns. As these states gather and release data on employee uptake of their parental leave programs, other states will likely monitor the results to determine whether the benefit could work for them.
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