Public Sector Struggles to Compete for Talent in Tight Labor Market
History and hiring trends suggest that government vacancies will remain higher for longer than the private sector, which has already recovered all jobs lost in the pandemic recession
Key Insights:
- While the private sector has recovered all the jobs lost during the initial pandemic recession, federal, state, and local governments are struggling to attract workers.
- Government agencies have failed to keep up with the rapid growth in wages that has lured many to the private sector.
- The slow government recovery mirrors that following the Great Recession of 2008-09, with agencies unable to react nimbly to changes in the labor market.
- At the federal level, employee pay dissatisfaction runs high, while state and local governments struggle to attract essential workers such as law enforcement, firefighters, teachers, and garbage collectors.
- The Fed’s aggressive interest rate hikes to fight stubborn inflation remain a wild card: it could slow down private wage growth and allow the public sector to remain competitive for talent, or it could lead to a recession that derails both public and private employment.