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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

Shadi Bushra

Written By: Shadi Bushra

Published: 10/7/2022

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.

The coronavirus pandemic that began in 2020 drastically changed almost every facet of our lives, at least temporarily. But one of the most enduring legacies of the pandemic is its effect on the economy.

Most countries, including the United States, saw almost every measure of economic activity contract sharply in the spring of 2020 after many jurisdictions issued mandatory stay-at-home orders and closed their borders.

Companies trying to stay afloat in the turbulent waters slashed whatever expenses they could by laying off employees, halting supplier orders, and closing down locations. State and local governments also furloughed or laid off employees, , and garbage collectors, despite concerted efforts in some cases to boost pay and incentives.

Police departments , and garbage collectors, despite concerted efforts in some cases to boost pay and incentives.

Police departments  about how we make money. "> ADVERTISEMENT

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