The government struggles to replace loss of workers after mass retirements and other COVID-19 related issues while the private sector is on the rise and recovering quicker.

Juanita Waters wasn’t ready to quit working. But the United States Postal Inspection Service, where she worked for nearly 25 years, had a mandatory age cap in place. So, in March, she retired from the agency and left for a job in the private sector as an investigator for TD Bank. 

“It’s new and kind of scary to do something new,” she said. “It’s a whole different world out here now.”

While employers across the nation are facing labor shortages as the economy emerges from the pandemic, in the public sector, another issue is compounding the problem: an aging workforce, one that had 27.1 percent of its workers over age 55 in 2021. Between generous retirement benefits and, in some cases, mandatory retirement ages, the industry is losing workers at a rapid rate. Meanwhile, budget constraints make it hard for government agencies to compete with private-sector employers when trying to fill jobs vacated by retiring workers.

Total employees in the private sector vs the government sector

The graph shows the percent of the workforce in each sector from the start of the pandemic to April 2022. The private sector lost more workers but recovered more quickly than the government sector.

While pension funds and pay for certain positions have increased over the years, Stan Shipley, an economist at Evercore ISI, said for most aging workers, the risks to continuing to work outweigh the benefits. Between budget cuts, labor strains on agencies, health-related concerns, family life, and other shortfalls, the public sector has to find ways to recruit people who can stand to be in positions as long as some retirees have been. Shipley said that has to do with offering competitive pay.

“The public sector is going to have to continue to gradually increase wages or they will continue to suffer when it comes to bringing in younger workers to replace those who are at retirement age,” Shipley said.

Waters started her career with the United States Postal Service as a mail carrier in 1985, making approximately $15,000 a year while still in college. In March, when she retired from the inspection service she was making approximately $185,000. Even with her averaging a 3.5 percent wage increase every year she was employed by the postal service, the private sector tends to increase wages at a faster rate than the public sector, including federal positions like hers. Private sector wages and salaries increased 5.2 percent in April from a year earlier, while government wages were up just 1.2 percent. 

The pandemic led some to jump ship and switch careers while others leaned into their retirement benefits and called further working quits. Most people who are at retirement age now started their careers in the 1980s and 1990s like Waters.

Even before the pandemic, many government agencies faced a retirement crisis. A spokesperson at the Merit Systems Protection Board said the aging federal workforce is an issue that has been with them for a long time, dating back to at least the 1990s when government stakeholders first started bringing attention to the impending “retirement tsunami.” They said while the tsunami never hit at full force, the board has long held that the federal government needs to pay attention to workforce planning, retention, entry-level hiring, and employee development. While 15 percent of new hires in the government sector were under 24 in 2021, only 4 percent of total government workers make up that age group, compared to 13.2 percent of private-sector workers.

“With the new generation of workers, it’s more about flexibility,” Waters said. “Back in the day, they’d give you a title and people would be like ‘oh wow, that’s your title?’ People weren’t necessarily getting paid what they should have been. Money intrigued us, but there was also a sense of loyalty.”

The pandemic exacerbated the problem in acquiring workers, especially younger ones. In fiscal years 2020 and 2021, federal agencies saw 111,369 retirements, according to the Office of Personnel Management. While many industries saw an increased number of separations during the height of the pandemic, the government sector hasn’t been able to retain or replace workers nearly as quickly. 

Across all industries, employment increased 4.6 percent from April 2021 to April 2022, while the government sector saw a 1.3 point increase. While employment has risen across the board, the government sector remains three percent below prepandemic levels of employed workers.

As retirements continue to plague the government sector, health concerns due to the pandemic also play a role in overall labor force participation—the number of active workers or those looking for work—which was at 62.2 percent, 1.2 percentage points below its prepandemic level. Even with 66.5 percent of the country fully vaccinated—not accounting for those who have received a booster—COVID-19 cases continue to fluctuate instead of consistently decreasing. In mid-April federal mask mandates for public transportation were lifted and cases began to uptick. Shipley said some older workers don’t seem comfortable with losing their work-from-home options amidst another spike, although recent cases have resulted in fewer hospitalizations and deaths.

“The coronavirus isn’t worth it and when they started seeing effects, they decided to either shift to another career or retire,” Shipley said.

That was exactly what former Memphis district office Area Director Deborah Walker had done. 

She worked for the US Equal Employment Opportunity Commission from 1993-2021. She said when she was informed they would be going back into the office, she had a small level of anxiety about returning to in-person work, so she cashed in her unused vacation time, sick pay, and her pension.

“I knew what I needed to earn to be able to live comfortably for the rest of my life,” Walker said, which was made easier by her generous pension plan.

While some retirees have decided to return to the workforce, those like Walker who have enough money to live comfortably don’t have another job at the forefront of their minds.

“I may decide to work again next year, but I don’t know. We’ll see,” Walker said. “If I do go into another job, whatever I do, it won’t be a management role again.”

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