New research delves into the keys to retention for public sector employees, and finds that generous benefits are still a key reason why workers seek out (and stay in) government jobs.
The Employee Benefit Research Institute (EBRI) recently studied data on employee tenure among American workers in both the public and private sectors, using U.S. Census Bureau data from the Current Population Survey to examine the tenure with current employers of wage and salary workers from 1983 to 2022. The survey should put to rest some misperceptions surrounding employee tenure, according to EBRI.
“While some believe current American workers change jobs more frequently than was the case for past generations, the data on employee tenure show that career jobs (individuals holding only one job for their entire career) never actually existed for most workers and continues not to exist for most workers,” read an EBRI statement summarizing the key findings.
The report also determined that workers’ tenures tend to be shorter when the labor market is strongest, as it was in 2022, with more individuals starting new jobs “by being newly employed or by changing jobs due to more opportunities from a tight labor market.”
Overall, the median tenure of all wage and salary workers age 25 or older remained at five years throughout the time period EBRI analyzed. The difference between private sector and public sector workers tenure distributions, however, “is quite striking,” according to the report.
While private sector employers have generally been able to maintain a near constant and small percentage of very long-term workers (25 or more years of tenure), public sector employers saw the number of employees in this group grow significantly through 2004, before trending down through 2022.
“Consequently, public sector employers have seen a significant share of their most experienced workers retire or otherwise leave their jobs.”
Benefits are Still a Key Retention Tool
The findings suggest that, historically, most workers have changed jobs during their working careers, with the evidence suggesting they will continue to do so in the future, according to EBRI.
This “persistence of job changing” has several important implications for employers in the private and public sector alike, such as potentially reduced or no defined benefit plan payments due to vesting schedules, reduced defined contribution plan savings, lump-sum distributions that can occur at the time of a job change, and public policy issues through both lower retirement incomes of the elderly population and the loss of experienced public sector workers, the EBRI statement read.
“Thus, it is clear from these results, even with the ups and downs in median tenure, that workers will be faced with many decision points about their retirement benefits along their career paths, as workers will most likely not be with one company their entire career,” according to EBRI.
“The decisions made regarding retirement benefits will greatly impact their retirement security. As a consequence, employers need to account for these job changes when designing or providing education about retirement benefits.”
Discussing the survey results with Government Executive, Craig Copeland, EBRI’s director of wealth benefits research, stressed the crucial role of attractive federal benefits in retaining federal talent.
“Yes, it is still clear that public sector employees—including feds—are more likely to stay at their job longer than other sectors, at least up until recent years,” Copeland said.
“The defined benefits plans that public sector jobs usually provide typically are an important part of the reason that public sector employees stay longer—as well as because of the overall typically better benefits offered to public sector employees when compared with the average private sector employee.”
That said, it’s tough to tell whether the long-term trend of “strong benefits and the stickiness of the public-sector jobs that offer them” will continue as younger federal employees become a bigger part of the workforce, Government Executive’s Nathan Abse wrote.
“The issue here is that the percentage of long-tenured federal employees finally has started to decline in recent years,” Copeland said. “That’s because many of the most experienced employees that stayed on the job so long—meaning the longest-serving of the baby boomer generation—finally have started to retire. And they’re finally being replaced by younger employees.”
Having this type of data on these long-tenured employees who are now retired or retiring, but not possessing the same kind of long-term statistics on their replacement makes it difficult to truly gauge whether younger public-sector workers will stay in their current jobs for another 20 years or more, like the previous generation did, he added.
All that said, workers participating in EBRI research typically still cite health insurance as their most important job benefit, Copeland told Government Executive, adding that benefits geared toward helping workers maintain their financial health are powerful retention tools.
“Beyond [health insurance], what seems to be making the difference at the margins to retain employees are employers that offer financial well-being benefits—anything that helps financially, like a student loan benefit or loan payment benefits, or emergency savings help, and even employer-provided financial coaching.”
08 February 2023
Category
HR News Article