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Navigating a Low Unemployment Labor Market for Public Sector Organizations

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Ian Hutcheson
January 13, 2020

When the final United States employment figures for 2019 were released earlier this month, they confirmed that 2019 saw the lowest unemployment rate in over half a century. Low unemployment is widely recognized as a positive indicator of our nation’s prosperity, productivity and potential for growth. However, a low unemployment rate does not have a universally positive influence on all aspects of our highly interconnected economy. Employers tend to endure the negative externalities of a tight labor market and public sector organizations in particular are disproportionately impacted by these forces.

To help mitigate the adverse effects to employers of today’s low unemployment, public sector organizations will benefit from:

  1. Communicating the traditional benefits of public sector work to applicants.
  2. Continuing to provide alternative benefits that workers care about.
  3. Streamlining recruiting and hiring processes.

Dangerous lows

It would be misleading to refute the beneficial impact of low unemployment to an economy. The danger is rather that unemployment sinks below what economists consider, “Full employment,” or the level at which labor is allocated at peak efficiency. When unemployment is too low, employers suffer as wages inflate and there is fiercer competition over the dwindling supply of labor. Weaknesses in an organization’s recruiting and hiring practices are magnified as applicant’s are less willing to sacrifice their time and energy on cumbersome processes. Retaining workers becomes more difficult as the quit rate increases and employees feel freer to pursue other opportunities. Most of these problems are magnified for public sector organizations which traditionally struggle to offer competitive salaries and are often weighted down with bureaucratic hiring processes.

Talking benefits

Public sector employers in the United States have historically offered generous benefits packages to their workers which may entice them away from higher private sector salaries. This conventional promise of better benefits is still largely defensible, with some research showing that healthcare and retirement plans have actually become more generous. As noted in Caroline Cournoyer’s 2018 article for Governing, public employers also have an edge on their private counterparts in providing alternative benefits, such as mental health programs and educational assistance.

To contend with private employers for the shrinking number of available workers, public organizations should focus on communicating to job applicants the traditional benefits of sector employment. This has typically been a weakness for governments in particular, and continued efforts to proactively market public sector employment will allow these organizations to navigate today’s labor market.

Primary alternatives

In a low unemployment environment, applicants will consider more than salaries when choosing an employer. A 2016 survey by the Harvard Business Review found that growth and learning opportunities and the quality of management were the most important factors among applicants of all ages, and this was especially true for millennials. Since 2016, millennials have been the dominant generation in the American workforce. Any employer hoping to capture millennial talent will need to create a challenging work environment that offers opportunities for learning.

 One of the alternative benefits that Cournoyer finds the public sector is better at providing than the private sector is, “On-site professional development,” which 83% of the surveyed governments provided compared to 64% of private companies. This is good news for public employers competing in a tight labor market. These organizations should ensure that they maintain this competitive advantage over the private sector.

Hiring headaches

When job applicants are less desperate for employment, pain points in an employer’s recruiting and hiring process will stand out more starkly. Unpleasant experiences can have ramifications for employers that hamper their future recruiting. Talent Board’s 2019 North American Candidate Experience Research Report found that for the past six years, two-thirds of candidates who reported negative hiring experiences would share these experiences with their inner circle and over a third would share a negative experience publicly online. Making sure that hiring experiences are pleasant for applicants will help employers hold the interest of qualified candidates.

Here, the public sector, especially governments, are decidedly disadvantaged compared to the private sector. In a 2016 article for Governing Katherine Barrett and Richard Greene describe the how strict civil service regulations in states like Pennsylvania and New Jersey have restricted agencies’ abilities to retain candidates through cumbersome hiring processes. In their efforts to attract qualified applicants, public organizations will need to reform their recruiting and hiring practices to ensure that these candidates are not lost.

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Low unemployment is not necessarily the boon for individual employers that it is for individuals. The wage inflation and intense competition for workers that high employment often fosters can disadvantage some industries. To avoid the pitfalls of a tight labor market, public sector organizations should clearly communicate to applicants the traditional and alternative benefits that they are often better at providing than their corporate competition. Streamlining hiring and recruiting to minimize the stress on applicants will help ensure that qualified candidates are not pushed away. By communicating their strengths and improving their weaknesses, public sector organizations can find the people they need to truly make themselves employers of choice.

Author: Ian Hutcheson, MPA is a Management & Budget Analyst for the City of Oklahoma City and the President-Elect of the ASPA Oklahoma Chapter. He is a 2018 graduate of the Master of Public Administration program at the University of Kansas. Ian’s professional areas of interest include city management, finance and budget, economic development and urban design. Contact: [email protected]. Twitter: ihutch01

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