Fiscal Realities: Public Sector Workforce Suffers

Wisconsin Policy Forum

Amid a historically tight labor market, reports from Wisconsin’s largest public employee retirement systems show that between retirements and other departures, state and local employees quit their jobs. at a record pace in 2021.

While most of these workers have been replaced, the increased turnover raises questions about the continued ability of the public sector to fill critical positions and deserves the attention of policy makers.

In 2021, 17,646 people left the ranks of active employees of the Wisconsin Retirement System (WRS) for reasons other than retirement, death, or disability. It was the most since at least 2002 and topped the next highest year on record by more than 2,000 workers.

Overall, more than 1 in 10 WRS members who started 2021 as a state or local employee left their job or active status during the year – another first in the data available. Although this WRS data does not cover all types of public employees, it includes more than 250,000 teachers, police officers, prison guards and university employees from hundreds of local governments, school districts and state agencies.

There are various reasons why a member of a pension system may leave active status. Yet two reasons make up the vast majority of all departures: normal or early retirement and “other separations,” including those who leave because they have changed jobs or become unemployed.

More than 8,100 people within WRS retired in 2020 (8,151) and 2021 (8,303). The only other year since 2002 in which retirement reached this level was in 2011, after the passage of Wisconsin Law 10 of 2011, which eliminated most collective bargaining for most state and local workers. .

The 17,646 people who left active WRS status due to “other separations” in 2021 were by far the largest in this category for a single year. Combined with other smaller factors, 26,237 WRS members became inactive in 2021 – the highest total since at least 2002.

The higher retirements from the WRS over the past two years are partly due to demographics, as Wisconsin’s workforce ages and more people reach retirement age. That said, the COVID-19 pandemic and struggling labor markets may have spurred retirements and increased other departures.

Given the state’s aging workforce and tight labor market, Wisconsin’s public and private sectors will continue to face labor challenges. These trends may not be bad in every way. However, if active workers continue to leave the public sector at high rates, this could put pressure on elected leaders to increase workers’ wages and ultimately put pressure on government budgets.

To cope with higher turnover, public officials could consider a number of options in addition to a pay rise, including offering more flexible workplaces and working conditions. Labor shortages may also encourage greater use of new technologies, service-sharing agreements between neighboring governments, and possibly greater use of private contractors.

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Michael A. Bynum