How The Impending Wave Of Worker Retirements Will Change Government In Minnesota
When two Minnesota cities — one large, one small — decided earlier this month to offer paid family leave for employees with newborn children, leaders in both places predicted they would be the first among many local governments to do so.
That’s because Brooklyn Park and St. Paul said they weren’t responding to political or union pressure, but to demographics — the need to help recruit and retain younger workers in the wake of the “Silver Tsunami.”
First coined by the Pew Center in a 2001 report, the phenomenon describes the impacts of aging baby boomers on the work force, health care and the economy. The most oft-repeated statistic from the report: that 10,000 of the oldest boomers turned 65 on a single day in 2011; and that another 10,000 will turn 65 every day through the year 2030.
That wave will hit government especially hard, with increased demand for services and the decreased amount of taxes paid by boomers. But the most pressing challenge for government falls on human-resources departments. Government workers tend to be older, on the job longer and retiring at younger ages than private-sector workers.
And there are a lot of boomers on government payrolls. The state of Minnesota, for example, counts 46 percent of its 33,500-person executive-branch work force over the age of 50, with 3,200 already past the average retirement age of 61.
According to a recent state work-force report by Minnesota Management and Budget, those numbers raise a number of concerns, including maintaining institutional knowledge, planning for transition and recruiting new talent.
And a small city will lead them
One government that not only sees the tsunami coming but is also trying to prepare is Brooklyn Park. Earlier this year, city staff began briefing the City Council on the issue, presenting a program to ease a transition that will see one in five city workers retire over the next five years.
Those numbers translate into two major challenges for the city: How does it make sure the knowledge and skills held by those retirees doesn’t go out the door with them, and how can it improve its odds of attracting younger workers to choose government service.
To deal with the first issue, Brooklyn Park is planning to formalize a mentoring program that will allow retiring and retired workers to share knowledge with younger employees; the program will also boost training programs and tuition reimbursement for younger employees.
To deal with the second — attracting millennials who will soon become the largest share of the nation’s work force — the city will institute flexible work schedules, match holiday schedules to a broader array of religions and allow telecommuting.
But what got the most attention was when Brooklyn Park became the first city in the state (by a week) to approve paid family leave for city workers. It was a move that, though it applies to both new mothers and fathers, was clearly targeted at women. “Females are outpacing males in terms of college degrees,” said Brooklyn Park assistant city manager Michael Sable. “In looking for knowledge workers, the odds are pretty good we’ll have more women than men.”
Just one week after Brooklyn Park approved two weeks of paid family leave for birth mothers, St. Paul approved a plan to offer four weeks of paid leave.
Erin Dady, St. Paul Mayor Chris Coleman’s chief of staff, said the idea came out the city’s emerging leaders academy, a training program for younger workers who want to move up the ranks in city government. After interviewing younger current and former city employees, the group reported that women wanted benefits and policies that allowed them to better balance their work and personal lives.
Dady said paid leave is a benefit that didn’t cost very much — an estimated $200,000 a year. And Coleman said he’s OK if the price tag goes up because it will indicate the city is adding exactly the kind of employees it’s seeking. Dady said the city is also looking at other changes to address younger workers’ expectations about workplace technology and flexibility.
Minneapolis expected to follow
Minneapolis City Coordinator Spencer Cronk said he first began working on the retirement wave while in his previous job as commissioner of the state Department of Administration, where 40 percent of the 500 employees were retirement eligible.
“It’s a challenge and an opportunity,” he said. “It gives us the opportunity of saying, ‘This is a chance for us to look at how we do our work and how we recruit and hire.’”
Cronk said he expects Minneapolis will consider paid family leave for city employees before the end of the year. One assumption that should be reconsidered, he said, is that workers want and expect to remain in a job for their entire careers. Benefits, pay and advancement should be rethought with the understanding that millennials prefer to move from job to job as opportunities arise and interests change. “If you don’t create meaningful work, people will leave,” Cronk said.
On the state level, meanwhile, agencies have been designing new strategies and processes to address vacancies opened by boomer retirements, said John Pollard, the communications director for Minnesota Management and Budget. One issue often raised by younger workers: the long and overly bureaucratic hiring processes. In response, though the state keeps vacancies open longer to allow outreach to communities underrepresented in government, it has also tried to speed up hiring decisions.
The state has also increased internal leadership training for both emerging and senior managers, Pollard said, but is not yet considering adding benefits to appeal to younger applicants.
Will it work?
The types of benefits offered can definitely improve the ability of employers to retain and attract employees, said Colleen Manchester, an assistant professor at the University of Minnesota’s Carlson School of Management who studies how workplace benefits create incentives for workers.
For millennials, those incentives include maintaining work-life balance with such benefits as flex time, telecommuting and parental leave, she said. And parental leave is as important to men as women.
“Even in traditionally male-dominated fields such as police, there’s a sense they want to be more involved in their children’s lives,” Manchester said. There is a perception among younger workers, however, that government jobs lack flexibility, lack innovation and are less technologically advanced.
“They have grown up in a time of technological innovation and they see government agencies as being hard to change,” she said.
And though appealing to the public-service characteristics of government employment could be beneficial when it comes to recruiting workers, government has some catching up to do as it prepares to compete with the private sector for millennials. “Private companies are constantly thinking about work-force planning and succession planning, including knowledge transfer,” Manchester said.
A recent survey of government human-resources executives did find one means of attracting younger workers that goes against the stereotype of job-hopping millennials. The International Public Management Association for Human Resources found the kind of pensions that come with government jobs offer “a distinguishing positive benefit” in the battle with private-sector employers.
Immigrants also key
While the drive to attract younger workers get most of the attention, the Minnesota State Demographic Center identified another source for the state’s future work force: newcomers. In fact, without immigrants, Minnesota’s population will begin to shrink by 2043, the center said in its most recent population report.
And though millennials are entering their peak child-bearing years, said Minnesota State Demographer Susan Brower, they aren’t expected to procreate at the rates of their grandparents or baby boomer parents.
“Because we can’t rely on natural increases, we’ll have to rely on immigrants — both domestic and international,” Brower said.
By moving more quickly on expanding benefits that might attract younger workers, both Brooklyn Park and St. Paul may have accomplished the goal of standing out in the hiring market. That advantage dissolves, however, when other governments follow suit. “That’s the fundamental flaw in the plan,” Sable joked. “We’ll adapt.”
Neil Reichenberg, executive director of the International Public Management Association for Human Resources, said he isn’t surprised that state and local governments haven’t taken more steps toward preparing for the demographic wave about to hit them. The Great Recession not only delayed the impact of retirements but put governments in crisis mode; when you’re worried about laying off workers, you don’t spend a lot of time thinking about the long-term future.
But the pace of retirements has picked up as some older workers have gained more confidence that their retirement plans will be sufficient. And some government workers have moved up retirement plans to get ahead of reductions in pension benefits that were another response to the recession.
That’s why Reichenberg and his organization have been trying to raise the alarm. “The numbers are not going to change,” he said. “You can delay retirement but no one has found a way to delay aging.”