WASHINGTON, D.C., Jan. 16, 2025 (GLOBE NEWSWIRE) — As public service employers prepare to navigate a complicated year, MissionSquare Research Institute has identified six key workforce trends to watch in 2025. The trends focus on job motivations, succession planning, emerging technologies, retirement planning, debt, stress, and mental health.
The six trends are based on recent MissionSquare Research Institute research that highlights key strategies public employers can implement in 2025 to address the multitude of workforce challenges facing government agencies. The six workforce trends to watch in 2025 are as follows:
1. Differentiating motivations to work in the public and private sectors
The U.S. Army used to advertise that “It’s not just a job, it’s an adventure.” That concept of one’s profession being more than just a job also applies to local and state government. It is an opportunity to serve the community, find personal fulfillment, and see the results of one’s efforts on more than just a profit/loss statement. Making that case to job prospects aligns with what many of them have said are their motivations to choose the public sector as their calling. But this is not a message to be communicated once or just in the job ad.
When there are opportunities to pursue a career in the public, private, or non-profit sectors – particularly within in-demand fields like information technology, finance, or nursing – state and local governments need to help ensure that there is awareness of public sector opportunities and what makes them potentially the more rewarding path. That may include both traditional advertising of vacancies and more targeted approaches, such as college partnerships, K-12 outreach, neighborhood-focused marketing, and consideration of alternate career pathways.
In sharing those messages, governments also need to be cognizant of the form in which that communication takes place – focusing on plain language discussion and multi-media demonstrations of what a job candidate may be able to accomplish rather than a recitation of requirements, policies, and other bureaucratic text.
2. Kickstarting succession planning
Succession planning is an essential pathway toward more orderly workforce transitions. But since a MissionSquare Research Institute survey conducted in 2016, the needle has barely moved on the percentage of state and local governments with a succession planning process in place (increasing from 12% in 2016 to just 13% in the 2024 State and Local Government Workforce Survey of HR managers). With more than half of those HR managers indicating that the largest wave of retirements is coming in the next few years, and with the peak of the Baby Boom generation having reached age 65, the time for postponing such planning is long since passed.
Planning for succession does not mean handpicking deputies who will step into department head or other key roles years ahead of time. It may, in fact, involve preparing a larger cohort of multiple qualified staff who are given access to professional development, cross-departmental teams with leadership opportunities, job rotations, mentoring, and other support. This helps ensure that even if a single mid-level manager were to leave unexpectedly, the organization would have sufficient bench strength to consider multiple candidates when the key leadership roles become vacant.
3. Acknowledging and addressing employees’ concerns about emerging technologies
Advanced technology, automation, and especially artificial intelligence (AI) have been attracting public attention recently. Some organizations embrace and benefit from these technological innovations. Others have taken a more cautious approach, waiting for others to be the beta testers and work out the initial bugs.
Understanding, examining, and adjusting for the impact of advanced technologies on public sector employers and employees will be an important trend to watch in 2025.
MissionSquare Research Institute is conducting a comprehensive survey to help state and local government employers comprehend how their employees view and adapt to AI implementation, what their expectations are, and how to help them utilize this advanced technology to increase productivity and even boost employee morale and job satisfaction via tailored education, training, and benefits programs.
4.Talking openly about debt, stress, and mental health
The Institute’s survey on student debt collected responses from both public and private sector employees. The research shows that 46% of public sector employees with student debt view it as a major problem. In addition, a greater percentage of public sector employees view student debt as a factor in considering a job change than do those in the private sector, and from the Institute’s research on employees 35 and under, 60% are considering leaving their jobs. By providing more information and normalizing discussion about debt, public sector employers can help employees understand the full range of benefits available to them, whether provided through the federal government or their own employer’s education or professional development programs.
Financial stress aside, many employees endure stress tied to the nature of their work. Physical stresses are well understood and acknowledged, but emotional stress can be particularly impactful among those in public safety, human services, health care, or other fields where employees deal with crisis intervention. Designing related benefits and education/mitigation programs to help employees alleviate the impacts of mental/emotional labor will become an increasingly important issue for public sector employers and will be vital to helping to develop and maintain a resilient workforce.
5. Recognizing differences between retirement expectations and reality
The importance of retirement timing decisions to retirees’ economic well-being make it crucial for policymakers, financial advisors, and plan sponsors to provide effective financial education and services in the years prior to retirement. The distribution of older Americans’ expected retirement ages is often centered around two Social Security Benefit claiming ages – the early retirement age and full retirement age. However, actual retirement ages are more likely to be somewhat earlier than expected. Although there is generally a natural upward trend in the portion of the workforce delaying their retirement age expectations, this trend has no statistically significant relationship with the COVID-19 pandemic. The most significant factors that influence participants’ retirement decisions relative to expectations are health, wealth, age, change of marital status, mortality expectations, education levels, disability, and major illness diagnosis.
Focusing on these factors can help the retirement benefits community explore strategies to help mitigate the negative consequences of gaps between retirement expectations and the reality actually experienced by workers. Understanding the factors influencing retirement decisions is vital for effective planning and policymaking. Practitioners and retirement service providers should consider promoting flexible retirement products and services that accommodate the diverse needs and circumstances of retirees.
6. Designing DC plan default investments for public sector participants
The increasing availability and participation in defined contribution (DC) plans is fundamentally changing the way Americans save and invest for retirement. One important DC plan innovation is default investments, which allow participants to invest in a professionally managed portfolio like a target-date fund.
MissionSquare Research Institute found that the default investment acceptance rate in the public sector is very high, typically into a target-date fund, generally exceeding 80% for all ages. Retention of the target-date fund declines linearly by age as participants become more financially independent and closer to retirement age. As the importance of defined contribution plans with respect to saving for retirement continues to increase, it is crucial to understand the decisions participants tend to make with respect to saving and investing. Research such as the Retirement Expectation vs. Reality study and the upcoming Default Investment Acceptance among Public Defined Contribution Plan Participants study can help guide retirement planning in the public sector.
About MissionSquare Research Institute
MissionSquare Research Institute promotes excellence in state and local government and other public service organizations to attract and retain talented employees. The organization identifies leading practices and conducts research on retirement plans, health and wellness benefits, workforce demographics and skill set needs, labor force development, and topics facing the nonprofit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. More information and access to research and publications are available here.
About MissionSquare Retirement
Since our founding in 1972, MissionSquare Retirement has been dedicated to simplifying the path to retirement security for public service employees. As a mission-based financial services company, we manage and administer over $83.2 billion in assets.* Our commitment to delivering results-oriented retirement plans, education, investments, and financial education sets us apart. Explore how we enable public service workers to build a secure financial future. For more information, visit www.missionsq.org or follow the company on Facebook, LinkedIn, and X.
*As of November 30, 2024. Includes 457(b), 401(k), 403(b), Retirement Health Savings (RHS) plans, Employer Investment Program (EIP) plans, affiliated IRAs, and investment-only assets.
CONTACT: Bina Handa MissionSquare Research Institute brhanda@missionsq.org
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