Report: Some public employees face financial hardship; comprehensive pay packages proved ‘a pathway toward economic security’

Many who work in public service, in professions that center around helping others, are themselves struggling to make ends meet and face financial hardship. Addressing these needs, the public employers they work for are well positioned to help them out, according to a report published Thursday by the MissionSquare Research Institute, “Examining the Financial Wellbeing of the U.S. Public Service Workforce.” 

“Just as employers can help their employees gain long-term retirement security, they can assist with building short-term emergency savings,” the report says. “Public employment is a pathway toward economic security. Public employers worried about competing over crucial talent can do more to help their employees build financial security and to communicate the value of those benefits as part of their recruitment and retention efforts,”

The report provides a comprehensive look at the financial wellness of public employees, asking questions like ‘do employees feel they’re better off than their parents?’ (Fifty-six percent of all government employees said ‘yes.’) It also analyzes retirement savings based on demographic, and compares the financial wellbeing of public employees to private sector workers.

Nearly one-fifth of all public employees and almost one-sixth of those in public education skipped healthcare because they couldn’t afford it, according to a brief about the findings. And between 2017 and 2019, 14% of public service households couldn’t pay their bills. A little more than 11% of those in public education indicated the same. 

Inflation has been a driving factor. With costs for essential services like healthcare, childcare, and housing going up, “wage growth in the public sector has been modest,” the report continues. “A large share of state and local government employees say they have been negatively impacted financially by the pandemic, taking on more debt and spending their emergency savings.”

Nearly a third of those surveyed who face financial hardship said they’d have a hard time coming up with $400 in an emergency situation. Savings were especially low or non-existent among Black or Hispanic employees, and single women. And in regard to retirement, 81% worry they won’t have enough.

“Financial insecurity is a growing problem for most Americans, and the problem can be acute for public service workers,” said Christian Weller, Ph. D, the report’s author. Weller is chair of the University of Massachusetts Boston’s Department of Public Policy and Public Affairs at the McCormack Graduate School. 

To that end, the researchers highlighted the advantages public employers have over those in the private sector, which can be leveraged by employers to help their employees overcome financial hardship. For example, robust compensation packages can prepare current employees for retirement and provide a pathway to short term financial security. They can also help fill staffing needs by attracting new talent. 

“This report is a clear indication that public sector benefits play a major role in financial wellness for the public worker. Public employers are wise to continue offering strong benefits packages that not only shore up financial and retirement security, but also serve as magnets for public service workers,” Weller said.

Given the strong compensation packages in the public sector, public employees as a whole tend to save more than their peers in the private sector—even if the upfront pay isn’t as competitive.

“It is important to holistically understand the overall financial wellbeing of the public service workforce and how the benefits provided by state and local government employers support the financial security of these essential workers,” said Joshua Franzel, Ph. D, managing director of MissionSquare Research Institute. “This report offers a comprehensive snapshot of the financial health of state and local employees, while also analyzing opportunities for their employers to optimize benefit offerings that underpin financial wellness, while reducing employee stress, financial worries, and on the job distractions.”