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State faces looming personnel shortage

The budget crisis Texas state government faced in 2003 received a lot of attention from the press and public. But another, potentially more serious problem has received less scrutiny: the coming shortage of state workers.

Traditionally low wages, dwindling benefits and the improving economy all are making state jobs less attractive just as an entire generation of state workers, products of the Baby Boom, looks forward to retirement.

Skilled work force
Providing thousands of programs and services for the nation's second-most populous state is no small undertaking. According to the State Auditor's Office, about 270,000 Texans work for various state agencies and institutions of higher education. They face a workload that grows with the state and, due to the demand for social services, only increases during economic downturns.

Texas has a highly competent work force that compares well with that enjoyed by the private sector, despite sizeable pay differences, according to Stuart Greenfield, a former systems analyst for the Texas Comptroller and consulting economist who examined the coming employment crunch in an August 2003 Texas Business Review article.

Greenfield reports that Texas state workers have higher average education levels than their counterparts in the private sector. More than half of all Texas state workers have a bachelor's degree or better, versus less than a quarter of workers in the private sector.

Greenfield also examined those professions requiring specialized education, training or skills, such as education, health care, legal professions and engineering. These "knowledge workers" make up 58 percent of the state work force, compared with just 31 percent of the Texas private work force, said Greenfield.

Texas' state workers also have more experience. Greenfield found that almost half of all state workers were 45 or older in 2002, compared with 31 percent in the Texas private sector.

But the flip side of that level of experience is that many of Texas' most seasoned employees will retire in the near future. According to Greenfield, about 40 percent of state government's "knowledge workers" will become eligible for retirement over the next 10 years, versus just 20 percent in the private sector.

"Unless the state implements more innovative and aggressive personnel practices, it faces serious problems over the next decade," said Greenfield.

Greenfield also noted that the popular conception of a rapidly growing state work force is misleading.

"There are only two areas of significant growth [in state employment], even though the demands on the state work force have increased," Greenfield said. "Between 1992 and 2001, there was an increase of 30,000 state employees, but of that, corrections accounted for 17,000 and higher education for another 11,000. Most other areas [of government] have seen almost no growth."

As a result, many state workers are working harder to meet an ever-increasing workload, he said.

The pay problem
Greenfield found that Texas ranks near the bottom among the 10 largest states in employee pay. Overall, Americans in the public sector earn slightly more on average than their private-sector counterparts. In Texas, state workers earn about 13 percent less.

"Across the country, public workers are better educated and more experienced than private-sector workers. And they're also paid better, on average, than private-sector workers--except in Texas," said Greenfield.

Andy Homer, director of Government Relations for the Texas Public Employees Association (TPEA), estimated the pay gap even higher, at 14 to 25 percent.

"Actual pay is drastically behind what a comparable person gets paid for similar work at another employer," said Homer. "There's got to be a sustained effort to get us more competitive."

Alton Ressler of the National Academy of Public Administration in Washington, D.C., said the wage gap is a common problem, and bigger states in particular are feeling the pinch.

Of course, workers can be motivated by considerations other than salary.

"We need more emphasis on improving the quality of work life and to do a much better job of showing potential job applicants what value we do offer--the intangibles such as the security of continued employment," Ressler said.

But Texas' advantages seem to be dissipating in this area as well. Cost-cutting has affected even job security, a traditional plus for state workers, according to Greenfield.

"In the past, state employment meant stability, but not any more," Greenfield said. "Agencies are being forced to cut their staffing."

And, due to legislative action in 2003, health benefits have been substantially eroded, Homer said.

Irene Abeita, who works in the Taxpayer Publications Division of the Comptroller's office, considered retiring in 2003 but didn't, out of necessity rather than preference.

"Since they changed the insurance and raised our deductibles, we have to pay much bigger copays, and $100 for every emergency room visit," she said. "My husband is having medical problems, and our bills are a lot higher. He's going to go on dialysis soon. I'm worried about what our medical bills will be then. I can't afford to retire."

The collapse of the 1990s economic bubble may have bought Texas some time, because it made state employment a more attractive option. But a rapidly expanding economy is eliminating that incentive.

"The economic downturn provided a major inducement to apply for state jobs," said Greenfield. "But as the economy improves, it's going to be much more difficult."

"Our state is behind the eight ball right now," Homer said. "We've got to get quality people any way we can. TPEA believes the compensation system is out of whack. The state leadership has got to make some effort to upgrade employee pay if we're going to compete."

Greenfield agreed that wages are the key.

"The price is going to have to go up," he said. "It's basic economics. There's this great focus on improving the educational attainment of Texans, because better-educated people earn more--unless they work for the state."

Retirees return
To try to meet their needs for qualified employees, many agencies are rehiring their best retired workers for another round of state employment. These "return-to-work" workers allow the state to retain the benefit of their experience and expertise for a while longer, at least.

"It's a fairly dismal picture," said Homer. "We'll probably see more people working longer. It's a stopgap measure. But Ressler said it's not a crisis.

"The working population has realized that retirement has changed," he said. "We're finding that many retirees are staying active in the work force and staying engaged as productive employees much longer. The traditional notion of people retiring 'full-time' is not as common as it used to be."

Greenfield said rehiring retired workers also helps agencies avoid the pressure for higher salaries.

"You bring retirees back because it's easy," Greenfield added. "And why do you want to bring back the same people? Because you can get them their current salary--at below-market rates, in other words."

But eventually the Boomers will leave for good. And both Greenfield and Homer see another problem with a reliance on "return-to-work" personnel: a lack of new blood that will deprive the state of precisely the sort of workers most likely to ensure continuous improvement in state operations.

"It would seem to me that the state will continue [relying on retiree workers], because it's the easiest thing to do," Greenfield said. "But it leaves the state with a stagnant work force that's resistant to change. Younger people with newer ideas who could promote change--they won't be coming in."

Homer said a crunch is coming.

"It's a creeping kind of problem," he said. "We can plug the gaps with return-to-work workers or get people not as qualified as we''d like. We've been lucky over time. But we've got to get a new generation of workers, and that's where we're in difficult shape."

Ressler said government is not preparing employees for the work they will need to do in the future.

"The work is becoming more complex and more technical," he said. "And, increasingly, it's a government of managers rather than 'doers,' now that much of the work is [outsourced to] the private sector. The real dilemma will be the skills gap. I don't know that we're keeping up with our training and skills needs."

Bruce Wright