Employment challenges are unique to the public sector

According to Arizent’s HR development research, local governments have the greatest difficulty attracting and recruiting new employees compared to all other entities in the financial sector.

The difficulty comes as governments seek to attract potential young workers who are skeptical of the public sphere and its potential for career advancement in the post-COVID-19 era. This disappointment has prompted industry professionals to correct common misconceptions about their jobs.

“There’s a perception that you don’t need any advanced skills to be in government, that city finances aren’t that complicated, and that’s just not true,” said Eric Mason, finance director for the city of Quincy, Massachusetts.

Despite the need for the presence of public finance officials, gap between supply and demand for state and local government finance workers is growing faster than for the financial sector and the economy as a whole. While demand remains strong, the government finance sector has seen a net loss of employment each year since 2019 due to a rapidly aging workforce.

The increase in job openings has also caught the attention of private sector professionals. Justin Cooper, Orrick’s financial sector leader, spoke about the importance of relationships between employees in the public and private sectors.

“We desperately want and need strong people in the public sector,” Cooper said. “We don’t want to just make up all the rules and run everything ourselves. We want some push and pull with the public sector,” he said. “It doesn’t help if those seats are vacant; we need partners in the public sector that we can bounce ideas off of and move things forward with. We want those strong people across from us in government.”

Mason attributes part of the misperception about public finances to the belief that governments lag behind the private sector in terms of scope.

“Our police department alone spends $41 million a year,” Mason said. “If you had a company in your city that spent $41 million a year, you would call that a pretty significant operation.”

The total operating budget of New York City, the largest city in the United States, for 2024 was about $116 billion. This amount is comparable to the budgets of Microsoft and Apple, whose operating budgets for 2024 were $130 billion and $62 billion, respectively. In the first quarter alone, the amount of money outstanding in the American municipal market was $4.1 trillion.

“When people hear those numbers, they start to realize that everything they touch is local government,” Mason said. “Seventy-five percent of all interactions with government are at the local level… every road, every pipe, all of your underground infrastructure, all of your parks.”

Regardless of the erroneous understanding of the scope of activities of municipalities, the development of new technologies has made the private sector more attractive and advanced.

“We’ve always been behind the private sector, but we’re catching up, we’re becoming more advanced,” Mason said.

Currently, fewer than 10% of city officials believe their employees are adequately proficient in new technologies and general computer skills. But finance offices are as diverse as the many municipalities they cover.

Megan Kilgore, the city auditor for Columbus, Ohio, attributes her office’s success to early modernization efforts. Today, Columbus uses artificial intelligence for payroll, revenue and accounting systems. This technology has proven useful in comparing data and visualizing and presenting city finances in near real time.

“When I took office in 2018, we started to put in place some of the infrastructure that was ultimately going to be necessary to help us get through the pandemic. Across the country, some governments just weren’t prepared for the new normal,” Kilgore said. “Fortunately, we had taken some steps to get there. We knew that with technology, we were ready to probably do a lot more than the traditional constraints of work.”

Another arena where the public and private sectors are compared is the space for advancement, pay, and work-from-home benefits. The latter is one on which governments have been unable to compromise.

However, it would be a mistake to assume that local authorities are simply trying to catch up with the private sector.

There are many areas where municipalities are far ahead of private entities. According to research by the Government Finance Officers Association, entry-level and non-bachelor’s level positions are better paid, there is much greater demographic diversity, and local government finance positions are often a springboard to other areas of government leadership.

To address hiring challenges, municipalities are turning to deep internship and mentoring programs. The city of Quincy is leaning on what it calls a “deep farming program” to bring young people into its finance department. And so far, it’s working.

“A lot of young people don’t think about government when they get out of school, but when they do, they see that they’re part of something,” said Quincy Mayor Justin Koch. “It’s not just going to work and going home. You see that you’re involved in the day-to-day life of the city. Especially if you come from a community and you love it, you feel like you’re contributing to it, that you’re part of something much bigger than yourself.”

What most clearly distinguishes the local public finance sector is its relationship with politics and management. Municipal representatives see this feature as both a challenge and a strength.

Kilgore’s work as an associate professor at The Ohio State University convinced her that many young people feel disconnected from the political system itself.

“It’s become clear to me that students, especially in recent years, are questioning the effectiveness of government. There’s a lot of overt politicization that can really hinder the success of government… It’s hard for students who are very ideologically driven,” she said. “You have to have a lot of determination to serve in government, and you have to be willing to fight sometimes, and to push for what you think is really important.”

Regardless of the challenges, Arizent’s research reveals that the municipal sector experiences the lowest employee turnover. Kilgore attributes this to the meaningful nature of the work.

“It’s a space for people who are really motivated to serve with a little something in their heart. I think the public sector is the best place to fulfill your heart as well as your brain,” she said.