Short on Workers, State and Local Governments Look to Retirees

State and local governments are turning to public sector retirees to help fill the vacancies left by an exodus of workers.

Lawmakers in several states are weighing changes to work rules intended to bring retirees back into the government workforce. 

Tennessee passed a bill last month that would let retired government employees return to work as teachers or school bus drivers–two areas where worker shortages are especially acute–for up to a year, without losing their taxpayer-funded benefits. 

New York Gov. Kathy Hochul made a similar pitch to fill hundreds of open school bus jobs.

Meanwhile, legislators in Michigan are weighing a proposal allowing retired correctional officers to return to work without jeopardizing their retirement allowance, a move designed to address a staffing crisis caused by more than 800 open positions across the state’s prison system.

And Massachusetts last year revised long-standing rules on how many hours retired government employees can accrue in public sector jobs and still maintain their pensions.

“There’s a shortage of skilled workers and now, retired public employees are able to fill that void,’’ said Frank Valeri, president of the Massachusetts Retired State, County and Municipal Employees Association, which has about 52,000 members.

State and local governments across the nation are facing staffing shortages, with burnout and stress from the Covid-19 pandemic, along with a desire for better pay, erode the public sector workforce. Some states are also seeing a “gray tsunami” of retirements as members of a workforce that trends older reach the end of their careers.

The stream of departures from state and local government began about a decade ago, but the pandemic sharply accelerated the trend, according to a report issued by the Rockefeller Institute of Government in January. 

Annual “quit rates” in the public sector workforce ticked up from 6.1% in 2010 to 9.7% in 2016, but then seemed to stabilize, the report found. But in 2020, the rate of government workers leaving their jobs jumped to 11.7%. 

The retirement wave is unlikely to abate: 52% of public sector workers said they are considering leaving their jobs, with 33% saying that working through the Covid crisis had led them to consider retirement, according to an online survey of 1,100 government workers conducted last year by MissionSquare Research Institute.

“State and local governments are truly struggling in retaining employees,’’ said Donald F. Kettl, professor emeritus and former dean of the School of Public Policy at the University of Maryland. “The retirement boom has hit state and local government agencies especially hard.’’ 

Some government officials have taken steps to address staff shortages, including raising pay, providing hiring bonuses, and allowing employees to work remotely and improving work-life balance.

Rehiring retired workers won’t completely eliminate the shortages, but it could help, Kettl said. “The talent pool of retired employees is an especially attractive target for filling the gap,’’ he said in an email. “After all, these employees have already demonstrated their capacity and training for the work, and bringing them back is the easiest way to staff up in tough times.’’

Changing the Rules to Fill Vacancies

But in many states, rehiring public sector retirees requires legislation to change the rules regarding how many hours they can work without jeopardizing their government pensions.

These rules, which have often been in place for decades, are designed to prevent retired employees from “double dipping”: collecting both a pension and a paycheck. 

“The main reason why so many states have rules restricting re-employment of retired workers is to prevent double -dipping,’’ Kettl said. “The concern has long been the chance that an employee might work long enough to be eligible for a pension, retire and begin collecting the money, and then turn around, return to work, and begin collecting a salary again, often at the top of the salary scale. That would bring in two checks a month—the pension and the salary,.” Kettl said.

To prevent that, many states have adopted a cooling-off period, during which the retired workers cannot take a government job. Others place limits on the number of days retirees can work or cap the amount of money they can earn.

Last fall, lawmakers in Massachusetts approved a bill that increases the number of hours retired government workers can accrue, from 960 to 1,200 per year. 

Gov. Charlie Baker initially vetoed the proposal. “I support providing municipalities and state agencies with increased flexibility to make appropriate staffing decisions,’’ the Republican governor wrote in his veto message to lawmakers.  “However, an increase of 240 more hours per year is a significant policy change and moves the Commonwealth and its municipalities closer to a place where employees continue to work near full-time while collecting a pension, without any corresponding changes to improve the current practice.”

Lawmakers ultimately overrode Baker’s veto.

Municipal leaders hailed the measure, saying it would help them find experienced workers for positions they have struggled to fill. 

The association representing retired government workers in Massachusetts also supports the change. 

Frank Valeri, the group’s leader, notes that retired public sector retirees filled key roles during the pandemic, when the work rules limiting their hours were temporarily suspended. Retirees came back to staff the Department of Unemployment Assistance, which was dealing with an unprecedented number of unemployment claims, and helped overwhelmed local public health agencies navigate the crisis, among other roles. 

For some retirees, returning to work provides an important income boost, especially at a time when inflation is eating away at fixed pension benefits.

“I think there’s a real willingness on the part of many retirees to share their expertise with government and try to help,’’ Valeri said. “At the same time, it doesn’t hurt their ability to try and put gas in the tank and put food on the table.”

He dismissed concerns about double -dipping as a product of public perception. “There’s the [image] of the double dipper who retires after 30 years and then goes back and grabs another taxpayer-funded job and milks the system. But there’s no extra cost to the retirement system and most retirees are very proud of their service and the training, information and knowledge they’ve gotten throughout their careers.

“To be able to come back and help is a real positive,’’ Valeri added.