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Many Public Service Employees Struggle to Pay Bills and Worry About Retirement

February 2, 2023

A new report from MissionSquare Research Institute provides a benchmark analysis of the financial health of the state and local workforce. The analysis indicates that while many public service employees face financial struggles, state and local employers are well-positioned to strengthen the financial security of the public workforce via key benefit offerings. The report comes as state and local governments face challenges in attracting and retaining public service employees, and against the backdrop of continued economic uncertainty and related strains on family budgets.

The new research, Examining the Financial Wellbeing of the U.S. Public Service Workforce, was prepared by Christian E. Weller, PhD, Professor and Chair, Department of Public Policy and Public Affairs, McCormack Graduate School at the University of Massachusetts Boston, and researcher Beth Almeida.

Read the research.

Register for a webinar on Wednesday, February 15, 2023, at 2:00 PM ET with a review of the research.

This analysis examines the financial wellbeing, benefits, and savings of public employees based on a range of data sets to inform potential changes to those benefits or compensation structures. The report also uses a variety of data research methodologies to highlight proven pathways for building savings and reducing debt in the public sector.

"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, PhD, 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."

"It's always going to be difficult for public employers to compete on salary, so they have to take full advantage of their strong benefit offerings to build financial security for the public service workforce," said Lynne Ford, CEO and President of MissionSquare Retirement. "Traditional benefits like healthcare, pensions and supplemental retirement savings plans lay a strong long-horizon financial foundation for workers. Meanwhile, additional benefits like student loan repayment and childcare assistance can alleviate some of the day-to-day financial pressures on public employees," Ford said.

"Financial insecurity is a growing problem for most Americans, and the problem can be acute for public service workers," Weller said. "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."

The research key findings are as follows:

  • Substantial shares of public employees face financial difficulties. For example, close to one-fifth of all public employees and close to one-in- six employees in public education reported skipping health care because they could not afford it.
  • Some public service employee households cannot pay all of their bills. From 2017 through 2019, 14% of all households employed in the public sector indicated that they could not pay all their bills, as did 11.3% of those employed in public education.
  • Liquid savings among public service employees often is not enough for a substantial emergency. Nearly one in three public employee households would have trouble coming up with $400 in an emergency. Emergency savings were less common among single women, Black, and Hispanic public employees.
  • Both public sector employers and employees have concerns about the retirement security of the state and local workforce. Only 41% of public sector human resources professionals feel their employees are financially prepared for retirement. Some 81% of public employees worry whether they will have enough money to last them through retirement.
  • Access to benefits helps strengthen the financial security of public sector employee households. This includes benefits like retirement plans, health and life insurance, health and education savings accounts, and paid time off. That financial security is also bolstered by greater tenure and job security in the public sector which enables more predictable budgeting for short-term and long-term household expenses.
  • Generally speaking, public employees save more than private sector employees. Public employees had higher combined employer and employee contribution rates to defined contribution plans (401(k) or 403(b) type plans) than private sector employees — 15.7% compared to 13%.

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 not-for-profit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. More information and access to research and publications are available at

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