COMMENTARY | As Covid-19 puts increased financial strain on the state and local government workforce, employers must find innovative approaches to shore up workers’ financial security. Otherwise, vital services and programs delivered to communities throughout the nation could be at risk.

By Rivka Liss-Levison, PhD, SLGE Director of Research

A recent poll of state and local government workers shows that 56% believe they and their family have already suffered financially because of the Covid-19 pandemic. And nearly half (47%) expect the financial impact to be worse over the next year.

Interestingly, this anxiety about money existed well before the pandemic triggered devastating economic fallout. A 2019 survey revealed that 54% of public sector employees worry about their finances while at work. These worries don’t end when a person enters the workplace (either in-person or virtually) and carry consequences for work productivity. When employees don’t feel they are in control of their finances, they are more distracted at work and cannot focus on their jobs. And now, the stakes couldn’t be higher—for all of us—that state and local government workers are effective at their jobs.

About 18.7 million individuals are employed by state and local governments, and each plays a role in the everyday lives of all Americans. They are the teachers who educate our children, sanitation workers who keep our public spaces clean, emergency responders who save lives during an accident or a disaster and of course public health officials trying to stop the spread of Covid-19.  

Since the onslaught of the pandemic, the visibility of public workers has been amplified, as has the recognition of their contributions to society. But just as the need for a skilled and sufficiently staffed state and local government workforce is greatest, the size of the workforce has contracted substantially. State and local governments have shed nearly 1.2 million jobs since February, creating even further stress on an already stressed public workforce.

These layoffs and furloughs aren’t surprising, given the significant budget shortfalls that state and local governments are facing. Moody’s Analytics is projecting $500 billion in spending cuts and/or tax increases by state and local governments through fiscal year 2022. And a recent survey from the National League of Cities and the U.S. Conference of Mayors found that 88% of cities expect a revenue shortfall this year as a result of Covid-19. That same survey found that for cities with populations of 50,000 to 500,000, 55% expect that furloughing employees will be necessary, and 38% expect layoffs. Making matters worse, the cities with populations under 500,000 weren’t eligible for direct funding under Congress’s $150 billion CARES Act relief funds.

When this social contract is compromised through substantial reductions in compensation or benefits, state and local government employees are likely to leave. A recent survey of K-12 public school employees found that employees would definitely or probably leave their job if significant cuts were made to their salary (75%), their defined benefit retirement plan (60%) or their health insurance (58%). Whether or not these employees actually leave, the effects that these cuts can have on morale and, in turn, productivity, can be just as harmful.

Take teachers for example. Research indicates that low morale among teachers can lead to job withdrawal (e.g., increases in absenteeism, lower engagement with and expectations of students), negatively affect student achievement, impact the ability to recruit and retain new teachers, and place additional financial burdens on schools and the surrounding community. These negative effects can be especially pronounced in schools with academically and socioeconomically disadvantaged students, further exacerbating already existing inequalities.

So, what can state and local government employers do?

First, improve the financial literacy, education and overall financial wellness of their workforce. While only 26% of state and local governments offer a financial literacy or education program, 68% of their employees would be likely to participate if offered one. The same survey finds that 65% of state and local government workers believe that it’s important for their employer to offer a financial literacy program, and 51% agree that improving the financial literacy of employees should be a priority of their employer.

Next, state and local governments can utilize innovative cost-containment strategies to help meet their financial obligations. One strategy is staff-sharing arrangements, which allows public sector employers to share personnel who hold essential skill sets across one or more jurisdictions, either on a one-time or ongoing basis. When done well, sharing personnel, positions or services can address existing staff shortages, help jurisdictions make the most of available resources, enhance flexibility, improve communication and coordination and even add capacity for more or improved services.

While state and local government employers are undoubtedly facing extraordinary challenges, there is reason to remain hopeful. When asked their feelings about working in the public sector during the pandemic, 61% of state and local government workers reported that they value serving their community during this difficult time, and 48% believe that the pandemic has made the public more aware of the importance of their work.

On a daily basis, public sector workers show a passion and dedication to providing needed programs and services to the residents of their communities. As the nation strives to contain a global pandemic, it’s time to give back to the public sector and help ensure that they have the financial security that they need to survive and thrive.


This article was originally published in Route Fifty on September 3, 2020.