Demography is destiny, as the saying goes. In the federal workforce, the demography has been stable for a long time but it can’t stay that way forever. So, what will be its destiny?
Several recent developments make this a good time to consider that.
First, a word about demographics. Like the national workforce as a whole, the federal workforce has been dominated for many years by the Baby Boom generation, those born 1946-1964, making them now age 56-74. The first third of the next-largest generation, Generation X—born 1965-1980—also is now above 50. Forty-five percent of the federal workforce is that age or higher.
In a personnel system that allows for retirements as soon as age 50 under certain limited conditions, and that allows it after certain numbers of years of service at 55, 60 or 62 (CSRS) or 56, 60 or 62 (FERS), there will inevitably be a steady outflow. Not necessarily a “retirement wave” that has long been predicted–much less the “retirement tsunami” that some had predicted—but a steady outflow.
Those leaving will be replaced, in almost every case, by younger people. Not necessarily just-out-of-college young—just 1 percent of the workforce is under age 25—but, say, under-35 young.
What will that mean? Well, we’re seeing some of the impact already with the launch of the paid parental leave benefit for births, adoptions or foster placements occurring October 1 or later. Since that benefit was first approved late in 2019, there have been very distinct reactions to it in the federal workforce.
From younger employees, who expect they will or might benefit from it, it’s a sense of gratitude. From older employees, who know they almost certainly won’t benefit from it, there’s been a range from indifference to only slightly concealed hostility. The latter can come out as complaints that no such benefit existed when they were that age and that the government should create some benefit of equivalent value geared to them.
That’s not auspicious, given the findings of two recent surveys of federal employees that revealed significant differences in attitudes toward benefits by age.
One was the latest in the occasional series of benefits surveys conducted by OPM (not to be confused with the annual employee viewpoint survey). Some of the differences by age were predictable and possibly natural—for example, older employees feel more confident in their retirement security and are more confident that they understand their benefits.
When asked what new benefits they would like to see, for example, Millennials (born 1981-1996) ranked emergency child/dependent care the highest, with 35 percent picking it first or second out of seven listed possibilities, compared to only 17 percent of Generation X and 12 percent of Baby Boomers.
Similarly, both Millennials (18 percent) and Generation X (15 percent) showed far higher interest in student loan reimbursement programs, compared to only 9 percent of Baby Boomers.
OPM called those “interesting differences . . . Recognizing these differences as well as similarities may be impactful when thinking toward the future recruiting and retention needs of agencies as Baby Boomers retire and new staff are needed. The priorities and needs of each generation of workers are important to consider to ensure that future benefit program offerings are in line with the priorities and needs of the changing workforce.”
Around the same time, the Thrift Savings Plan released one of its own sporadic surveys of participants, also finding differences by age in desired features of that program. Of the 10 possibilities the TSP listed, the most popular among account holders age 50 and up was getting combined statements of federal retirement, Social Security and TSP benefits. That was only in third place among those under 40, however.
The second-most desired feature of the older group was a “tool to draw down TSP throughout retirement,” which was in only seventh place among the younger group.
On the other hand, the most-desired feature for the younger group was a TSP mobile app, which was only the fifth choice of the older group. Younger people also were much more interested in features including artificial intelligence investment tools, personal financial advice even at the cost of a separate fee, and more retirement savings calculator tools.
Those two surveys followed a report by a commission on public service concluding that FERS, into which all new hires have been put since 1984 “is a poor value for employees who serve fewer than 20 years.” That report suggested that younger people—who tend to job-hop more frequently than the older generations—would be better served by a larger employer contribution into the more-portable TSP.
If you’re questioning where this may be leading, ask yourself: If you were an employer planning a benefits package to recruit and retain the employees you’ll need for, say, the next 30 years, would you focus on the desires of 55-year-olds or the desires of 30-year-olds?