Low unemployment, high salaries and economic headwinds are making it difficult for local governments to compete with the private sector.
This is the first story in a series about the tech worker shortage facing local governments.
Rising salaries, a persistent talent shortage and changing expectations among workers are making it difficult for local governments to hire the tech workers they need, according to researchers and city officials.
It’s “a major pain point,” said Cleveland Mayor Justin Bibb. The city is struggling to compete with the private sector to hire and retain tech workers, Bibb said. Cleveland wants to handle more technology functions like cybersecurity in house, but it has outsourced several functions because of the talent shortage, he said.
“The labor market is very competitive right now, particularly in the tech sector,” Bibb said. “We’re having a hard time retaining talent in our technology division because our private-sector peers are offering higher wages, the ability to work remotely and a lot more flexibility.”
With the unemployment rate for tech workers hovering around 2% nationwide, many cities are dealing with an acute talent shortage, according to a survey by the MissionSquare Research Institute.
While some local governments can pay tech workers compensation that’s competitive with the private sector, most cannot, said Farhad Omeyr, program director of research and data at the National League of Cities’ Center for City Solutions.
Increasing home prices — along with the associated property tax revenue — and an influx of federal funding stabilized city budgets during the depths of the pandemic. But higher inflation, a potential recession and a looming decline in federal funding could threaten the financial footing of many local governments, he said. As a result, cities are hesitant to raise wages significantly, Omeyr said.
“Inflation is hindering governments’ ability to hire more,” he said. Given all the economic headwinds facing local governments, their tech workforce issues probably won’t end anytime soon, he added.
Meanwhile, wages for tech workers are growing, according to data from the Bureau of Labor Statistics and Dice, a career website for engineering and IT professionals.
Instead of higher salaries, many local and state officials hope to attract skilled tech workers by offering them a sense of social purpose, job security and generous retirement benefits, said Deloitte’s Srini Subramanian, principal of its risk and financial advisory practice for the state, local and higher education sector. But, he said, while younger people may like the civil service mission, they might not value long-term security as much as older workers.
“Job security and pension benefits are not something that are going to resonate with the next generation of workers,” Subramanian said. He added that cities might need to turn to other approaches, such as more flexible work-from-home policies, to hire the tech workers they need.
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Users can experience the 800-square-mile digital twin in downtown Orlando or via virtual reality as the Orlando Economic Partnership seeks to market its potential to inform decisions around infrastructure and business development.
Residents in 37 states will vote on 132 statewide ballot measures on Nov. 8, according to Ballotpedia. Read our coverage on measures addressing top smart city concerns.
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