Annual survey finds hiring challenges are improving, while employers prioritize talent development, workforce continuity and employees’ financial security

WASHINGTON — MissionSquare Research Institute today released findings from its annual workforce survey examining recruitment, retention, benefits, retirement readiness and workforce planning trends among state and local government employers. Now in its 17th year, the “State and Local Government Workforce Survey Report 2026,” finds that as recruitment pressures and concerns about workforce retirements ease, public employers are increasingly focused on developing talent, retaining employees and strengthening succession planning.

“Many public employers are seeing greater workforce stability and fewer hiring challenges than they experienced just a few years ago, allowing them to look beyond today’s hiring needs and focus on the long-term health of their workforce,” said Gerald Young, senior researcher at MissionSquare Research Institute. “This creates an opportunity for employers to take a more coordinated approach to developing employees, preparing future leaders and supporting retirement readiness.”

Among the report's key findings:

• Recruitment challenges continue to ease. Hiring difficulties across a range of hard-to-fill occupations have declined compared with prior years. The number of occupations identified as difficult to fill by at least half of respondents has fallen considerably since 2022, signaling an improved hiring environment for many public employers.
• Succession planning remains a significant need. While 51% of respondents rank succession planning as a very important workforce issue, 53% report that their organizations lack a formal succession planning process.
• Retirement waves appear to be peaking. Four in 10 respondents said the largest anticipated wave of retirements has already occurred or is not expected to occur, while about the same share (44%) see the largest wave still to come in the next few years. In addition, 53% believe employees are financially prepared for retirement, indicating that many organizations can increasingly focus on developing and retaining the next generation of public service employees.
• Workplace flexibility remains an important part of the employer value proposition. More than half of respondents offer flexible schedules (53%) while half (50%) allow hybrid work, suggesting that flexibility continues to be an important recruitment tool as overall hiring pressures ease.
• Benefits remain a competitive advantage. Ninety-two percent of respondents believe their benefits are competitive with those available in the broader labor market, underscoring the important role benefits play in attracting and retaining employees.

“This year’s survey findings underscore that workforce stability, retirement preparedness and succession planning are closely connected,” Young said. “Together, they play a critical role in helping organizations retain talent, prepare future leaders and support the financial security of employees and their families. Employers that invest in these areas will be better positioned to meet tomorrow’s workforce needs.”

As public employers plan for the next generation of workers, the survey findings reinforce the value of helping employees build strong financial foundations throughout their careers. Financial wellness programs, retirement education and employee development opportunities can support retirement readiness while helping employers attract talent as they look to the next generation of the workforce.

The survey was conducted from Feb. 9 to March 20, 2026, and includes responses from 606 human resources managers representing state and local governments across the United States. The full report, produced annually since 2009 in partnership with the National Association of State Personnel Executives and the Public Sector HR Association, is available on the MissionSquare Research Institute website.

About MissionSquare Research Institute

MissionSquare Research Institute identifies and advances best practices in retirement planning, financial wellness, and workforce development strategies to help meet the evolving needs of the public and private sector workforce. Through rigorous, data-driven research, in collaboration with industry-leading thought leaders and academics, the Institute delivers actionable insights and innovative strategies that support MissionSquare’s broader mission to help all individuals and their families build financial security.

About MissionSquare

Since its founding in 1972, MissionSquare has remained committed to delivering on its mission to help all individuals and their families build financial security. As a mission-based financial services company, we manage and administer over $73.6 billion in assets.* Our commitment to delivering outstanding service, effortless technology, and quality investments sets us apart. For more information, visit www.missionsquare.com.

*As of June 30, 2026. Includes 457(b) plans, 401(a) plans, 403(b) plans, Retirement Health Savings plans, Employer Investment Program plans, affiliated IRAs, and investment-only assets.