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South Dakota public sector employers face hiring crunch as record numbers retire

The top actuary for South Dakota's public sector retirement system noted the pandemic may exacerbate generational trend, as baby boomers reach retirement age of 65.

FSA South Dakota capitol

PIERRE, S.D. — South Dakota's state employees will retire at record levels over the next half-a-decade, making it "tougher and tougher" to rehire the needed teachers, public safety, and county employees, according to a senior actuary.

A joint meeting of the South Dakota Retirement System Board of Trustees and the Legislature's Retirement Laws committee heard the annual state workforce demographics report on Thursday, Dec. 2, with officials confirming that more public employees hung up their hats in South Dakota in 2021 than ever before.

Officials add the departures will only increase as baby boomers exit the labor force.

"The next five years we're going to have five years of record number retirements," said Doug Fiddler, the board's senior actuary.

The pandemic has affected, albeit not caused, the underlying labor force departures, Fiddler said. Baby boomers -- those born between 1946 and 1964 -- have long constituted the largest share of the state's public sector workforce and are increasingly hitting retirement age.

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But their numbers are shrinking.

In 2021, 37% of the state's workforce comprised boomers, down from 44% in 2007.

As this generation retires, analysts said, there will be a need to hire more of the workforce -- from clerks at county courthouses to college professors and school bus drivers. Currently, SDRS counts over 94,000 employees across 500 employers, from school districts to town and county governments to the Board of Regents.

"This is information we should be sharing with our employer groups all the time," said James John, a captain with the Rapid City Police Department and chair of the board . "It's going to get tougher and tougher to find these employees, and we've got some significant challenges ahead of us."

Thursday's report only confirmed a trend the board has known about for years and should not be a surprise, said Eric Ollila, the executive director of the South Dakota State Employees Organization.

"What is surprising is that all these years later, after receiving the same info year after year, there is still no plan to help it," Ollila told Forum News Service on Friday, Dec. 3. "It's like a three-legged stool with just one leg left, and that one leg is the retirement plan."

Ollila called on lawmakers and employers to address what he characterized as "stagnant wage growth" to entice new employees.

Fiddler also on Thursday noted a trend among public sector workers to retire at older ages -- partly attributed to rising cost of healthcare and the desire to hit Medicare eligibility at 65. But he said the ongoing pandemic will also only encourage some workers to exit.

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"As this goes on, we might see some people just getting exhausted and saying, 'I'm done,'" said Fiddler on Thursday.

This year, some national analysts saw a reversal of a long-term trend in the U.S. of people working later into life -- many faulting the COVID-19 pandemic.

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