State and local governments are hiring again, but they're having difficulty finding -- and retaining -- the right people. Do governments have a people problem?

In the Center for State and Local Government Excellence's latest annual workforce survey, government human-resources managers cite staff development, succession planning, employee morale and retaining staff for core services as their top issues. Those issues were rated as greater concerns than compensation and health-care and retirement-plan costs. What's going on?

Some of the problem is the mismatch between the skills of people looking for work and the jobs that need filling. Whether governments are looking for finance experts, managers, engineers or public-health professionals, they face stiff competition from the private sector.

Add to that the fact that more local and state workers are heading for the exits as they become eligible for retirement. While many stayed in their jobs as the economy slowly recovered from the recession, they are now retiring in large numbers. The center's survey finds that 22 percent of retirement-eligible employees accelerated their retirement date in 2013.

Recruitment challenges have been a shock to communities that see themselves as highly desirable places to live and work. As one North Carolina local-government manager told me, "It takes a lot of time to fill senior positions -- sometimes we have to go through the recruitment process three times." She speculated that the housing market and two-career family dynamics were making it more difficult for people to move.

A legacy of the recession is that more governments are hiring contract or temporary employees to fill positions (one third reported doing so in 2013, according to the center's report). The rise of this independent workforce is significant for both the private and public sectors. Will these workers be able to accumulate adequate retirement savings? If not, they may have to turn to government for social services when they do retire.

One reason that governments may be relying more on temporary or contract workers is to manage their overall compensation costs. Although employees in many state and local governments saw no pay increases for three or more years in the wake of the recession, the costs of health insurance and defined-benefit pensions have continued to grow. In 2004, those benefits made up 16 percent of employer costs for public workers' compensation; by 2013, they made up 20 percent of employer costs.

These trends create new management challenges. In many places, new government hires have less-generous benefits than the longer-term employees with whom they work. Generational differences may create workplace tensions or lead newer workers to press for more significant wage increases in the future.

But while workforce challenges are a hot topic in human-resources and other management circles, they are not on the radar screen for most elected officials. Cost containment for health insurance and pension benefits continues to dominate the agenda for many elected leaders.

Yet demographics are destiny, and the local and state government workforce should be getting more attention. The average age of a state or local worker is 44, compared with 39 for a private-sector worker. Many governments have reduced or eliminated internships and entry-level positions in the last five years, so the pipeline of younger workers is small.

On top of all that, there is evidence that government has become a less-attractive career option for college students. In its State of the Internship Report last month, InternMatch found that most college students would rather work for the private sector than for government.

Government has many advantages over the private sector, but must sell itself effectively and adapt to current worker preferences. Many young people want to work for an organization where they can make a difference in the world. If governments can make a better case for the rewards of a public-service career -- and write better job ads -- they should be able to attract more of these millennials.

Where to begin? A good place to start is by assessing who is working for the organization today. A workforce assessment not only should examine the age of workers and their retirement eligibility but also document skill sets and talent gaps.

Investing in employees by helping them develop new skills not only benefits governments but also shows workers that they are valued. Offering cross-cutting assignments appeals to younger workers who are eager to gain experience and a bigger picture of organizational challenges. Providing flexible work practices appeals to workers at all ages and is another excellent retention strategy.

Governments often undertake huge, important projects and are in a position to offer major growth opportunities. They should use these as selling points for hard-to-fill jobs, whether in information technology, engineering, health care or management. The message to the workers that government needs should be: "Wanted: Smart people with a passion to fix things so our society is a great place to live."