House Moves Forward on Overdue Update to the Federal Workforce System

New WIOA legislation, passed in committee this week, would modernize parts of the training system but falls short of the overhaul many experts feel is needed.

The U.S. House Education and Workforce Committee this week advanced legislation to update the Workforce Innovation and Opportunity Act—the underpinning of the federal workforce system that hasn’t been renewed in almost a decade.

The bipartisan bill would require states to spend more of their WIOA funds—no less than 50% in each local area—on training, rather than administration or other services. It calls for more focus on incumbent worker training, the use of real-time labor market data, and skills-based hiring as a way to promote economic mobility.

It also aims to streamline the lists of eligible-training providers by putting a greater emphasis on employment outcomes. And, in some cases, the feds would give states more flexibility in how they use WIOA funds. 

The big idea: Experts and cross-sector coalitions generally hailed the legislation as a move in the right direction, but one that still falls short of the fundamental overhaul that many believe the nation’s workforce programs need.

“I welcome this step. However, a more structural redesign of our public workforce system is necessary,” says Mardy Leathers, a labor policy expert and former director of the Missouri Office of Workforce Development. “Simply softening some of the rough corners fails to meet the needs of a fast-changing, modern economy.”

The Challenge

A central criticism is that the workforce training system is vastly underfunded for the work it aims to achieve. The new WIOA legislation would authorize about $3.3B in annual spending, only a portion of which would go to training. That pales in comparison to expenditures on the traditional higher education system. 

More than $112B goes to the federal financial aid system each year, with additional spending possible on a new short-term Pell program. Some critics of the short-term Pell proposal, which also cleared the House committee this week, have argued that money should go through an improved WIOA system instead. 

Michelle Van Noy, director of the Education and Employment Research Center at Rutgers University, doesn’t have a stance on that but does think the focus should be on synergies, rather than duplication. “We should look at these two bills in tandem,” she says.

Beyond funding, the WIOA system is balkanized with more than 7K eligible providers competing for trainees across 700 occupational fields. The average provider enrolls just three people per year, Harvard University’s Project on Workforce found.

The politics: The new legislation would help to streamline the eligible-training provider lists but is far from a wholesale makeover of the system. In the committee vote on Tuesday, members made it clear that they believe the bill leaves work to be done, but that it is the best hope for passing anything substantive in a fractious Congress.

Rep. Virginia Foxx, the Republican committee chair, and Rep. Bobby Scott, the Democratic ranking member, repeatedly emphasized the bipartisan nature of the bill and the tough compromises involved. They also highlighted the importance of doing something.

“Some of the committee’s most important work sits squarely at the intersection of education and workforce, not entirely dedicated to one or another,” Foxx said before the vote. 

The committee approved the legislation with only one “no” vote, from Rep. Bob Good, a Republican from Virginia, who wanted to see the federal Job Corps program eliminated, among other things. Rep. Ilhan Omar, a Democrat from Minnesota, voted in favor of the bill but expressed concern that it didn’t require more investment in wraparound supports for working learners.

“Housing, childcare, healthcare, and broadband access are all part of workforce development and it is time that we start treating them as such,” she said before the vote.

It was an oversight, Omar said, that she hoped would be addressed in negotiations with the Senate. The legislation will first have to go to the full House for a vote, which starts its holiday break at the end of this week.

The Details

The new WIOA bill would largely preserve the voucher system for training, requiring that local areas use at least 50% of their funds for individual training accounts for workers. A growing chorus of researchers has begun questioning the voucher approach—as it results in a relatively small number of dollars being spread across a large number of programs.

Annelies Goger, a fellow at the Brookings Institution, questions whether the requirement for more spending on training will provide much benefit if it goes to the same kinds of programs it always has. “WIOA-funded training is very short in duration—on average, six weeks—and it’s often a one-off investment,” she says. “Why would we expect it to have a dramatic impact?”

Goger would like to see Congress make bigger structural changes to provide funding for longer-term, work-based training programs or to invest in universal career counseling.

(Undefined) Data and Outcomes:

For vouchers to work, says Kerry McKittrick, co-director of the Harvard Project on Workforce, states also need to collect better outcomes data so people have a better idea of which programs align with their goals and generally pay off.

“Our research showed that nearly every state needs to improve data collection and transparency,” she says.

The WIOA legislation moves in the right direction, she says, but it’s just a start. The bill would streamline the eligible training provider lists, with a great focus on regional hiring demands and employment outcomes. And newer programs would have to go through a probationary period with much greater outcomes tracking.

The legislation also would enhance the Workforce Data Quality Initiative and require states to use real-time labor market data in decision making. But, experts say, the bill leaves what it means by employment outcomes and real-time data largely up to interpretation.

“It’s positive to see real-time labor-market information called out, but we need clarity about the definition,” says Shalin Jyotishi, a senior advisor for education, labor, and the future of work at New America. “We also need to understand where real-time LMI has its limits.”

Job postings form the foundation of much of that data, and they aren’t always clearly written. They also tend to skew toward large companies—with many small and medium-sized companies not posting on online job boards, Jyotishi says. And LinkedIn, which provides insights on workers and career pathways for real-time LMI systems, is much more heavily used by office workers and college-educated professionals than frontline workers without degrees.

New America is working with a group of 15 community colleges to get a better understanding of the limits and potential of such data, including for learners supported by WIOA funds. Van Noy’s recent research found that community colleges lead the way among higher education in using labor market data, but that the definitions and uses can vary widely.

“The devil will be in the details in how that gets implemented,” she says. “That’s a place where we’ll need to be really thoughtful.”

High-Need Industries: 

The legislation would allow states to carve out up to 10% of their funding and direct it to training and employment services in priority industries, so long as they match the federal dollars with state ones.

  • These so-called “critical industry skills funds” could be used to provide reimbursements to employers, cross-sector partnerships, and other intermediaries for upskilling workers. Reimbursements would only be made if workers complete their program and are employed in the target industry.

McKittrick says the carve out will allow states to put more money into sectoral-training programs that have a demonstrated track record of helping people advance economically. 

“It enables states to invest in high-growth sector strategies, while at the same time empowering individuals with choice, which has long been core to the WIOA system,” she says.

Modernizing Systems:

Under a new demonstration authority, some states and local workforce boards also would be allowed to receive their funds as a five-year block grant, which could allow them to experiment more and invest in modernizing systems.

Leathers says this longer timeline would allow states and local areas to bring more employers into the fold—by designing workforce programs that are longer-term and require sustained investments.

“Often it takes one year to design a program, another year to launch the program and then the performance period is limited to a single year at best,” he says. “This makes it a challenge to convince employers to make investments or to partner in workforce training programs that may go away as soon as they are launched.”

But, Leathers says, the flexibility comes with the risk that states won’t innovate and will simply operate unchecked for a longer period of time. Tying the demonstration authority to the work that is already being done through federally-backed workforce hubs would help guard against that.

“There is both a benefit and a risk with this,” he says. “The goal must be to help more job seekers gain employment and keep employed for this to be effective.”

Incumbent Workers:

The new WIOA legislation in some ways catches up to states and other government programs in focusing not just on the unemployed, but also on workers who have jobs, but not good ones.

It would raise the cap, from 20% to 30%, on the proportion of funds that local workforce boards can use to provide upskilling to incumbent workers. And it would allow areas with particularly low unemployment rates to go even higher.

It’s a move, experts say, that recognizes the realities of today’s labor market—with many states at or near all-time low unemployment but with robotics, AI, and other forms of automation poised to replace or remake many jobs.

We can’t afford to wait until people are displaced to help them prepare for future employment,” McKittrick says. “This new provision will help low-wage workers who are in positions at high risk of displacement to proactively adapt to inevitable industry shifts.”

Leathers also welcomed the change. He pushed for more of a focus on underemployed and vulnerable workers when he served as director of workforce development in Missouri. But, he expressed concern that the increased emphasis on incumbent workers doesn’t come with any new funding.

“The challenge here is that while lifting the cap on funds for incumbent training is helpful, it will require tradeoffs,” he says.

Also of Note:

The new WIOA bill also has noteworthy provisions on:

  • Skills-based hiring. Would allow states to use WIOA funds to support employers in implementing skills-based hiring systems and practices.
  • Competency-based assessments. Would require states to coordinate with industry and education institutions to identify or develop competency-based assessments that could be used for awarding college credit and creating skills-based learning and employment records.
  • Community college grants. Codifies and renames a grant program that supports collaboration between industry and two-year colleges and is currently funded at $65M over four years.

Paul Fain contributed reporting to this story.

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