The Time Is Now for Workforce Innovation

Over the past two years, I have had the honor and privilege of steering AEI’s Workforce Future’s Initiative in collaboration with colleagues at The Brookings Institution and The Harvard Kennedy School’s Project on Workforce. Together, we’ve convened experts to evaluate evidence of workforce program success, discuss workforce policy, and identify priorities for new research on the future of work.

WFI is now at the stage of producing papers and events on how best to reform and enhance the nation’s workforce development programs. The latest of these papers is from two senior workforce researchers, Kenneth Troske of the University of Kentucky and Peter Mueser of the University of Missouri. Their WFI paper examines the performance of the Workforce Innovation and Opportunity Act (WIOA), the law that funds and governs federal workforce development programs. The authors find that some WIOA programs, like job counseling, can and do benefit participants and the economy, while others have modest returns due to decades of declining investment, growing administrative burdens, and lack of integration across programs.

Mueser and Troske show how inflation-adjusted WIOA funding has dropped 90% from its 1970s peak. Reductions in real funding levels, however, have accompanied by growing program complexity and higher administrative burdens. This leads to a perverse situation in which low funding helps undermine effectiveness while administrative costs consume a larger portion of the program spending creating a downward spiral declining resources and underperformance. This is all happening while the technology-driven need for retraining and reemployment services continues to rise, squeezing nation’s job training and employment support system at both ends.

So, how do we fix this? Troske and Mueser provide a range of potential fixes that would help address deficiencies and inefficiencies in the WIOA system that policymakers in Congress and the Biden Administration should study closely. Their recommendations include:

• Reducing preliminary eligibility paperwork at local workforce development boards to fast-track onboarding
• Expanding the authority of workforce development boards to require co-location of programs like TANF and vocational rehabilitation with American Job Centers and to share administrative costs to promote efficiency and easy of participant use
• Changing divisions between adult and dislocated workers to reflect more accurately the divide between those merely looking to upskill for new employment and those looking for more intensive services, including housing, support for criminal justice-involved workers, and less educated and lower skilled workers.

In my response to Troske and Mueser, I argue these and other changes they recommend while important and necessary, are unlikely to provide the depth of innovation the broader WIOA job and career training system require to make significant performance improvements. In parallel to their reforms, I recommend that governors seek broad flexibility under Section 1115 of the Social Security Act to restructure their workforce systems to make them more responsive to the needs and priorities of the states while reducing the administrative burdens that are consuming WIOA from the inside.

This recommendation would build on the experience of the State of Utah over the past 30 years in utilizing Section 1115 waiver authority to integrate and streamline workforce and human and social services. I argue states should be able to submit reorganization plans (as Utah did) for federal approval along with strategies for evaluating the success of their efforts and, in return, waive out of many of the regulatory and administrative constraints that contribute to rising administrative costs and reduced performance. The U.S. Department of Labor would also coordinate training and technical assistance to bring the best of our knowledge and practice to bear on the challenges participating states are seeking to address. States that that demonstrate success under waivers would be eligible to receive additional federal resources to expand and accelerate progress. Congress could use these successful strategies to help inform additional rounds of WIOA reform that would help raise national program performance.

Implementing smart reforms frees local leaders and frontline workers to exercise creativity on par with the private economy, removing the “results-funding” catch-22 that plagues workforce programs. Updating workforce policies for the 21st century will help bolster American human capital and economic competitiveness while expanding opportunity for workers. With vision and commitment, a more agile, entrepreneurial, and successful workforce system can help unlock the full talents of our people.