Fund What Pays

States can get better results from the workforce system with performance-based funding and contracting, two briefs argue. Also, new funding for six federal Tech Hubs and 12 NSF regional engines, an essay on why workforce training needs to be one long interview, and a take on states’ strides in collecting noncredit data and the work that remains. (Subscribe here.)

Performance-Based Funding for WIOA

The U.S. spends far less on workforce training than other wealthy countries. And results from those public investments tend to be weak. For example, the median participant in the primary federal workforce system exits that training into jobs that pay about 70% of a living wage.

That figure comes from a new policy brief that seeks to bring performance-based funding to federal job training. The brief from Arnold Ventures, a foundation focused on evidence-based policy solutions, recommends that states apply a wage standard to the Workforce Innovation and Opportunity Act, with governors tapping reserve WIOA funds to direct participants to training providers with good outcomes.

“Living-wage employment and sustained growth in earnings are the standards against which every publicly funded workforce intervention should be measured,” write Jeremy Avins, vice president of career pathways for Arnold Ventures and a former official at the U.S. Department of Energy, and Jessica Valand, a consultant who previously was Colorado’s director of workforce development.

In a similar vein, two think tanks are calling for performance-based contracting under WIOA. The new policy brief from America Forward and Results for America says legislative changes are needed to clear bureaucratic barriers in publicly funded job training and to drive flexibility and effectiveness, with real benefits for workers.

“This means rewarding workforce training providers for achieving meaningful outcomes, such as trainees getting jobs after completing a training program and increasing their earnings over time,” argues the brief, which Arnold helped fund.

Performance-based funding and wage thresholds are becoming more common at both the state and federal levels. For example, Valand and Avins cite the inclusion of a value-added earnings standard in the Workforce Pell Grant program, which just went live and is pushing states to create the standards and data infrastructure to support this approach.

Governors can push federal job training in this direction, too, argue Avins and Valand.

“Participants should be able to see which programs deliver real earnings gains, while states set a floor for what public dollars will support,” they tell me.

The reforms they recommend would move WIOA away from leaning so heavily on the voucher-style approach, while also strengthening the voucher model. The current system is built on individual training accounts with an emphasis on consumer choice. But it too often fails to include user-friendly information about program costs and performance.

Avins and Valand say the goal is to help job-training participants make meaningful choices about which path to pursue. That’s accountability reform with bipartisan appeal.

“Both the America First Policy Institute and the Century Foundation have argued that the current system does too little to measure whether training leads to meaningful outcomes,” they say.

Reserve Funding: States can lead the way in improving WIOA, the brief argues, through policy actions they can pursue without new federal legislation or appropriations.

One key lever is WIOA reserve money, which governors can tap for statewide activities. That category of funding was roughly $434M during the 2025 program year, according to the brief, which is around $4-6M for a typical midsize state. While that’s a modest sum, Avins and Valand say the money can drive serious shifts.

Braden Goetz agrees, in part because of widespread dissatisfaction with the status quo under WIOA. A senior policy adviser at New America who worked at the U.S. Department of Education for 26 years, Goetz says the moment requires stronger state leadership to take workforce development in new directions.

“Governors can show us some better alternatives,” he says. “This is one way how.”

Governors’ reserve funds face many competing demands, says Goetz, because the money can be used flexibly across an underfunded system. The brief cites research showing that most states use their reserves to plug funding holes instead of for more strategic uses.

“Focusing the dollars on programs that prepare people for good jobs with living wages will deliver greater value to the state than spreading the funds thinly across a grab bag of investments,” Goetz says.

Per Scholas is an example of the sort of sectoral training provider that could receive governors’ reserve funds. The nonprofit tech-training organization’s model has a proven track record. But like most sectoral training programs, its costs (roughly $8K per participant) top that of standard voucher-based training under WIOA. So do results for Per Scholas, however, including strong ROI and outcomes evidence.

States could use reserve investments to help build the evidence, procurement experience, and accountability infrastructure needed to steer much larger workforce funding streams toward providers that consistently deliver economic mobility, say Valand and Avins. The same goes for the living-wage and earnings-growth standards. And the Trump administration’s push on WIOA waivers, including to expand pay-for-performance contracting, strengthens the opportunity.

Arnold’s proposals are a good start in driving WIOA money to better economic mobility for workers, says Melissa Johnson, chief of policy and state strategies for the National Skills Coalition, which has backed similar reforms. “State leaders can and should do all they can to better the lives of their residents right now,” she says.

Yet Johnson says more funding is needed to move the needle. For example, if Colorado were to spend $4M in reserve funds on training that costs $8K per participant, that money would reach just 500 of the 236K households in the state that fall under the poverty line.

The Kicker: “Our workforce systems are in need of huge, transformational investment to produce economic mobility for people at scale,” says Johnson.

Place-Based Industrial Policy

The U.S. Department of Commerce this week announced that it will invest $169M across six federal Tech Hubs. The Biden-era program, which seeks to create centers of innovation and prosperity in overlooked regions, now includes 18 hubs that will receive substantial funding. Another 13 have been designated as hubs but so far have only received planning grants.

The Trump administration’s continued backing of Tech Hubs is a signal of bipartisan support for the program’s unusual blend of pursuing both economic development and mobility for workers.

The new funding has a backstory with plenty of drama, however. Commerce Secretary Howard Lutnick last year nixed funding for six Tech Hubs, clawing back awards ranging from $22M to $48M. He claimed the Biden administration’s process for naming those recipients was “rushed, opaque, and unfair.” Former Commerce officials strongly denied that charge, with one calling it political grandstanding. 

Industries covered by the new announcement include advanced manufacturing across pharmaceuticals, quantum, critical minerals, and nuclear energy. 

Some blue states were included in the new awards. For example, Illinois is at the center of the Bloch Quantum Tech Hub, which includes Wisconsin and Indiana, and will receive $30M through the program. The state is investing $500M in the Illinois Quantum and Microelectronics Park, which is a member site of that hub.

Congress authorized $10B in funding for Tech Hubs. Yet the Commerce Department’s Economic Development Administration had authorized just 6% of that amount before the new awards were announced, according to Jason Rittenberg, a fellow at New America.

It’s unclear if the 13 unfunded hubs could receive future awards. That includes a consortium that has been trying to develop an aerospace materials manufacturing hub in Spokane, Wash. The Tech Hub’s $48M award was one of the six withdrawn last year by the Commerce Department.

New Regional Engines: The U.S. National Science Foundation last week announced awards for 12 new NSF Regional Innovation Engines across 20 states.

The program aims to advance critical technologies like semiconductors, AI, advanced wireless, and biotechnology. With 10 initial engines and funding from the CHIPS and Science Act, the regional engines also are designed to spur high-tech business clusters and workforces outside of superstar cities. Each partnership will receive an initial award of $15M over two years, with the potential to eventually receive up to $160M from NSF during the next decade. 

The second cohort includes an engine focused on grid modernization in the Carolinas, for example, which is led by the University of North Carolina at Charlotte. The project features new training programs and career pathways.

Open Tabs

Skilled Trades
BlackRock, Carhartt, Ford, and Google have partnered to create the Alliance for America’s Skilled Trades, which seeks to multiply the impact of previous independent commitments from the companies to back skilled workforce-training initiatives in 30 states. The alliance seeks a wide range of partners. It will focus on career exposure and scaling evidence-based approaches to workforce development, including apprenticeships and pre-apprenticeships.

Credentials of Value
Legislative reforms in Texas to connect education to careers have placed students on an improved track to good jobs and good wages, finds a report from Texas 2036. Students in the state are earning far more postsecondary credentials in high school, while dual-credit course completion is up 35% since 2018. Texas community colleges awarded 140K credentials of value in 2024, the report found, and 37% of those credentials were in high-demand fields.

Dual Enrollment
States have invested heavily in dual enrollment, with 2.8M high school students now taking college coursework. Yet too few have thought strategically about the mix of courses and how they align with credentials and career pathways, according to a brief from the Community College Research Center. In far too many places, dual enrollment also remains a “program of privilege,” even though first-generation college-goers and Black, Latino, rural, and lower-income students stand to benefit the most.

K-Shaped Economy
Wage inequality is widening markedly, with salaries from new job postings for the highest-paying roles rising far faster than those for lower-paying jobs, finds Revelio Labs. Divergence in the increasingly K-shaped labor market has accelerated along with inflation over the past year. Knowledge workers are seeing the biggest gains, with the professional services, information, and healthcare sectors accounting for most of the recent growth.

Unions and Training
Workers should have more bargaining power, Vice President JD Vance said during a podcast interview with Joe Rogan last week. He said private-sector unions in Europe can cut deals with employers to provide entry-level workers with job training and better benefits. “You turn the company almost into an educational institution,” said Vance, adding that unions should have power to negotiate. He cited Oren Cass, founder and chief economist of American Compass.

Job Moves
Henry Mack has been appointed Florida’s commissioner of education. Mack has been assistant secretary of labor during the second Trump administration, overseeing the department’s Employment and Training Administration. He’s a former senior chancellor at the Florida Department of Education.

Timothy van den Broek has been appointed CEO of Lightcast, the labor market intelligence firm. Roles van den Broek has held since joining Lightcast in 2010 include COO and CFO, and interim CEO since late last year.

Autumn Rivera has been hired by Arnold Ventures as a manager on the career pathways team. Rivera previously was senior policy specialist at the National Conference of State Legislatures.

I’m pausing the newsletter for the next couple weeks. You might get a roundup of recent news and opinion writing, but otherwise The Job will be back on August 13. —PF