R&D Versus Welfare

Rachel Lipson calls for treating federal job training as a long-run investment in economic growth, getting an endorsement from Ford’s CEO. Also, Republicans in D.C. want to cut workforce funding while holding flat support for apprenticeship, and an essay by leaders at Guild on how to help young people succeed as the job market tightens. (Subscribe here.)

Job Training as Fuel for National Prosperity

Policymakers in the U.S. treat workforce development primarily as a tool to fight poverty or reduce unemployment. That collective choice has been a strategic misstep, which has hindered investment and effectiveness in public job training.

That argument comes from Rachel Lipson, a research fellow at the Harvard Kennedy School. A better strategy, she writes in a new paper published by the Aspen Institute, would be to treat human capital like research and development aimed at boosting economic growth.

“We need a full refresh,” she says via email. “The framing around workforce development as poverty alleviation overcoming ‘barriers to employment’ is not getting us there.”

Structural underfunding is a big part of the problem, notes Lipson. The U.S. lags well behind peer nations in public workforce spending. Meanwhile, sectoral training programs with a track record of helping workers get higher-paying jobs cost $10K–$45K per learner, but a typical public job training voucher is closer to $2K.

“Because the government’s investment is still cast as a social program for low-income people, not as a public good tied to national prosperity, it ultimately gets deprioritized in federal budgets,” writes Lipson, who was a senior policy officer at the U.S. Commerce Department’s CHIPS for America during the Biden administration. “The result is a vicious cycle of chronic underinvestment, which in turn reinforces underperformance.”

Apprenticeship adoption and funding in this country remains a drop in the bucket. And federal workforce spending is highly fragmented, with 160+ programs across 19 agencies. The voucher strategy of leaning on Pell Grants and individual training accounts also fails to cover costs for training programs in advanced manufacturing and other fields that require specialized facilities, cutting-edge equipment, and higher-paid instructors.

Federal grants are limited as well, Lipson writes, with typical awards of a few million dollars that peter out in a couple years, before a training program can reach sustainability through private investment.

The paper’s call deserves serious consideration, says Brooke DeRenzis, CEO of the National Skills Coalition. Making it happen would require sustained investments well beyond current levels.

“Just as importantly, we need to ensure those investments deliver shared prosperity in addition to productivity,” DeRenzis says. “Treating workforce development as a public good can be a winning approach if it grows the economy and gives workers real opportunity to share in the prosperity they help build.”

Long-Term Returns: The rising AI economy could make effective workforce training pathways more important than ever. Lipson argues that industrial expansion, the potential resiliency of blue-collar jobs, and demand for new skills all pose an opportunity to rethink public spending on job training.

She says the federal government should set priorities and align investment with sectors that matter disproportionately for productivity growth and national security. Policymakers also should reward proven training models while supporting innovation and redirecting money when needed.

Publicly funded workforce programs should focus on long-term returns, Lipson writes, not short-run outputs. She says better models in R&D, like DARPA, treat iteration and learning as a natural feature, not a flaw: 

“They also use real-time data and defined transition points, where public investment establishes the foundation and the private sector helps scale commercially viable approaches.”

When asked what’s needed to make her vision a reality, Lipson says business will be the critical stakeholder to get the government to think differently. Governors also are important. States can lead the way with workforce experiments, she says, particularly biggies like California and Texas, which have substantial budgets and active R&D plays.

Lipson says advocating for changes around the margins of WIOA, the primary federal workforce system, won’t do anything transformational. She says nobody she knows would say what we have today is the right framework, yet people tend to be afraid to say that publicly.

“Maybe it’s because they are hesitant to advocate for increased expenses given everything that comes with that, especially in the current environment,” says Lipson. “Or conversely, they fear that the small amount of funding today gets proclaimed wasteful and is cut.”

Ford CEO Jim Farley agrees with Lipson’s call for a broad workforce refresh. He cited her report in an essay for Time, pointing to a projected shortage of 400K auto techs over the next three years. Ford will host Lipson in Detroit later this month for an event on economic productivity, which will also feature several mayors and CEOs from a wide range of industries.

The Kicker: “We should learn from the successful model of federal R&D funding—and see workforce development as a powerful investment in the essential economy,” Farley writes.

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Job Training Cuts, Flat Funding for Apprenticeship

House Republicans this week unveiled a funding bill that would slash federal funding for workforce training—cutting more than $1.3B from the $3.9B budget for apprenticeship and core workforce development programs under the Workforce Innovation and Opportunity Act. In all, the bill would cut $4B, or 28%, from the Department of Labor’s budget.

The proposal is in line with President Trump’s budget request, but in conflict with much higher funding levels proposed in the Senate.

The budget debate comes at a time when the Trump administration is touting its investments in working Americans. Republicans on the House Committee on Appropriations, led by Tom Cole of Oklahoma, said the cuts to workforce training would be achieved by eliminating “duplicative and overlapping” programs. 

Democrats on the committee begged to differ, with ranking member Rosa DeLauro of Connecticut saying in a statement that the bill “abandons the working class.”

Most notably, the proposal would:

• Eliminate funding for youth activities under WIOA and cut total funding for adult, dislocated worker, and national programs to $2.6B—for an overall reduction of about 33% in those core WIOA funds.

• Keep support for registered apprenticeships level at $285M.

• Halve funding for Job Corps, which the Trump administration has targeted for elimination, and end a special program for seniors.

• Keep state grants essentially flat for employment services, housed at one-stops and American Job Centers, under the Wagner-Peyser Act.

Within the Education Department, the bill also would slightly increase funding under the Perkins Act and change the name of Workforce Pell to Trump Grants (as the administration seeks a rebrand for the sprawling domestic policy law that included the Pell provision).

The training cuts are likely to meet resistance in the Senate, where Republicans have proposed a modest increase to funding for WIOA programs, including preserving youth activities. The Senate also has moved to hold harmless Job Corps.

Rhetoric, Reality: In neither chamber, though, does the proposed investment seem to line up with the stated ambitions of the Trump administration to boost workforce training. It has set a goal, for example, of reaching 1M apprentices a year, up from about 680K today.

Most experts have praised the ambition but stressed that meeting the goal will require a clear plan, improved state and national infrastructure, and likely more federal dollars. 

In a media push over Labor Day, the White House and Labor Department touted early accomplishments—citing 1,736 new registered apprenticeship programs and 183K new apprentices since January. It’s unclear, however, whether that represents real growth, as hundreds of thousands of apprentices come and go in a typical year. 

Last fiscal year, the U.S. added 315K new apprentices over 12 months—which would average to a faster monthly pace than the numbers cited by the White House. Enrollment in some programs is cyclical, however, so the fall could see a significant increase. 

We asked the Labor Department for the 2024 numbers for the comparable time period in order to more precisely track any relative increase, but haven’t received a response. A department spokeswoman indicated in a separate exchange that no specific plan for reaching 1M apprentices, as called for in an April executive order, is immediately forthcoming. She cited the general workforce strategy released last month as satisfying the requirement to publish such a plan by the end of August.

Separately, the department issued guidance last week encouraging states to use WIOA funds to support AI education and skills development, as stipulated in another executive order.

The budget debate in Congress will ultimately determine what funds those states have to work with. —By Elyse Ashburn

Open Tabs

Trump on Workforce
The best example of the targeted investment President Trump wants to spur in vital industries is the CHIPS and Science Act, which he often criticizes despite his administration’s support for similar legislation on shipbuilding, Oren Cass, chief economist at American Compass and a defender of Trump’s tariffs, writes for The New York Times. And while Trump talks about increasing funding for trade schools, Cass says building up new noncollege pathways requires a concrete plan.

Healthcare Jobs
The U.S. primary-care workforce faces shortages, with widening gaps in the supply of nurse practitioners and physician assistants, as well as high turnover among medical assistants due to low wages and limited career paths, finds a National Academies committee. In addition to recommending adequate payment for primary care, the committee calls for the U.S. Department of Health and Human Services to prioritize job training across primary-care disciplines.

AI and Seniority
The diffusion of generative AI since 2023 is associated with seniority-based technological change within firms—meaning a sharp relative decline in junior employment at AI-adopting firms, alongside continued growth in senior employment, finds a study by researchers at Harvard University. Using LinkedIn-based data from Revelio Labs, they found that the decline in employment among junior workers was due primarily to reductions in hiring.

AI-Exposed Workers
An estimated 25% to 40% of occupations are “AI retrainable” as measured by its workers receiving higher pay for moving to more AI-intensive roles, finds a working paper published by the National Bureau of Economic Research. Using wage data for participants in federal job training programs, the researchers found that workers in AI-exposed occupations are surprisingly resilient in adjusting to AI pressures through job training.

Short-Term Training
Nearly two-thirds of employers say upskilling their current workforce is a top investment priority over the next six to 12 months, according to a survey of 507 business leaders from Jobs for the Future. Most respondents say short-term, responsive training is the dominant mode they use to develop their talent. Overall, they were less interested in longer-term structural workforce solutions like apprenticeships or college-to-career pathways.

Job Moves
Katie Jenner has been appointed Indiana’s next commissioner of higher education. She will simultaneously continue leading the state’s education department, where she is responsible for “establishing a unified, student-centered vision across the full spectrum of education, from Pre-K and K-12 to college.” Jenner will replace Chris Lowery, who has led the commission since 2022.

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