Across the country, Governors are finding new ways to strengthen their workforce systems. From reorganizing state agencies to improving industry engagement and providing essential support services, states are taking bold steps to ensure their workforce strategies are effective and inclusive. Cross-sector collaborations and creative funding solutions are playing a critical role in these efforts, enabling states to respond to shifting labor market demands and provide targeted support where it is needed most.
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Executive Summary
The Workforce Innovation and Opportunity Act (WIOA) grants Governors significant authority to shape their state workforce systems. Yet, little research explores how they use those powers to strengthen their economies and expand access to employment and training. To bridge that knowledge gap, the Project on Workforce conducted in-depth interviews with Governors’ workforce development policy advisors in 34 states and technical surveys of workforce administrators in 17 states. Our research examines how Governors are leveraging WIOA and other policies to design, fund, and implement workforce development strategies in an evolving economic landscape.
Nearly 60% of Governors’ advisors described low labor force participation as a significant factor shaping their workforce development strategies. They are experimenting with new policy approaches to address this challenge: fostering innovative programs, enhancing cross- agency collaboration, and expanding career pathways. Despite chronic resource constraints and systemic hurdles, Governors are working to meet industry needs while striving to ensure individuals with barriers to employment have access to quality jobs. Through our research, five trends emerged, highlighting both the opportunities and obstacles shaping the future of state workforce systems.
Key Findings
- States are shifting organizational structures to improve workforce governance. Over half of advisors reported that organizational structure has a significant impact on how they address workforce challenges and administer public funds. To elevate workforce development as a policy priority, some Governors have designated advisors or created offices within their Executive Office to serve as central workforce policy coordinators. In Alabama, for example, Governor Kay Ivey established the Office of Education and Workforce Transformation within the Governor’s Office to align the state’s education, workforce, and human services policies and systems. States are also merging or restructuring state agencies to better collaborate across silos, streamline responsibilities, and improve accountability.
- States are adopting stakeholder-driven approaches to WIOA planning. Some states are integrating the WIOA planning process into broader economic development planning, elevating stakeholder engagement to a core strategy. Other states continue to view WIOA planning as a compliance exercise that is more burdensome than it is valuable. While many states seek additional federal flexibility with WIOA planning, interviewees also shed light on opportunities to leverage the process to advance state goals by increasing community outreach.
- States are investing in workforce services to attract and retain businesses. As of 2024, many states were investing in workforce development in high-growth sectors, with more than 1 in 4 states mentioning clean energy and semiconductor manufacturing, and 1 in 5 states discussing broadband infrastructure and healthcare. States are deploying similar strategies, such as providing incentives to businesses to hire individuals with barriers to employment, creating customized training programs, and developing tailored business services to help them navigate the workforce system.
- WIOA funding challenges are prompting states to seek alternative solutions. Eligibility restrictions and unpredictable funding levels constitute key obstacles to reaching state workforce objectives. Some states are supplementing WIOA by braiding other funding sources, like federal education grants, state funds, or philanthropic dollars. Many rely on the Governor’s Reserve Fund just to administer programs, with more than two thirds using it to backfill administrative costs. Meanwhile, 54% of states are also using the Governor’s Reserve Fund to seed innovative pilots. For example, Washington state tested a successful initiative using these funds–known as Economic Security for All–which provides coaching and financial assistance to individuals earning incomes just above the WIOA threshold. After four years of success, the program was signed into state law and funded through state appropriations.
- States are expanding training programs and supportive services to engage new workers. More than 80% of Governors’ advisors mentioned initiatives to strengthen the youth workforce pipeline, including by engaging K-12 students in youth apprenticeships. Others are focusing on growing the workforce by reaching populations with barriers to employment, including justice-involved individuals and Indigenous populations. Wraparound services are also becoming an increasing priority. More than 60% of advisors highlight childcare as a key focus, more than half emphasize career navigation, and a third mention transportation and housing. To address this multifaceted challenge, some states are adopting a whole-of-government approach to workforce development.
