The low-wage labor market is marked by several unfortunate realities: growing numbers of “working poor,” decreasing relative wages for less-educated Americans, and declining employment and labor force activity among low-income men, particularly African American men. To reverse these trends, the country’s low-wage workers will require stronger skills that are better matched with marketplace needs, yet today’s underfunded and fragmented workforce development system is unable to deliver the necessary training.
The Worker Advancement Grants for Employment in States (WAGES) program would allow states to draw on the strengths and experiences of community colleges, industry associations, workforce boards, and other entities to support workforce development. A competitive process for awarding renewable and expandable grants that provide matching funds for training and related support—such as child care and transportation—could be established, with the resulting awards being embedded with performance measures, federal evaluation, technical assistance, and bonuses for successful initiatives.
This paper proposes a new federal funding stream to identify, expand, and replicate the most successful state and local initiatives designed to spur the advancement of low-wage workers in the United States. In the Worker Advancement Grants for Employment in States (WAGES) program, the federal government would offer up to $5 billion annually in matching funds for increases in state, local, and private expenditures on worker advancement initiatives. To gain funding, states would have to develop local advancement “systems,” which would provide career-oriented education and training to youth, working poor adults and “hard-to-employ” workers. Partnerships would be developed between local training providers (like community colleges), employer associations, and intermediaries. Additional financial supports for the working poor — including child care, transportation, and stipends for working students — would have to be funded as well. Initially, the WAGES program would require states to compete for federal grants, which would ultimately be renewable. The program would generate a “learning system” in which states would have an incentive to innovate and use information from other initiatives. The federal government would provide substantial technical assistance and oversight. Performance measurement and rigorous evaluation would be required for program renewal; states achieving substantial worker advancement would be awarded major bonuses and more rapid renewal of funding.