New Act Creates Employer-Directed Skills Accounts, Letting Companies Fund Training for Pre-Selected Hires

The new Employer-Directed Skills Act is setting up a fresh way to fund workforce training by creating “employer-directed skills accounts” within the existing federal WIOA system. Essentially, if an employer wants to hire someone who needs specific training, they can now use this account to pay for it, provided they commit in writing to hiring that person once the training is done. This isn’t free money for the company, though: the employer has to chip in a percentage of the training cost based on their size—from 10% for the smallest businesses (50 employees or less) up to 50% for the largest (over 100 employees). The federal government covers the rest of the cost, making this a co-funded pipeline from training directly to a job.

The Fast Track to a New Gig

This bill’s biggest change for job seekers is how it handles eligibility. Normally, if you go to a local one-stop career center looking for subsidized training, you go through an interview and assessment process to figure out what training you need. This Act creates a major bypass. If an employer selects you directly for this new “employer-sponsored skills development” or On-the-Job Training (OJT), the local career center is explicitly waived from having to interview, evaluate, or assess you first. Think of it like an express lane: the employer has already decided you’re the right fit, so the system speeds up the funding. This is great news if you’ve been tapped for a training program that guarantees a job, as it cuts down on bureaucratic steps. However, it also shifts significant power away from the public workforce system and directly to the employer in deciding who gets access to these subsidized training opportunities.

Who Pays, Who Plays?

The creation of these accounts fundamentally changes the funding flow. Instead of the money going into an Individual Training Account (ITA) managed by the job seeker, the funds go directly to the employer’s account to cover the federal share of costs. This means employers are now heavily incentivized to invest in training, as they get federal dollars to offset their expenses, provided they meet their minimum co-pay requirement. For example, a mid-sized manufacturing company with 75 employees only has to pay 25% of the cost to train a new welder, with the federal government covering the other 75%. This is designed to ensure the training is hyper-specific to the employer's needs, leading to a much better job match. Local boards still have to approve the agreements, prioritizing small businesses and making sure the training leads to a recognized credential in a high-demand sector, but the control over candidate selection rests firmly with the company.

Practical Challenges and Trade-Offs

While the direct link between training and a guaranteed job is a huge win for selected participants, this system introduces a few trade-offs. For the average job seeker relying on the standard public workforce system, this could mean fewer resources or less attention, as funding is diverted to these employer-directed accounts. Furthermore, the waiver of the standard evaluation process raises questions about equity. If an employer can select a candidate without public oversight of the selection process, it could inadvertently allow for bias, even if the local board later reviews the final agreement. The effectiveness of the Act will ultimately hinge on how well local boards enforce the requirement that employers submit performance data and whether they truly prioritize training that benefits the broader community, not just a single company’s immediate hiring needs.