Why the Federal Reserve studies investments in America’s workforce
The Federal Reserve’s “dual mandate” involves price stability and maximum employment. What this means is that the Board of Governors of the Federal Reserve System, and more specifically the Federal Open Market Committee (FOMC), has a monetary policy objective of price stability and maximum employment. There are many factors that affect the dynamics of the labor market, they can change over time, and they may not be directly measurable. Atlanta Fed President Raphael Bostic describes his perspective on maximum employment this way: “I like to think of it as maximum sustainable employment, a state in which all Americans can maximize their human capital and find work that puts their skills to their highest and best use.”
The Federal Reserve engages in a number of activities that foster maximum employment, including research, data analysis, thought leadership, convening, and community engagement. These actions serve to both inform monetary policymakers about labor market conditions and support cross-sector approaches to investing in America’s workforce.
In 2017, community development leaders across the Federal Reserve System undertook a national initiative to explore the current state of labor markets for low-income workers and jobseekers and ideate on future needs to create conditions for economic opportunity—for both workers and businesses. This effort, “Investing in America’s Workforce,” involved research, promising practices, and convening leaders from across the country to frame workforce development efforts as investments in broad economic growth—instead of as social services—and to uplift replicable, scalable solutions with measurable outcomes. In other words, solutions that show a return on those investments.
Conducted from 2017-2019, the Investing in America’s Workforce initiative was conducted in collaboration with the John J. Heldrich Center for Workforce Development at Rutgers University, the Ray Marshall Center for the Study of Human Resources at the University of Texas at Austin, and the W.E. Upjohn Institute for Employment Research. The effort included a series of listening sessions across the country to identify key themes to be studied or highlighted; a national conference featuring discussions on promising workforce development practices; publications including a three-volume book (Investing in Workers, Investing in Work, and Investing in Systems for Employment Opportunity); and special briefs exploring topics like digital skills, rural workforce development, and new financing models, among others.
Since 2019, when the Investing in America’s Workforce research was published, the labor market has experienced notable changes. The economy and labor market were shocked by the COVID-19 pandemic, with unemployment spiking at 14.8% in April of 2020 and then, three years later, dropping to a 50-year historic low of 3.4% in April 2023. During this period, supported by efforts like the Rework America Alliance to advance skills-based workforce development, some employers began shifting hiring practices to increase access to their jobs for a wider range of workers.
In 2022, the Federal Reserve initiated the Worker Voices Project, aimed at capturing non-degreed workers’ experiences with and views on employment during these turbulent years. Through our focus groups, we learned that many workers without a degree struggled to connect to new or different jobs. Our research also found that the way people worked and the skills employers sought were changing. Remote work and productivity increased across many industries. In addition, 92% of all job ads by 2021 required their applicants to have at least one digital skill, highlighting the technological shifts affecting the job market.
Pandemic shocks notwithstanding, the labor market changes all the time in response to many factors: changes in skill needs, accessibility of education and skill-development opportunities, rising cost of living and wage levels, technological advancements, and policies on workforce and economic development. These factors and others are a constant that affect the strength, competitiveness, and growth of the economy. This constant evolution in the labor market is why understanding approaches to investing in America’s workforce continues to be important for the Fed’s role in promoting maximum employment. It’s why the Federal Reserve focuses on workforce issues, primarily through our Community Development research and community engagement.
Below are examples of this work. Our hope is that community development professionals can connect the Fed’s research and data to the work they are doing in communities across the nation.
Nationally Focused Research and Data Tools
Understanding Worker and Job seeker Perspectives on the Labor Market
Capturing the full picture of the labor market means looking beyond the numbers to consider the experience of everyday workers and job seekers. The Worker Voices research, co-led by the Atlanta and Philadelphia Feds, was conducted beginning in 2022 to provide a unique view into how job seekers and workers in lower-wage roles navigated the labor market at the onset of the COVID-19 pandemic and through recovery. Findings detail barriers workers experienced, workers’ views on job quality, educational investments they made in themselves, and their self-employment aspirations. You can use this data to better understand and respond to worker needs in your community, and leverage a toolkit developed from lessons learned on this research and best practices about how to collect information for your community. More research will come on confidence and concerns through continued engagement with workers and through partnerships with organizations like the SkillUp Coalition.
Advancing Careers for Low- and Moderate-Income Families
Low-income working families may experience a variety of financial barriers that could limit their economic mobility. Fed researchers focus on the “benefits cliff”. Spearheaded by the Federal Reserve Bank of Atlanta’s Advancing Careers Initiative, this research focuses on a collection of financial barriers a low- and moderate-income person or family may navigate in their career journey. The “benefits cliff” is when a person experiences a reduction or loss of public assistance which has a greater financial value than an increase to their income or wages from hours worked, which can leave families financially worse off during their career progression. The Atlanta Fed provides tools to help workers and career counselors spot and prepare for the cliffs before they happen, as well as tools to explore policy alternatives and other innovations.
Child Care and Labor Force Participation
One significant barrier for families with young children is access to child care. Affordability and availability of these programs are two issues the Federal Reserve conducts research on. Across the Federal Reserve System, staff work together to explore how these challenges impact working families and the child care sector at national and local levels. Their goal is to understand and quantify the problems and implications of inaccessible child care and highlight innovative approaches.
Reimagining Financial Models for Workforce Development Outcomes
Innovative financing approaches, new investment mechanisms, and results-driven partnerships are one way that the public, private, and education sectors are addressing the skills gap and driving economic mobility. In today’s rapidly changing economic landscape, these approaches to funding and financing workforce development—which feature shared accountability and shared financial risk—are helping to meet the challenge of fostering full employment. The Federal Reserve Banks of Atlanta, Chicago, Richmond and Philadelphia have been working with The Social Finance Institute to pull together research and insights from the field on these models of outcomes-based funding. Check out examples of these approaches in the Workforce Realigned Volume 1 book and accompanying podcasts.
Nationally Focused Engagement and Convenings
The Policy Summit
The Cleveland Fed’s Policy Summit, held biennially, explores practitioner and policy solutions to challenges facing low- and moderate-income communities across the nation. The 2025 conference, “Building Strong and Sustainable Communities,” featured national research on workforce development programs and policies affecting economic mobility, expanding the supply of the workforce in critical sectors, and creating pathways to quality jobs. Explore materials from this year’s and prior Policy Summit events.
Uneven Outcomes in the Labor Market
Understanding employment conditions requires evidence from a wide spectrum of sources. The Fed has convened a periodic national research conference, Uneven Outcomes in the Labor Market, which brings together researchers, policymakers, and practitioners to highlight research and practices examining disparities in employment, labor force participation, income, and wealth across demographic groups. Explore materials from the 2021 and 2024 virtual conferences.
Regional Reserve Bank Workforce-Focused Efforts
Each regional Reserve Bank focuses on macro and regional workforce topics. Much of the Fed’s regional research and community engagement focuses on issues pertinent to regional economies. For example, some Reserve Banks focus on rural workforce development because their area is disproportionately rural. Some conduct work that is responsive to local experiences with workforce policy and labor market navigation, reflecting on, for instance, the impacts of automation on an industry and the effects that automation has on careers.
Boston
The Boston Fed’s Working Places initiative encourages leaders in New England’s smaller cities, regions, and towns to build local economies that give all residents more opportunity to prosper. Two competitive challenges aimed at small cities and communities across Massachusetts, Rhode Island, Connecticut, Vermont, and Maine (Working Cities Challenge and Working Communities Challenge) link their state governments and philanthropic partners with community leaders, who explore workforce topics such as connection to employment, access to child care, and career navigation to ensure all residents benefit from and participate in the local economy. Local leaders work to develop strategies that inspire action, test promising new ideas, and elevate learning across their communities.
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Chicago
The Chicago Fed’s spotlight on child care and the labor market features data and reports that explore parental attachment to the job market, financial lending trends to child care businesses, and experiences of working parents—including how problems with child care access affect their employment and hours worked. Bank researchers are analyzing the effects of COVID-19 shocks on “opportunity youth,” those aged 16-24 who are disconnected from both education and employment, and their attachment to the labor market. The Chicago Fed has also conducted research on automation trends in the labor market and their effects on workers and wage structures for occupations.
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Dallas
The Dallas Fed’s Advance Together is a technical assistance initiative that supports the work of public-private-nonprofit partnerships addressing education and employment challenges to connect more Texans with quality jobs. This place-based effort helps communities reduce intuitional silos that hinder effective education-to-employment pathways for students in key industries. Additionally, the Dallas Fed has been conducting research on the value of how short-term credentials help workers, job seekers, and employers.
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Kansas City
The Kansas City Fed is working with community stakeholders to socialize benefits cliffs research and provide training to use data tools to understand how workers might experience financial losses on their career journeys. In partnership with the Atlanta, Cleveland, Dallas, New York, and Philadelphia Feds, they are hosting a research forum on digital access which will highlight the role and importance of digital skills in workforce development, among other issues around digital access, affordability, and adoption of digital technologies.
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Minneapolis
Minneapolis Fed researchers conducted focus group discussions with women in low-income circumstances to understand their experiences with unemployment insurance. They also hand-collected data from all 50 states and Washington, D.C. on the varying application processes for unemployment insurance to understand the administrative burden, or frictions, individuals experience when they seek to interact with public programs and services, which can affect take-up of these programs by workers. The findings from both of these efforts were shared at a virtual event in April 2025.
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Philadelphia
The Philadelphia Fed’s economic mobility and growth initiative helps to advance entrepreneurial solutions to inclusive economic growth and create pathways out of poverty. Its recent Economic Mobility Summit featured researchers, practitioners, and community members engaged in a national conversation about the economic imperative of upward mobility and the importance of collaborative solutions to foster this mobility. Recent research explores Philadelphians’ experiences and perspectives on economic stability and mobility and how those relate to their income, employment, expenses, and life satisfaction.
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Richmond
The Richmond Fed’s Small Town & Rural Initiative focuses on rural workforce development and education. Their research shows that many rural communities throughout Richmond’s district (which includes North and South Carolina, Virginia, Maryland, Washington DC, and most of West Virginia) experience lower rates of educational attainment and workforce participation, lower wages, and declining populations. These challenges can exacerbate barriers to employment; without enough trained and educated workers, the people calling these communities home may have reduced access to necessary services and infrastructure. Related, their Community College Initiative highlights the role these institutions play in workforce development. Their survey of community colleges offers a more holistic way to measure these institutions’ contributions to local economies and beyond.
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St. Louis
The St. Louis Fed’s analysis on disconnected youth across Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee explores that population’s experience in the labor market, providing insights that help communities to improve how they engage with their youth not connected to work or school to better connect them to the economy. St. Louis has also created child care ‘fact sheets’ for all 50 states and the District of Columbia to show the percentage of the workforce that have young children, the costs of childcare, and the wages for early child care workforce.
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San Francisco
The San Francisco Fed is conducting research in collaboration with the University of Washington to examine the changing nature of job access for workers in low-income jobs and communities that are disproportionately low-income across the United States. This short conversation between two researchers covers one critical topic their research will highlight: job proximity. How close or far a worker or community is from employment opportunities is an important factor in understanding employment access and employment mobility. The San Francisco Fed is also tracking emerging technologies and their effects on our workplaces, homes, communities, and the economy. Their EmergingTech Economic Research Network digital platform amplifies research and insights from across the Federal Reserve System and elsewhere on how technology will impact many aspects of life, including the job market.
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Reach out and engage with us! Our Community Development experts are in each regional Reserve Bank District across the country. We want the research we conduct, the data tools we develop, the conversations we can convene, and the insights we can share on economic challenges facing lower-income communities to meaningfully advance economic access in your community and across the country.
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