Briefing Memo for State LMI Offices: Workforce Pell Proposed Regulations – Implications for State Labor Market Information (LMI) Systems
Two weeks ago the LMI Institute shared how state LMI shops can be potential partners under the Department of Education’s upcoming Workforce Pell proposal in July 2026.
The proposed regulations create a new connection between federal student aid and labor market data. The regulations require workforce programs to demonstrate alignment with employer demand and measurable earnings gains before receiving Pell Grant eligibility. As a result, state labor market information systems will become a core component of the new program approval and accountability framework.
For LMI agencies, the regulations represent both a significant opportunity and a new operational responsibility. State workforce data systems will likely play a central role in:
- validating workforce demand,
- measuring employment outcomes,
- and verifying program eligibility.
Key Policy Implications for LMI Agencies
Labor Market Data as the Basis for Program Approval
Governors must certify that eligible workforce programs align with high-skill, high-wage, or in-demand occupations and meet employer hiring needs. This requirement will depend heavily on LMI agencies to provide:
- occupational demand analysis
- regional labor market projections
- industry employment trends
State LMI agencies will become key advisors in these decisions.
Administrative Data Required for Outcome Measurement
The rule establishes a value-added earnings metric based on median earnings of program completers relative to federal poverty thresholds. Calculating this metric will require access to administrative earnings data. This may involve:
- state unemployment insurance wage records
- federal earnings data
- cross-agency data matching
LMI agencies are among the institutions best positioned to support these analyses.
Program Performance Monitoring
Institutions must report completion and job placement outcomes annually. These metrics must be verified as part of ongoing eligibility reviews. State workforce agencies may need to establish processes to:
- validate employment outcomes
- verify wage records
- support governor certification processes
Interstate Workforce Program Coordination
The rule proposes bilateral agreements across state borders when workforce programs enroll students from other states. This raises potential challenges in data sharing and earnings tracking across state boundaries. LMI agencies may need to collaborate on interstate access to wage records and standardized occupational classifications.
Recommended Actions for LMI Institute Members
- Prepare for Increased Demand for Workforce Data
State LMI agencies should anticipate increased requests from universities and state policymakers for:
- occupational demand validation
- wage outcome analysis
- program evaluation support
- Develop Workforce Pell Data Infrastructure
States may need systems capable of linking education program data with employment outcomes. Potential components include:
- wage record matching
- program-level earnings analysis
- data sharing agreements between agencies
- Strengthen Partnerships with Higher Education
Universities seeking Workforce Pell approval will likely rely on LMI agencies to provide labor market evidence. Formal collaboration frameworks may be needed between:
- state LMI agencies
- higher education systems
- workforce boards
- Engage in Federal Implementation Discussions
The Department is actively requesting feedback on data sources and methodologies used to measure earnings outcomes. LMI agencies have unique expertise that could shape national standards.
Areas Where LMI Institute Members Can Provide Feedback
Several sections of the proposed rule directly request stakeholder input on labor market data issues. LMI agencies have a critical opportunity to shape four areas: earnings metrics, cohort definitions, data aggregation, and regional adjustments.
Interim earnings metrics
The Department is considering whether interim earnings data should be published before official value-added metrics are available. LMI agencies could recommend using state wage records, unemployment insurance administrative data, or multi-state data sharing systems.
Student cohort definitions
The Department requests feedback on which students should be included in earnings calculations. LMI experts could help ensure that the methodology produces accurate workforce outcome measurements.
Data aggregation for small programs
The rule proposes combining cohorts across multiple years to calculate earnings metrics. LMI agencies could advise on statistical approaches that balance data reliability with privacy protection.
Regional wage adjustments
The Department seeks feedback on whether earnings metrics should adjust for regional price differences when programs enroll out-of-state students. LMI agencies could provide insights on how regional cost-of-living adjustments should be applied.
The Path Forward
The Workforce Pell regulations embed labor market outcomes into federal higher education funding. This creates a significant opportunity for state LMI agencies to shape workforce training accountability systems.
By engaging early in the rulemaking process and collaborating closely with universities and policymakers, LMI agencies can help ensure that Workforce Pell programs reflect real labor market demand and produce measurable economic outcomes.