In the coming years, more workers will be required to learn new skills throughout their careers. A National Academies of Sciences report focused on information technology and the U.S. workforce recently stressed the need to prepare individuals for the changing labor market.
Due to automation, the McKinsey Global Institute estimates that up to a third of the U.S. workforce will need to learn new skills or find new work in new occupations by 2030. According to a Pew Research Center survey, 87 percent of workers believe training and developing new job skills throughout their work life is essential to succeed in the workplace.
U.S. Sens. Mark R. Warner (D-VA) and Chris Coons (D-DE) have reintroduced legislation to give low- and moderate-income workers more access to lifelong learning opportunities.
The Lifelong Learning and Training Account Act would establish a tax-preferred savings account with a generous government match to support workers looking to retrain or develop new skills throughout their careers.
“Access to lifelong learning and education is a critical tool that workers need to succeed in today’s economy. Therefore, it is essential for the federal government to support Americans’ ability to retrain and upskill throughout their career,” said Sen. Warner. “This is a no-brainer investment that would help workers continue to expand their skillsets and grow their earning potential. It would also help employers who need skilled workers to fill those jobs, particularly in a competitive labor market.”
“By strengthening access to skills training and fostering a culture of lifelong learning, we can support American workers while ensuring we have a workforce ready to fill the jobs of tomorrow,” said Sen. Coons. “That’s why I’m proud to partner with my colleague Senator Warner to invest in our future with this needed investment, and make available the growth and retraining we know will be vital in a competitive, global economy.”
“Small business owners often struggle to find skilled workers, which has become even more challenging during this competitive labor market,” said John Arensmeyer, founder & CEO of Small Business Majority. “In fact, Small Business Majority’s scientific opinion polling found more than one-third of small employers said it is difficult to find candidates with the right education, skills or training. Since small firms rarely have enough time to dedicate to extensive staff training or sufficient funds to pay for employee education, the Lifelong Learning and Training Account Act would be a huge boost to small businesses by offering them another way to invest in the development of their staff. This legislation would also help solo entrepreneurs invest in their own development and acquire skills without the aid of an employer.”
The Lifelong Learning and Training Account Act creates employee-owned Lifelong Learning and Training Account savings plans. Contributions to an LLTA by low- and moderate-income workers or their employers would be eligible for a dollar-for-dollar federal match of up to $1,000.
Under this legislation, the federal matching funds would be directly deposited into the LLTA immediately after a contribution by the worker or employer. The worker would then get to choose how to use the LLTA funds, which could be applied towards any training that leads to a recognized post-secondary credential.
For workers that need to contribute to the cost of updating their job skills, this significant federal investment can make a huge difference in whether or not these workers seek additional training. If employers are willing to match employees’ savings, the returns can be even greater—a $500 contribution by a worker would create $2,000 in training opportunities (a $500 match by the employer, and then a $1,000 match from the federal government.) The accounts are portable from job to job, and always under workers’ control.
Contributions by workers and employers are after-tax dollars, but face no additional taxes on earnings if the LLTA funds are used for qualified training expenses. Eligibility is for workers age 25 to 60, with incomes of up to $82,000 per worker. States will manage the accounts.
Accounts are designed to encourage the worker to use the funds to regularly update their skills, rather than build up large balances over many years. Restrictions are put in place to ensure that the government’s matching dollars go only to qualified training expenses.
The full text of the bill can be found here.
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