States Can Seek $40 Million for Employer-Led Skills Training

The Labor Department has opened a second round of Industry-Driven Skills Training Fund grants totaling approximately $40 million, with applications due from eligible state workforce agencies by 11:59 p.m. Eastern on August 17, 2026.

The grants are designed to support employer-led training for current employees and newly hired workers in critical, high-growth or emerging industries. Individual workers cannot apply directly for the federal funding.

States must lead the applications

The department issued Training and Employment Guidance Letter 02-25 Change 1 on July 7, 2026. The grant opportunity was posted July 8.

Eligible lead applicants are State Workforce Agencies — the state agencies responsible for statewide workforce policy and administration of Workforce Innovation and Opportunity Act Title I programs. Employers are expected to participate through partnerships with those agencies rather than apply as the federal lead applicant.

The opportunity lists approximately $40 million in program funding, an expected 10 awards and individual awards ranging from $3 million to $8 million. It lists no cost-sharing or matching requirement.

That structure means employers interested in the program should watch their state workforce agency for partnership requests, application instructions or later implementation details. Workers could benefit if their state receives an award and participating employers create qualifying training programs.

Shipbuilding has a reserved share

At least $5 million of the second-round funding is reserved for shipbuilding training. Other named or eligible areas include advanced manufacturing, artificial intelligence infrastructure, nuclear energy, domestic mineral production and information technology.

Those industries are program priorities or allowable areas, not announced awardees. The Labor Department has not announced which states or employers will receive funding.

Reimbursement will be tied to reported outcomes

The program uses outcomes-based reimbursement for allowable training costs. The guidance calls for performance reporting that includes measures such as verified training completion and six-month employment retention.

That language should not be read to mean that every payment will necessarily be withheld until every worker reaches a particular result. It means proposed projects must explain how training activity and employment outcomes will be documented and evaluated under the grant requirements.

The approach reflects a broader challenge in employer-linked training: programs must help businesses fill skill gaps while giving workers training that can lead to durable employment. A Government Accountability Office review found that earn-and-learn opportunities can benefit workers and employers, while also identifying employer concerns about cost and administrative burden.

What workers and employers should watch

For workers, August 17 is a federal application deadline for state agencies, not an individual enrollment deadline. If awards are made, states and employers will later need to explain which occupations, locations, training providers and eligibility rules apply.

Employers should monitor announcements from their State Workforce Agency and be prepared to describe the occupations they need to fill, the training they can provide or arrange, and how completion and retention will be tracked.

The federal application window remains open as of August 4, 2026. Awards and state-level program details have not been announced.

Sources

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