The Importance of Combining Workforce and Economic Development Initiatives

Mackenzie Krott - Business Services Manager ·

If there is one key word to pull from the Workforce Innovation and Opportunity Act of 2014 (WIOA), it is collaboration. WIOA has created a unique and exciting opportunity for collaboration at the state level between local workforce and economic development agencies. The law requires states to submit plans outlining how they will collaborate with partners, including economic development agencies. But, doesn’t this call for collaboration seem like a no-brainer? If employers have access to a more skilled workforce, then they are able to make a larger contribution to the overall economic wellbeing of the region.


Before discussing all of the wonderful ways workforce and economic development agencies can collaborate under WIOA, it is important to define each, as well as understand their differences.

Economic Development: The range of activities, policies, and programs of a state, a region, or a municipality used to create conditions that enable long-term economic growth.

Workforce Development: The range of activities, policies, and programs used to create, sustain and retain a viable workforce that can support current and future business and industry. This may include education and training, job matching and employer engagement .

Highlighted in the chart below are some key differences between the two types of agencies (Source):

A key reason why workforce and economic development initiatives aren’t better aligned is the complex nature of funding and performance. Generally, workforce development activities are directed by federal legislation and required to meet strict performance measures. In contrast, economic development agencies are more locally controlled, at either the state or regional level. These organizations can be tied to state government offices, or even be a private entity and are not required to set performance goals (Source). These noted differences in funding and performance hinder the groups’ ability to collaborate.

A study by the Urban Institute found that 41 states currently have separate workforce development and economic development agencies. Of the nine states that have combined agencies, the economic development agency is the umbrella organization, with workforce falling under it (Source). Therefore, WIOA’s call for more collaboration between these groups is much needed, but may require a bit of creativity and open mindedness. Below are a few suggestions on how these groups can kick start collaboration.


  • Offices and staff for economic development and workforce development agencies can combine under the same state government department (Source).
  • Economic developers can sit on state and local workforce development boards to provide insight and collaboration.
  • Agencies can create mechanisms that allow the coordination of funding to occur. Examples include tax incentives and braided funding – in which multiple funding streams are used to support one single program (Source).
  • Agencies can coordinate data systems and share information to better understand available programs and their outcomes.
  • States can implement sector policy initiatives or industry partnerships, spearheaded by employers. See an example of this below.


Industry partnerships and sector policy initiatives allow employers to lead local partnerships that bring many key players to the table. Pennsylvania’s Next Gen IP is a highly successful partnership of businesses, from the same industry and in a shared labor market region, who work with economic development, education, workforce development, and community organizations to address overall competitiveness needs of the targeted industry. By addressing these business-driven priorities, the program not only benefits employers, it benefits workers, students, the economy, and the general community. Learn more about the Next Gen IP Program here.


Government leaders and leaders within the workforce and economic development fields should be encouraged to take full advantage of the collaboration opportunities presented within WIOA. A major factor in business retention, expansion and attraction is the availability of a skilled workforce. Without a skilled workforce, companies cannot succeed. If companies are not successful, there is no need for a skilled workforce. These groups share a symbiotic relationship, and cannot succeed without the success of the other. Therefore, it is absolutely crucial for these two groups to collaborate.