Executive summary
The American labor market is undergoing a profound structural transformation, driven by an aging population, rapid technological change, and persistent mismatches between worker skills and employer needs. In response, states have been modernizing their workforce systems to expand labor force participation, align education and training with evolving industry demands, and future-proof their economies. As part of these efforts, policymakers, the private sector, and civil society are increasingly recognizing immigrants as a vital yet underutilized segment of the labor force and harnessing their contributions as workers, entrepreneurs, and community leaders.
This paper synthesizes a 50-state review of policy activity from 2020–2024, revealing growing bipartisan momentum among states to increase immigrant participation in their workforces. Common measures include reducing credentialing and licensing barriers; expanding opportunities for English language learning and digital literacy; broadening access to workforce training and services; and enhancing other pathways to opportunity.
Drawing on innovative steps that states have taken, the paper presents a practical playbook of real-world examples and actionable strategies for developing skills-based workforce systems that effectively engage all work-eligible populations. In this way, the paper serves as a resource to help states tap underutilized talent and foster long-term economic growth and resilience.
Introduction
The American labor market is undergoing a profound transformation marked by demographic shifts, accelerating technological change, and persistent mismatches between worker skills and employer needs. These changes pose urgent challenges, but they also present a generational opportunity to expand workforce participation, modernize systems, and build a more resilient labor force, drawing on the inclusion of all eligible, working-age populations. States are navigating a new era of economic and workforce development.
Two core factors are at the center of this transformation. The first is a simple demographic fact: The American population is aging. As retirements accelerate and birth rates decline, workforce growth is slowing across all regions and sectors. Second, the rise of artificial intelligence, the increasing demand for care work and credentialed workers, and the digitalization of jobs are reshaping the skills required to thrive today and adapt as work and technology evolve.
In response, states have been altering their workforce strategies through policy reforms, programmatic innovation, and targeted investment. Their goals are to increase workforce participation, harness existing talent and train workers for future jobs, and recruit new workers both domestically and internationally. By addressing participation barriers and creating skills-based pathways, states have been responding to immediate labor market demands while laying the foundation for long-term growth and shared prosperity.
Expanding labor market participation is necessary, but it will not be sufficient to meet the scale of current and future workforce demand. Immigration will continue to be a vital engine of workforce growth and economic vitality. Immigrant workers, already indispensable to local economies, are increasingly included in states’ strategies. They bring critical skills and entrepreneurial energy that sustain key industries and strengthen communities. Systemic barriers, however, have impeded states from realizing immigrants’ full potential. These obstacles include restrictive licensing rules and fragmented credentialing processes; limited access to English-language instruction and workforce training and services; and digital divides. These are not only missed opportunities but also active constraints on state-level economic competitiveness.
This paper provides a roadmap for how states have responded to and shaped the future of work in light of profound labor market changes, concluding with a playbook of actionable strategies to optimize the participation of work-authorized immigrants. The state-level initiatives discussed in the paper encompass work-authorized immigrant populations, who comprise roughly 13 percent of the U.S. labor force. Because of their lawful status, immigrants who are authorized to work in the U.S. historically have not been subject to federal immigration enforcement activities. These state-level initiatives reflect durable strategies that can help states build resilient workforces. Section II examines the structural forces reshaping the labor market: demographic shifts, evolving skill demands, and barriers to workforce participation. Section III explores the policy levers states are using to expand labor force participation, optimize existing talent, and recruit workers both domestically and internationally. Section IV highlights major state innovations and activities from 2020–2024 that aimed to maximize the contributions of immigrants, including licensing and credentialing reforms; the use of virtual platforms and digital tools to increase access to English language learning, digital skills, and workforce training and services; and the rise of Offices of New Americans. Section V translates these insights into a policy playbook of actionable strategies encompassing licensing reform, digital literacy, inclusive training systems, and cross-sector collaboration. Section VI concludes with a vision for the future in which immigrant inclusion is not a special initiative but a central pillar of resilient, future-ready workforce systems.
Policies are most effective when they eliminate barriers that keep working-age populations from participating fully in the workforce and contributing to the economy. By ensuring that all individuals who are ready and able to work can do so, states are building durable labor systems and driving economic competitiveness.
