How can we improve workforce outcomes for community college students?

Short of obtaining a bachelor’s degree—which a majority of young people in the U.S. will not do—attaining a workforce credential with labor market value at a community college is the most likely path to a well-paying job for American students and workers. Such credentials can be associate degrees or certain certificates, including some that are not for academic credit.

At the same time, not all students fare well in community colleges. Most community college students never complete any credential at all, and many of the credentials they obtain will lack significant labor market value. The recent enactment of “Workforce Pell,” which will expand Pell grant eligibility to students obtaining short-term certificates (both for credit or not) with demonstrable labor market value, increases the need to understand which credentials have value and how more students can obtain them.¹

In this brief, we summarize the implications for practice and policy of research that we undertook at the American Institutes for Research (AIR) on how to generate more workforce “credentials of value” at community colleges; the work builds on extensive existing research in this area by scholars at AIR and elsewhere. Using Integrated Postsecondary Education Data System (IPEDS) data on credential completion by field, we ranked all American public two-year colleges on their abilities to generate credentials with value, and then combined quantitative and qualitative analyses to find out what distinguishes relatively more and less successful colleges in generating such credentials (which we refer to as “excelling” and “aspiring” colleges respectively in our work). Our findings, though descriptive and not causal, suggest tentative recommendations for policy and practice, as well as the need for more research.

Implications for practice

Our research results suggest that more colleges should adopt the following “best practices”:

1. Better align program offerings with job availability and job quality

Among those that we analyzed, colleges regularly weigh which programs to offer and what to include in the curriculum to meet their graduates’ needs for jobs. The local economy and employer needs were the most commonly cited drivers of programmatic decisions for both excelling and aspiring colleges, but leaders from excelling colleges were more likely to describe deliberate efforts to align program offerings with jobs that are in demand in the local economy and that pay family-sustaining wages. College leaders can consider how they make decisions about which programs to offer and whether there are opportunities for them to better align program offerings with the local economy. To make these judgments, they might use data from varied sources, such as federal labor market information and real-time labor market data providers, local economic development organizations, chambers of commerce, workforce boards and commissions, and, most importantly, direct and sustained engagement with employers.

2. Engage with employers more often and more deeply

Sustained engagement with employers provides college leaders with critical information about the skills employers are looking for in job candidates. Although nearly all colleges use advisory boards (required for Perkins Act funding), leaders from excelling colleges describe deeper two-way relationships with employers. College leaders and employers had regular touchpoints beyond statutory meetings, with employers co-developing programs, providing input on decisions about equipment, and participating in reverse job fairs and other career exploration activities. College leaders may consider reviewing how they partner with employers to ensure meaningful engagement that supports the alignment between college offerings and industry needs.

3. Offer high-quality and varied work-based learning experiences

Work-based learning opportunities can help students prepare for all aspects of work by not only honing their technical skills, but also by learning many of the essential skills that are needed for success in the workplace, such as timeliness, communication, problem solving ability, and professionalism. Leaders from both excelling and aspiring colleges describe offering internships, apprenticeships, and clinical rotations to build students’ technical and essential skills, but excelling colleges offered a wider portfolio, such as site visits, co-ops, service learning, and practicums. College leaders may consider opportunities to increase access to work-based learning experiences, ensuring all students have meaningful opportunities to interface directly with employers and careers as part of their educational program.

4. Integrate career readiness into all facets of training

Employers expect that their employees not only have the needed technical skills, but also the essential skills required for success in the workplace. In addition to work-based learning, there are many opportunities for colleges to integrate an explicit focus on career readiness in all facets of training. Leaders from excelling colleges more often require stand-alone job-preparation courses or embedded “work ethic” and employability skills across courses; one college even provides employers with retraining guarantees if graduates are not fully job-ready. College leaders can consider how to increase opportunities for students to become career ready through both stand-alone and embedded opportunities. Further, college leaders can consider how to include employers in designing these opportunities to ensure that they best meet employers’ needs.

5. Provide robust student supports, including academic advising and wraparound support

Leaders from excelling colleges describe a more robust approach to academic advising than leaders from aspiring colleges. They describe their advising system as multilayered, involving academic counselors and student success advisors. These roles collectively support students with academic challenges, skill building, and service navigation. Advising is portrayed as highly accessible, with information delivered through a range of channels to ensure students know where to go for help. Career pathway navigators, who support students by guiding them through credit for prior learning, documentation, enrollment, and transitions to further academic programs, were noted as well. And excelling colleges provide more wraparound supports, such as help with child care or transportation, than aspiring colleges. In rigorous evaluation studies, a range of comprehensive supports appears to improve student completion rates at community colleges.

Implications for policy

To enable more community college practitioners to adopt the above practices, state or federal policymakers should consider the following:

1. Incentivize community colleges’ economic alignment and performance through outcomes-based funding (and evaluate its effects)

As of 2024, approximately 28 states use outcomes-based funding to allocate some portion of state funding to community colleges, but the percentage of funding allocated based on performance varies widely. For instance, Texas now allocates approximately 95% of state funds based on performance. Criteria include the numbers of students who complete dual credit hours, transfer to a four-year college, or earn a credential or degree with high earnings (with additional funding for earning a credential of value in a high-demand field). Other states that allocate funding to community colleges primarily based on meeting measurable milestones or outcomes include Ohio, Tennessee, and North Dakota.

More evaluation is needed to know to what extent outcomes-based funding could increase the number of credentials of value earned in a state each year, as well as other potential downsides. It is well known that performance incentives often lead organizations to “cream-skim” in admissions, favoring those who will likely have better outcomes; research shows that outcomes-based funding benefits colleges that serve a more advantaged student population. But Texas’ funding formula includes adjustments for students who are economically disadvantaged (Pell Grant recipients), academically disadvantaged (students who do not have college entry-level skills in reading, writing, or math), and 25 years or older. States might also consider including adjustments for enrollment size, consistent with the finding in a report that small colleges tend to be relatively less successful at producing credentials of value.²

2. Provide technical assistance to support employer involvement

Now more than ever, with AI shaping workplaces and rapidly changing the skills that employers need, ongoing and regular engagement with employers is critical. Technical assistance organizations can help community colleges to better understand the local labor market and engage in meaningful, two-way relationships with employers to develop programs that are responsive to employer needs; they also might help comprehensive community colleges adopt at least some of the practices of successful technical colleges. Such organizations could help colleges regularly analyze labor market data to drive curriculum design and work-based learning opportunities; coordinate engagement with local industry leaders and employers to learn about their needs and create pipelines to jobs; and implement professional development for faculty to ensure they maintain current knowledge of industry developments and trends. States may consider allocating funding to community and technical colleges to engage with technical assistance organizations that can support meaningful employer involvement.

3. Fund robust academic and career advising plus other student supports

Students need high-quality advising that extends beyond course placement to set them on a path to employment success. Advising can involve a wide spectrum of services that address the whole student, from entry to credential completion and beyond, including services that address academic challenges, provide career navigation support, meet students’ basic needs, and more. States may consider requiring individualized learning plans or student success plans for community college students, ensuring that all students have a robust plan in place and regular touchpoints with advisors to monitor implementation of their plan.³ Further, states may also consider setting maximum advising caseloads—or sharing nonbinding recommendations for maximum advising caseloads—to ensure that advisors have sufficient capacity to provide the level of support students need for success. Of course, states that consider these options may need to provide additional funding to address the costs associated with hiring more advisors or adopting new technology to support advising processes.

4. Provide more federal assistance

In addition to the state policy recommendations that are the primary focus of this brief, the federal government plays an important role in shaping community college practices. For instance, additional funding for work-based learning options or more career guidance for community college students could be generated through reauthorization of the Higher Education Act or other workforce legislation. As states get ready for “Workforce Pell” grants later this year (which were included in the One Big Beautiful Bill legislation of 2025), the federal government should help them collect the necessary data to measure which programs will qualify, and what more can be done to encourage such qualification (for instance, by “stacking” more noncredit programs into for-credit programs and improving earnings outcomes).

Conclusion and implications for research

Enhancing the ability of community colleges to generate more credentials of value for their students would improve the earnings and prospects of those who will not obtain degrees at four-year colleges and universities. The practices and policies suggested above should support this goal, alongside other new policies (like “Workforce Pell”).

At the same time, we need to experiment with and rigorously evaluate many of the policies and practice suggested above, especially those where few rigorous research studies have been conducted to date. The lack of rigorous research evidence characterizes many dimensions of community college practice. For instance, noncredit programs at community colleges might play a growing role in workforce efforts there, as such programs can be adjusted more quickly and less bureaucratically in response to shifts in labor demand. But we know relatively little about the labor market value of these programs, outside of a few studies to date. Right now, IPEDS does not collect data on noncredit programs, and many colleges do not have such programs. We need more research to better understand their market value, especially as “Workforce Pell” is rolled out.

Other forms of financial aid for community college workforce programs should receive more attention. For instance, there has been growing interest in programs with outcome-based repayment for students and trainees, like income share agreements and outcome-based loans. Such loan programs are currently being developed and implemented in both the private and public sectors, and could become a major new source of funding for community college workforce programs—though, here again, more rigorous research is needed to determine the cost-effectiveness of these approaches and for whom they work best.

Interest has also grown in other forms of workforce development, such as sectoral training programs by various nonprofit organizations or work-based learning, including apprenticeships. We need to learn how to scale these programs while maintaining their quality, but if and when we do so, they could be viewed as complements to community college training, with sectoral training and work-based learning becoming part of programs that also involve college workforce programs.

Finally, we note that the growing use of AI in the workplace might disrupt the labor market value of all workforce credentials, including those from community colleges. If young college graduates have more difficulty being hired into entry-level positions because of automation by AI, work-based learning linked to college curricula might become more important as a way of gaining such experience. Much more research will be needed on how the labor market value of college credentials evolves over time, and community colleges will need to be responsive as they evolve by adjusting program content.