Modernizing employment records: The public infrastructure the US labor market needs

The US system through the lens of international experiences

The United States is not alone in facing this challenge—but elsewhere, governments have found ways through.

Since the 1970s, Germany has linked wage, education, and training records to evaluate training programs. Australia built reporting into payroll software, cutting red tape and improving compliance. Brazil’s digital labor card connects millions of workers—including informal ones—to job matching and social aid. Estonia’s once-only reporting system updates tax, health, and social data automatically. India’s e-Shram registry brought 300 million informal workers into view.

Together, these examples show that modernization is about design and coordination, not technology. Successful systems treat employment data as public infrastructure: standardizing formats, sharing data securely across agencies, and giving workers access to their own records.

By contrast, the U.S. relies on a decentralized system built to administer unemployment insurance. Each state collects wage data using different definitions and timelines, often omitting basic details such as occupation, hours worked, or job location. The result is fragmentation: Policymakers cannot measure job quality, track mobility, or identify skills in demand.

Training providers make educated guesses about hiring trends. Researchers patch together surveys, scraped résumés, and job postings—a bit like running a health system with no patient charts, only periodic surveys asking if people feel better than last year.

Overcoming barriers to modernization

Skeptics point to familiar obstacles: bureaucratic inertia, coordination across 50 states, and concerns about privacy and security. But these challenges are no greater than those that once slowed the adoption of electronic health records—and were ultimately overcome.

Modernization would reduce burdens on employers, who now submit the same payroll data in multiple formats to agencies such as the IRS, the Social Security Administration, and the Bureau of Labor Statistics. A “report once, use many times” model, enabled by secure payroll links and shared standards, would streamline compliance while improving data quality.

The case for modernization grows stronger as automation and AI reshape work. Verified experience will soon matter as much as formal education. Without a reliable record of what people actually do and learn on the job, workers can’t demonstrate adaptability, and policymakers can’t target support effectively. Employment records are the missing bridge between learning, work, and resilience.

What global systems teach

The global experience offers a road map for how to move from fragmentation to function. The report’s review of nine global models highlights several key lessons:

• Set standards nationally, implement locally. Central standards, like those used by Germany and the EU, ensure consistency while preserving regional autonomy and flexibility.
• Pilot first, refine later. The United Kingdom’s real-time payroll system succeeded because it started small, learned from early challenges, and then scaled. Testing and iteration help manage complexity and build support.
• Protect privacy by design. India’s universal identification system and the EU’s digital wallet prove that systems can connect data securely while giving individuals control.
• Embed reporting into payroll. Australia and Brazil made real-time reporting easier by building it into the software businesses already use.
• Empower workers. When people can verify and access their own employment histories, as in Brazil and Estonia, trust in the system grows.
• Align incentives carefully. In Brazil, incentives to formalize self-employment inadvertently encouraged employers to cut labor costs by misclassifying employees as contractors. Design matters.

None of this happens without leadership that bridges bureaucracies and brings stakeholders together. In Brazil, finance, labor, and social service ministries had to align; in Australia, payroll software companies became partners. The lesson is clear: modernization requires leadership that can align diverse actors—government agencies, private-sector vendors, worker representatives, and educators—around a shared design process.

Windows for reform

The rise of artificial intelligence and automation raises the stakes. Workers who can show how they’ve adapted—what they did, for whom, and with what results—will stand out. A modern employment records system would let them showcase experience they may not even realize is valuable—in a trustworthy, portable, and digital format transferable across states, industries, and careers.

The payoff would be substantial. With real-time records, policymakers could target aid in weeks instead of months. Educators could design programs and credentials that lead to better jobs and higher wages. Employers could hire faster and with less paperwork. Most importantly, workers could carry their verified experience with them from one job to the next.

Amid another technological revolution, the U.S. cannot afford to fly blind. Employment records are not glamorous, but they are essential: They are the connective tissue of a fair, dynamic economy.

Policymakers must treat employment records as the indispensable public infrastructure they are. The next shock is coming. The question is whether the country will be ready to see it.