The U.S. Department of Labor is asking the workforce system to reconsider a familiar assumption: earning a credential is not necessarily the same as gaining something of value.
In Training and Employment Notice 04-26, issued August 27, 2026, the Employment and Training Administration explains how states should identify and promote high-quality industry-recognized credentials. It also recommends that credential quality play a much larger role in decisions about training, funding, eligible training providers, and career guidance.
The notice does not create new statutory requirements or replace existing federal guidance. However, it gives state agencies, workforce boards, American Job Centers, education partners, and grantees a clear indication of where federal workforce policy is heading.
The central message is straightforward: the workforce system should not judge success primarily by how many credentials people earn. It should determine whether those credentials lead to employment, higher wages, career advancement, and further opportunity.
What makes a credential valuable?
The notice identifies six characteristics of a high-quality credential.
Labor-market demand: Employers must actually need and value the credential. Occupational growth alone is not enough. The strongest evidence is that multiple employers explicitly name the credential in current job postings or commit to considering, interviewing, or hiring people who earn it.
Industry recognition: The credential should be recognized by employers, industry associations, sector partnerships, or a credible industry body—not merely by the institution that provides the training.
Portability: A worker should be able to use the credential with multiple employers and, where appropriate, across regions, states, or educational institutions. A credential recognized by only one employer or in one locality offers less protection and flexibility to the worker.
Stackability: When relevant, the credential should connect to additional education, credentials, apprenticeships, or career advancement. That connection should provide a real benefit, such as college credit, advanced standing, access to a higher-level occupation, or increased earnings. Simply placing several credentials in a sequence does not make them meaningfully stackable.
Labor-market outcomes: Evidence should show that people who earn the credential obtain jobs, increase their earnings, or advance in their careers. ETA recommends that states establish at least one measurable benchmark. Examples include an annualized wage increase of at least $10,000, earnings at least 10 percent above those of the state’s median high school graduate, or entry-level wages at or above 200 percent of the federal poverty level for one person.
Accessibility and reasonable cost: The time and total cost required to earn the credential—including preparation, training, examinations, and fees—should be reasonable in relation to the expected economic benefit.
Together, these criteria turn credential quality into a consumer-protection issue. A credential may sound impressive and still leave a participant with debt, lost time, few job prospects, and a qualification employers do not recognize.
What is changing?
For years, credential attainment has been an important WIOA performance measure. That remains true. But the new notice draws a sharper distinction between attaining a credential and attaining a credential that the labor market rewards.
This shifts the workforce system’s attention from completion to consequence.
A program can have a high completion rate and still produce poor results if its credential is not requested by employers, does not lead to placement, or prepares more people than the regional economy can employ. Conversely, a credential offered by a less familiar provider may have considerable value if employers recognize it and its recipients consistently obtain good jobs.
The notice also encourages states to move beyond credential lists that are merely informational. Credential-quality determinations should influence which programs receive public funding, which providers remain on Eligible Training Provider Lists, and which training options workforce professionals recommend to customers.
That is a significant change in practice. A list should no longer function simply as a catalog of what is available. It should help distinguish which investments are most likely to produce meaningful results.
Workforce Pell makes the issue more urgent
The notice arrives as states prepare to implement Workforce Pell Grants, which extend Pell eligibility to qualifying short-term programs lasting at least eight weeks but fewer than 15 weeks and providing between 150 and 599 clock hours, or their credit-hour equivalent.
Governors, in consultation with state workforce boards, will have a role in determining which programs satisfy state-level requirements before programs are certified to the U.S. Department of Education.
This creates an opportunity—and a responsibility—to align Workforce Pell, WIOA Eligible Training Provider Lists, Perkins-funded career and technical education, Registered Apprenticeship, and state credential policies around common definitions of quality.
Without that alignment, different public programs could continue funding different credentials using different criteria, leaving customers to navigate a confusing and sometimes contradictory system.
What state workforce agencies should do
State agencies should begin with an honest review of their credential policies. The key question is not whether the state has a credential list. It is whether the state can demonstrate why every credential on that list has value.
Agencies should establish a transparent, evidence-based framework that can be applied across WIOA, Workforce Pell, Perkins V, and other publicly supported training programs. The methodology, evidence, approval process, and review schedule should be available to the public.
Credential information should be reviewed at least every two years, as ETA recommends, and preferably coordinated with WIOA state-plan updates and Eligible Training Provider eligibility decisions.
States should also connect participant, wage, unemployment insurance, education, and credential data wherever legally and technically possible. Job-posting data and employer input are useful, but they should be tested against actual outcomes. A credential frequently mentioned in postings may still produce weak results if employers rarely hire the people who earn it.
The state should also examine its own hiring practices. State government is often one of the largest employers in a community. Removing unnecessary degree requirements is a useful first step, but states can go further by identifying relevant skills and high-quality credentials in public job descriptions and contracting requirements.
What workforce boards should do
State and local boards should bring greater scrutiny to training investments.
First, boards should compare the number of people completing training with the number of realistic job openings in the region. The notice specifically warns against overtraining—continuing to produce completers in occupations where training capacity exceeds employer demand. It cites phlebotomy and emergency medical technician programs as areas in which some states may be producing more completers than available openings can absorb.
Boards should therefore examine more than whether an occupation appears on an in-demand list. They should ask:
- How many people are being trained?
- How many relevant openings occur each year?
- How many employers request the specific credential?
- What percentage of completers find related employment?
- What do they earn before and after training?
- Does the credential lead somewhere beyond the first job?
- Are certain populations encountering barriers to completion or employment?
Boards should use these findings to add programs where demand is unmet, adjust enrollment when supply and demand are out of balance, and remove programs that repeatedly fail to produce value.
Boards should also review exclusive or preferred arrangements with credential vendors. The notice cautions against limiting participants to one certification provider when multiple credentials have demonstrated labor-market value, unless a specific credential is required by law, regulation, licensure, accreditation, apprenticeship standards, or documented employer demand.
Finally, boards should work more closely with community colleges, CTE leaders, apprenticeship sponsors, economic-development organizations, and employers. Credential approval should not occur in separate institutional silos.
What workforce professionals should do
Frontline professionals will need better information, but they do not have to wait for a perfect statewide system to begin asking better questions.
Before recommending training, a workforce professional should help the customer investigate:
- Which local employers recognize or require the credential?
- How often does it appear in current job postings?
- What percentage of participants complete the program?
- How many obtain related employment?
- What are the likely starting wage and potential wage gain?
- What is the full cost, including examinations, equipment, transportation, and unpaid time?
- Is the credential portable to other employers?
- Does it provide college credit, advanced standing, or access to another credential?
- Are there lower-cost or faster ways to demonstrate the same competence?
- What happens if the participant completes the training but does not obtain the intended job?
The role of the professional is not simply to help someone enroll. It is to help that person make an informed investment decision.
This also means being candid about uncertainty. When outcome data are unavailable, that absence should be disclosed rather than replaced with assumptions or promotional claims from a provider.
Employers must provide better signals
The workforce system cannot determine credential value without meaningful employer participation.
Employers should specify which credentials they actually require, which they prefer, and which have little influence on hiring. They should help validate competencies, review training content, provide work-based learning, and report whether credential holders perform successfully after hire.
Employers should also examine whether they are using credentials as unnecessary screening devices. A credential should signal relevant capability—not become another barrier for people who could demonstrate the required skills through experience, assessment, apprenticeship, or another credible pathway.
Strong employer engagement goes beyond attending an advisory meeting. It means providing evidence that can influence program design and funding decisions.
A practical starting point
Agencies and boards do not need to evaluate every credential at once. They can begin with the credentials receiving the largest public investment, serving the most participants, or raising the greatest concern about weak outcomes or excessive training capacity.
For each one, assemble a basic evidence profile covering:
- Employer demand
- Industry recognition
- Portability
- Stackability
- Completion and employment outcomes
- Wage changes
- Total cost and time
- Training capacity compared with projected openings
The results can then be used to classify credentials for continued investment, closer monitoring, improvement, reduced enrollment, or removal.
The larger meaning
TEN 04-26 is ultimately about more than improving credential lists. It asks the workforce and education systems to become more accountable for the economic value of the pathways they support.
That requires a change in the definition of success.
The question is no longer simply, “Did the participant earn a credential?”
The more important questions are: “Did employers value it? Did it improve the person’s prospects? Was it worth the time and cost? And did it create a foundation for further opportunity?”
Credentials can open doors, but only when they represent capabilities employers recognize and opportunities workers can actually reach. The workforce system’s responsibility is not to promote credentials for their own sake. It is to help people choose pathways that lead somewhere.