Federal Policy Update as of January 21, 2026
Jan 21, 2026
Workforce Avoids Massive Cuts in Bipartisan Labor-HHS Budget Proposal
Congress released a budget proposal to fund programs administered by the federal Departments of Labor, Health and Human Services (HHS), and Education. Part of a four-bill “minibus” package to cover the rest of Fiscal Year 2026, the proposal mostly would fund workforce development programs at the same levels as the last two years. It decisively rejects the devastating cuts to Workforce Innovation and Opportunity Act (WIOA) and other workforce programs proposed last year by the Trump administration and the House of Representatives Appropriations Committee.
Instead, this proposal closely resembles the measure passed out of the Senate Appropriations Committee last summer, which won overwhelming bipartisan support. As shown in the table below, WIOA absorbs a $10 million reduction in Adult Title I formula funds, as does the Senior Community Service Employment Program (SCSEP). Funding for Wagner-Peyser and a series of programs to support ex-offenders was reduced by $5 million each. Most other workforce initiatives—notably including Job Corps, which the administration tried to unilaterally eliminate last year—are level-funded.
Beyond the news on funding, Washington insiders note that as Congress takes a newly assertive pose on federal spending, programs should be less vulnerable to interference of the kinds attempted by the administration in 2025. Another attack on Job Corps, for instance, will be far more difficult if it is funded through a full appropriations process rather than a Continuing Resolution (CR), as was the case for FY 2025.
While the CR that ended last fall’s government shutdown expires on January 30, consensus is that Congress will act in time to avoid a repeat. The House of Representatives is expected to vote on the package this week before going into recess next week. If it passes, as expected, the Senate will vote next week when it comes back from its current recess.
In the sense of avoiding cuts that would have rendered the workforce system all but inoperable, this budget represents close to a best-case outcome. Yet, as job growth remains underwhelming and the labor market continues to adjust to AI and federal trade and immigration policies, workers and employers will need more than flat funding—which amounts to a slight reduction when considering inflation—and stale policies.
NYATEP commends Congress for avoiding disaster, and our members and partners for answering the call to advocacy. But we can and must do far more to support workers, employers, and communities toward equitable prosperity.
