As a result of changes across all sectors, “critical steps — from supporting labor force participation to reforming immigration — must be taken to increase U.S. labor supply, prepare workers for the future economy, and attract global talent,” CED President David K. Young said in a statement. “These challenges demand bold, forward-looking policy — and strong collaboration between the public and private sectors — to ensure the U.S. workforce is ready for what’s ahead.”

According to the CED, policymakers should seek to remove barriers that drive differences in labor force participation across key factors such as age and parental status. Its recommendations include the following:

• Repealing the Social Security retirement earnings test, which would reduce confusion among workers nearing full retirement age and boost labor force participation.
• Expanding the Earned Income Tax Credit (EITC), which would promote work and reduce hardship among low-income workers. Congress should increase the maximum EITC and income limit for individuals without children and remove age eligibility restrictions that penalize those over 65 or under 25, according to the CED.
• Creating flexible work arrangements, which can support workforce participation for many groups — including older workers, parents with young children, caregivers, and those with disabilities.
• Increasing support for working parents by increasing financial support for paid childcare through expanding funding for the Child Care and Development Fund, as well as potentially reforming the Child and Dependent Care Tax Credit, and making more forms of childcare eligible.
• Increasing the childcare workforce and providing on-site childcare facilities.

The CED also calls on policymakers to modernize immigration policies to ensure sufficient influxes of workers with in-demand skills while simultaneously strengthening measures to reduce unauthorized immigration. Additionally, the committee recommends prioritizing the removal of outdated or overly burdensome regulations that limit opportunities to enter the workforce or start a business — including regular comprehensive reviews of licensing requirements to ensure they are necessary, proportionate, and not unduly restrictive. They also should consider streamlining processes for obtaining licenses, recognizing out-of-state credentials, and reducing or eliminating licensing requirements for low-risk professions.

Finally, the committee suggests modernizing education and training systems to better align with industry needs, expanding access to alternative pathways, and supporting ongoing upskilling for all workers.

“With labor shortages already weakening U.S. economic growth and global competitiveness, critical steps must be taken to increase labor supply, prepare workers for the future economy, and attract global talent,” the report concludes. “These trends also impact the U.S. fiscal outlook, as a declining ratio of workers to retirees continues to strain government programs. A comprehensive policy response is both urgent and essential.”