Rebalance Capital and Labor

In center-left discussions of climate, energy, and economic policy—in autopsies of the Biden years and in early blueprints for 2029—organized labor tends to appear as either an afterthought or a nuisance. In particular, labor’s demands to implement mandatory job-quality standards, use union labor, and prioritize domestic manufacturing are viewed as rent-seeking that threatens to slow deployment or raise costs. The Abundance movement has made this view intellectually respectable: If the goal is to build clean energy fast, the argument goes, attaching labor conditions to public investment is like an additional tax—making it harder to achieve outcomes we care about.

This essay argues the opposite—and not merely on grounds of fairness or coalition arithmetic, though both matter. The deeper problem is that elite-led economic transformation has a consistent track record: It shifts wealth upward, leaves workers and communities behind, and generates the political backlash that makes sustained policy impossible. Far from being too solicitous of union demands, Biden-era green industrial policy did not go far enough. A simple return to that policy, with the labor and community standards scrubbed out to make it more palatable to capital, is not a shortcut to durable climate action—it is a recipe for the next reversal.

What follows is an argument for treating political economy questions not as a sideshow to green industrial policy but as its central problem. These questions include the balance of power between capital and labor and the conditions under which workers and their communities can trust that large-scale economic change will work out for them.

The New/Old Common Sense

From about 2018 through 2024, something like a “climate common sense” prevailed among both policymakers and investors.¹ Essentially, they believed that the future was carbon constrained and that advantages would accrue to countries, firms, and communities that moved quickly to seize the potential upsides of a low-carbon economy. The sense that this was the direction of travel eased the path for climate policymaking: It was reinforcing where the economy was going anyway. In turn, aggressive climate policymaking reinforced the sense that this was the direction of travel. Climate action would win the broader base of support necessary to sustain it by delivering “co-benefits,” including in the form of “good, union jobs.”

Biden-era thinking about the importance of union jobs was one piece of a broader rejection of economic orthodoxy. The state was going to step in to improve economic outcomes. The “union” part was not just coalition management, a gesture toward the need for improved job quality, or recognition of the political importance of securing a “just transition” for (often unionized) workers in carbon-intensive economic sectors. It was also a (belated) recognition by some policymakers that deindustrialization and deunionization had weakened the core mediating institutions that connected the interests of working-class people to a broader project of economic governance.² And, critically, the diminished reach of collective bargaining dramatically reduced the scope for disciplining capital from the ground up. Industrial policy was supposed to help rebuild the labor movement and give it a powerful foothold in the new clean energy economy. In doing so, it would help rebuild one of the core constituencies needed to sustain active pro-climate economic governance over time at the bargaining table and in the corridors of state power.

There were important wins. The prevailing wage and registered apprenticeship bonus structure of the clean energy tax credits was a gigantic breakthrough for the construction trades, and has had real-world effects on job quality and union density in clean energy deployment.³ Savvy organizing strategies and a helpful exercise of administrative discretion contributed to big organizing wins by the United Steelworkers at Blue Bird and Eos, and by IUE-CWA at New Flyer. And farsighted bargaining demands combined with hard-fought worker organizing led to successful UAW unionization drives at some of the electric vehicle (EV) battery joint ventures between US automakers and Korean battery makers, most notably and poignantly at the Ultium Cells battery facility in Lordstown, Ohio.⁴ Had there been a Harris administration, there likely would have been a good many more successful organizing drives in clean energy.

And yet, especially in manufacturing, Biden-era policies did not succeed in altering the fundamentally anti-union bias of the US political economy, even in the parts of the sector that directly benefited from massive public subsidies. There are many reasons for this, beginning with the fact that in a fundamentally anti-union political economy it is difficult to get pro-union legislation through Congress. In addition, where officials perceived a national security or geopolitical imperative, the Biden administration placed greater emphasis on ensuring that companies accepted the public subsidies than on ensuring that any jobs created would be good jobs. The consequence was that a disproportionate share of manufacturing investment made through Biden-era green industrial policies went to right-to-work states, and many companies deployed the classic union-avoidance playbook, exposing a gulf between the administration’s rhetoric and the reality that many workers faced.

Upending the Climate Common Sense

Since coming to power, the Trump administration and Republican Congress have sought not just to reverse climate progress but to upend the climate common sense. Their goal has been to convince everyone that the future is not carbon constrained, including by penalizing actors who behave as if it is. They have probably not fully succeeded—for example, the market share of clean vehicles globally is climbing inexorably upward. Their “success” has also been dramatically undermined globally by their war of choice against Iran.

Yet they have shredded any conviction that investors and firms might have had that climate policies, once enacted, will survive the next alternation in power. While future policymakers could take steps to increase the durability of climate action, we are unlikely to see a repeat of the kinds of bets on policy stability that, for example, led automakers to invest tens of billions of dollars in a rapid transition to electric vehicles, which policy reversals have subsequently caused them to write off. This psychological shift makes a simple return to Biden-era green industrial policy unlikely at both a political and a policy level. The climate policy of the future will need to solve anew for how we get capital to invest in the technologies and sectors that are necessary for a low-carbon economy.

At the same time as it has attempted to bury green industrial policy, the Trump administration has embraced an almost unbounded view of the power of the American state to intervene in private markets, however and whenever it sees fit. Some of the Trump administration’s industrial policy interventions have targeted industries and sectors that are also important for climate goals. This is for some of the same economic and national security reasons that motivated aspects of Biden-era industrial policy, plus the Trump administration’s bet on an unregulated AI boom as an economic strategy and (perhaps) out of unadvertised recognition of the far-reaching importance of lithium-ion batteries. While some of these industrial policy interventions look mostly like subsidies, which private firms are only too happy to take, others appear to have an element of state direction over private investment—of disciplining capital, rather than “coaxing” or “derisking” it.

Capitalists are now less likely to make unhedged bets on a low-carbon future. As a result, pundits and some advocates have argued that the key is to remove as many barriers as possible to investment in the clean economy. They say deregulation and abandonment of “everything bagel” social goals—including the goal of greater unionization—are necessary to advance climate goals. Furthermore, the complete absence of transparency or congressional authorization, the gangster-style coercion, and the naked corruption and self-dealing that characterize the Trumpist approach to industrial policy have understandably led some people to rediscover old verities about the proper relationships between states and markets.

Toward a Truly Worker-Centered Climate Policy

Deregulation and constraints on the government’s ability to intervene in private markets will not solve the problems of climate politics because neither addresses the core political economy problem that climate politics faces. It is difficult to build a political economy coalition for clean industrial policy because in recent decades, elite-led projects of economic transformation have mostly gone badly for working people. Working people and their communities simply have no good reason to trust that large-scale economic changes are going to benefit them. Loss aversion is everywhere. Trying to engineer a clean energy transition without solving for this is a recipe for indefinite replays of the Trumpist cleavage politics that we’ve seen from West Virginia to Michigan and beyond.

Abundance circles worry about pairing policies meant to spur investment in the clean economy with labor and environmental standards, domestic content requirements, and community benefits. They believe these additional conditions will increase costs and timelines, thus limiting investment, slowing deployment, and therefore having less to show for the policies.

However, the whipsaw of the last few years points in the opposite direction—we do not face a carefully calibrated trade-off between faster deployment without conditions and slower deployment with them. We face either constructive climate action with standards, or fossil nihilism. Similarly, when it comes to industrial policy more broadly, we do not really face a trade-off between doing it the “right” way and doing it the “wrong” way. We face a choice between a government empowered to intervene in an economy that is manifestly failing huge numbers of our people and failing to decarbonize, and a government so constrained that we’re left at the mercy of the profitability calculus of concentrated corporate capital—which results in continuous upward shifts in wealth and only incidental attention to the climate imperative. Our priority must therefore be building the broadest possible consensus in favor of constructive climate action through bold governance. We will only do that if the climate action we pursue makes the US economy work better for working people.

Labor unions are an essential part of how society can discipline capital to invest in the high-road, low-carbon economy that our people and the planet need. Labor unions make jobs better, and therefore can increase the popularity of policy that helps create those jobs. Labor unions are powerful vehicles for policy advocacy, and their support is typically make-or-break for policy that affects their members whenever Democrats are in power, including when it comes to advancing proactive and timely permitting and siting solutions. Labor unions exercise their power at the bargaining table to compel companies to invest in the facilities where their members work, and to commit to respecting other workers’ right to organize their own unions in new facilities.

The first step toward rebalancing the power of capital and labor ought to be strengthening the right to organize across the board. This step is reflected in legislation like the Protecting the Right to Organize (PRO) Act. The PRO Act dramatically increases penalties for companies that violate workers’ right to form a union. It speeds up union certification processes. And it eliminates some of the most egregious anti-union tactics that allow employers, in the name of “free speech,” to threaten and intimidate workers who want to organize. The PRO Act also overrides state-level right-to-work laws that allow workers to opt out of union membership while nevertheless requiring unions to represent all workers. This change would significantly reduce the perceived advantage to employers of locating in those states. Paired with the new penalties and protections, it would help unions build density in traditionally anti-union states. Alongside that, a future administration might consider requiring card-check neutrality from companies receiving Defense Production Act investments.⁵ Labor standards can and should be added to manufacturing subsidies, as, for example, a new bill to reauthorize the Export-Import Bank would do.⁶

One of the biggest drivers of deunionization in manufacturing over the past four decades has been offshoring and rising import dependence for manufactured goods. US-based manufacturers routinely wield the threat of offshoring in union organizing drives and contract negotiations to cow workers into accepting lower standards. The more attractive offshoring is to corporate management, the harder it is to build worker power in US manufacturing. Thus in addition to pursuing trade policy that creates a level playing field for US workers, future administrations and Congresses should look at additional ways to disincentivize offshoring. And to shift corporate behavior away from focusing on short-term profitability at the expense of long-term investment, we should be looking to put the brakes on things like stock buybacks.

In pursuit of a revived green industrial policy, the US government could also more powerfully leverage the fact that US companies that are not at the cutting edge of key industries need a partner in the US government to have a shot at competing. It can also use the fact that many companies that are at the cutting edge badly need access to the US market to be profitable. The Trump administration has attempted to exploit both forms of leverage, securing equity stakes in exchange for generous and comprehensive subsidy packages to US rare earth miners, investments from the Japanese government into US energy infrastructure, and commitments from companies like TSMC and Emirates Global Aluminum to establish or expand their US manufacturing footprint. Unsurprisingly, the Trump administration has not used this leverage to increase union density or secure guarantees of job quality, preferring to offer Trump family members the opportunity to “bid” for slices of government-guaranteed returns. Future administrations and Congresses that recognize the existence of this leverage could use it instead to attach strong labor standards that ensure that jobs created with public money are good jobs and that unions grow in numbers and in strength.

Conclusion

The biggest mistake we could make is to treat these deeper questions of political economy and the balance of power in our society as a luxury or a sideshow in the effort to revivify green industrial policy. They remain as central to the change we need as ever. The climate politics of the next decade will be shaped less by the technical details of any particular policy than by whether we can rebuild a common sense—a widespread conviction that decarbonization and broadly shared prosperity are not in tension but are in fact the same project. Attempting to remove unions from a meaningful say in the shape and direction of investment in the economy in the name of technocratic efficiency will not get us there. A far more powerful labor movement could.