Building Worker Power in Cities & States:
Industrial Policy

Background

The first two years of the Biden administration saw unprecedented levels of federal investment in our communities. Between the American Rescue Plan Act (ARPA),¹ the Infrastructure Investment and Jobs Act (IIJA),² the CHIPS and Science Act (CHIPS),³ and the Inflation Reduction Act (IRA),⁴ trillions of dollars will flow to both private and public entities:

• $1.9 trillion in ARPA funds directly invested in communities to prevent economic collapse during the COVID-19 pandemic.
• $1.2 trillion in IIJA funds, focused on rebuilding and strengthening the nation’s infrastructure while creating good jobs. 
• $369 billion in IRA funding to make significant investments to address climate change and the transition to a clean energy economy.
• $280 billion in CHIPS dollars, including major funding to build and grow the domestic semiconductor industry and strengthen science and technology research and development.

The passage of this once-in-a-generation slate of industrial policy bills gives state and local recipients a historic opportunity to enable worker power-building. Strategies that can be leveraged to empower workers who work on IIJA, CHIPS, or IRA funded projects include:

• Project labor agreements
• Prevailing wage requirements
• Labor peace agreements
• Local and targeted hiring authorities
• Workforce development and apprenticeships
• Place-based “energy community” tax credits
• Domestic content requirements
• Childcare provisions
• A scoring system for competitive, discretionary grants and loans that incentivizes the use of Community Benefit Plans that encourage the free and fair choice to join a union

Federal funding is distributed in a number of ways:

• Formula funding to states: A large percentage of the funding, especially from the IIJA, will move automatically to the states according to a statutorily defined formula. These funds are designated for purposes specified in the statute, with few other constraints on how the states choose to allocate and disburse the funds.
• Competitive funding: Federal agencies — in particular, the Department of Transportation, the Department of Commerce, the Department of Energy, and the Environmental Protection Agency — will have discretion to set up competitive grant programs to achieve statutory purposes through another pot of money. Several of these competitive programs require or permit agencies to attach job quality standards.
• Tax credits: Another large chunk of the funding in these bills will be expended through tax credits for private sector companies undertaking projects that align with the legislation’s objectives.

While all these funding streams have the potential to support worker organizing and empowerment, this section outlines how states and localities can leverage the money flowing from the federal government to maximize worker power-building. 

Objective of State Intervention

The objective of state intervention in this area is to condition the expenditure of funds authorized by the IIJA, CHIPS, and IRA on adoption of pro-worker policies by fund recipients. During congressional negotiations over these bills, many potential conditions on state spending were dropped from the legislation. However, with advocacy from the labor movement and other progressive organizations, these kinds of conditions can be adopted at the state level. State legislatures can be encouraged to require companies receiving federal funds passed through the states to adopt pro-worker policies as well as set strong climate and clean energy goals through strategies such as project labor agreements, prevailing wages, and apprenticeships.

Read:

Breaking Ground: The Inflation Reduction Act Two Years In

Climate Jobs National Resource Center

Preemption Risk

The preemption risk is the same as that described in Section VI of the toolkit on procurement.

Options for State or Local Action

I. Worker-Empowering Conditions on the Disbursement of Funds

As discussed above, the largest pot of money from these three pieces of legislation goes to the states based on a statutory formula. There are few constraints on how it is spent, beyond the general purpose of the programs, such as providing weatherization services or replacing aging roads and bridges. The discretionary grant programs, however, include a number of worker-empowering conditions that federal agencies are already attaching to their grants.

One option for state or local action is for states to pass legislation imposing the same worker-empowering conditions on their disbursement of the formula funds as federal agencies are imposing through their discretionary grant programs. For example, Maryland’s Promoting Offshore Wind Energy Resource (POWER) Act promotes the inclusion of labor standards in proposals for the use of federal funds for the state’s offshore wind and related transmission projects, aligning the state’s energy procurement goals with the federal provisions outlined in the IIJA and the IRA.⁵

Another example is the Department of Energy’s Funding Opportunity Announcements (FOAs) for funding under IIJA discretionary grants, which require applicants to complete a community benefit plan (CBP).⁶ CBPs must include a description of plans to engage with labor unions, worker organizations, workforce development organizations, and community organizations. Applicants can also get credit for having a CBP by reaching a Community Benefits Agreement, Good Neighbor Agreement, Project Labor Agreement, or a Community Workforce Agreement.⁷ 

The FOAs require the applicant to complete a CBP detailing their approach and commitments to: 1) community and labor engagement; 2) investment in the American workforce; 3) advancing diversity, equity, inclusion, and accessibility; and 4) the Justice40 Initiative target delivering at least 40% of the overall benefits from federal investments to disadvantaged communities. The CBP is evaluated as 20% of the applicant’s overall merit review. In addition, the FOAs require applicants to discuss how they will support their workers’ free and fair chance to join a union, bargain collectively, and have a voice in the design and execution of workplace decisions that affect them, such as workplace safety and health plans. 

States could enact legislation that requires any applicants for the state’s IIJA formula funding to meet the same standards that are included in the Department of Energy’s FOAs.

Spotlight: Blue Bird Corporation – Fort Valley, Georgia

In 2024 – a year after voting to unionize and affiliate with the United Steelworkers – workers at Blue Bird Corp. in Fort Valley, Georgia, approved a first contract securing wage increases, health and safety protections, and enhanced benefits for more than 1,500 workers. 

This historic win was significant for a number of reasons. For one, the Blue Bird workers won the largest union organizing campaign at an auto manufacturing plant in 15 years in a right-to-work state with a union density rate of 4.4%. The bus manufacturer was also selected to receive up to $80 million in federal aid to build manufacturing capacity for electric school bus production. The grant they received was a part of the Department of Energy’s Domestic Automotive Manufacturing Conversion Grants program, which requires that applicants include descriptions of commitments to creating high-quality and/or high-paying jobs, supporting organizing and collective bargaining, and entering into labor and community benefits plans.⁸ As Acting Secretary Julie Su remarked to Blue Bird workers at their contract signing in Fort Valley, “the almost $80 million from a Department of Energy investment is going to allow [Blue Bird]… to expand, to build out, and to create 400 new union jobs right here in this great city.”⁹

II. Project Labor Agreements (PLAs)

Another possible model can be found in the CHIPS Incentive Program Notice of Funding Opportunity (NOFO),¹⁰ which “strongly encourages” the use of PLAs for construction projects. The NOFO goes on to assert that the use of a PLA indicates compliance with the requirement for a construction workforce plan. If an applicant in this discretionary grant program does not use a PLA, the applicant must comply with more onerous reporting requirements, such submitting workforce continuity plans. States could use this program’s provisions as a blueprint for embedding encouragement of PLAs in legislation, setting forth conditions on how state agencies disburse any construction funding. 

III. Workforce Development 

States can pass bills requiring that certain projects participate in apprenticeship programs that meet specific labor-related criteria. For example, Connecticut’s Climate and Community Investment Act requires large-scale renewable energy projects to pay prevailing wages and support workforce development through participation in apprenticeship programs.¹¹

The bills each include a great deal of funding for workforce development programs. States can use these funds to support and ensure enforcement and oversight of apprenticeship programs.¹² Furthermore, they can limit such funding to registered apprenticeship programs, thereby ensuring that primarily union-sponsored programs get support.

IV. Strategic Enforcement Partnerships

State agencies, unions, and labor-adjacent organizations can partner to enforce high-road labor requirements in the IRA, IIJA, and CHIPS (see Section V). This would require information sharing notice or registration (of intent to leverage credits) requirements to be functional.

V. Oversight

Finally, states can also use state or federal funding to oversee compliance with these pro-worker requirements. Although the federal Office of Management and Budget is statutorily tasked with tracking the labor, equity, and environmental standards and performance under IIJA, states may be better equipped to track compliance with these provisions due to their closer relationships with local unions. 

VI. Other Recommendations

• Coordinate efforts to educate state and local lawmakers on existing incentives in the bills.

• Build coalitions of expertise in both the labor and clean energy transition spaces to promote worker empowerment.

• Explore siting and permitting reforms that enable community and worker organizations to engage in policy implementation.¹³
• Incorporate labor standards into just transition frameworks. 

1. American Rescue Plan, The White House, https://www.whitehouse.gov/american-rescue-plan/. ↩︎
2. Fact Sheet: The Bipartisan Infrastructure Bill, The White House (Nov. 6, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/. ↩︎
3. Fact Sheet: CHIPS and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, and Counter China, The White House (Aug. 9, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/. ↩︎
4. Inflation Reduction Act Guidebook, The White House, https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/. ↩︎
5. Maryland Commits to 8.5 GW of Offshore Wind by 2031, Looks Ahead to Offshore Wind Transmission, Perkins Coie (April 7, 2023) https://www.perkinscoie.com/en/news-insights/maryland-commits-to-85-gw-of-offshore-wind-by-2031-looks-ahead-to-offshore-wind-transmission.html. ↩︎
6. CBPs have also been included in the Department of Energy’s IRA grants, and similar approaches have been undertaken by other agencies for IIJA, IRA, and CHIPS. For example, the EPA’s IRA Greenhouse Gas Reduction Fund applications required a “Labor and Equitable Workforce Development Plan.” ↩︎
7. About Community Benefits Plans, Department of Energy, https://www.energy.gov/infrastructure/about-community-benefits-plans. ↩︎
8. Domestic Automotive Manufacturing Conversion Grants, U.S. Department of Energy, Office of Manufacturing and Energy Supply Chains, https://www.energy.gov/mesc/domestic-manufacturing-conversion-grants. ↩︎
9. Press Release, U.S. Department of Labor, Remarks by Acting Secretary of Labor Julie Su at Blue Bird First Contract Signing (July 19, 2024), https://www.dol.gov/newsroom/speech/20240719. ↩︎
10. CHIPS for America, CHIPS Incentives Program Portal, National Institute of Standards and Technology, https://www.nist.gov/. ↩︎
11. Connecticut General Assembly, SB 999 (2021), https://www.cga.ct.gov/2021/TOB/S/PDF/2021SB-00999-R01-SB.PDF. ↩︎
12. Apprenticeship, U.S. Department of Labor, https://www.dol.gov/general/topic/training/apprenticeship. ↩︎
13. For example, Michigan’s recently passed HB 5120 creates a regulatory framework for the certification, zoning, and workforce requirements for large-scale solar, wind, and energy storage facilities (https://www.legislature.mi.gov/documents/2023-2024/publicact/pdf/2023-PA-0233.pdf). ↩︎