In recent years, Congress has passed several sweeping federal policies that aim to create jobs, modernize the economy and boost key industries. Early returns are promising in Kentucky, which is seeing a growing number of public and private investments. But to maximize the benefits to Kentuckians, we need state and local action to boost the quality of jobs and help all communities access the funds.
Industrial policy spurring new economic announcements
Three laws passed recently – the Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA) and CHIPs and Science Act – mark a potential new governmental commitment to actively fostering U.S. job creation in specific critical sectors. Embodying an approach known as industrial policy and championed by the Biden administration, these laws use tools like subsidies, regulations, public investment and research and development to strengthen strategically important sectors. The welcome return of industrial policy comes after decades of a corporate globalization model that offshored manufacturing jobs and fostered vulnerabilities ranging from climate change to fragile supply chains.
The new policies are making possible big projects like the Ford and SK Innovation battery plant in Glendale, expected to create 5,000 jobs; $1.1 billion for broadband deployment across Kentucky; and $1.6 billion to build a companion to the Brent Spence Bridge in northern Kentucky. They are also spurring less visible projects that range from airport improvements to clean-up of abandoned mines and oil and gas wells to the purchase of zero-emission school buses. Along with creating jobs and updating infrastructure, these investments can make communities cleaner, safer and more resilient.
The Center for American Progress (CAP) has identified 1,855 different investments linked to the laws in Kentucky already.
More action needed to ensure new jobs are good jobs
More investments don’t necessarily translate into better jobs unless deliberate action is taken on that front. In some cases, the jobs that these laws shift away from – such as in fossil fuel extraction and gasoline-powered cars – were historically heavily unionized, so replacing them with “low road” non-union jobs would worsen job quality on balance in key industries. While industrial policy can help ensure jobs and investments happen here that wouldn’t otherwise, policies aimed at strengthening worker power can ensure that the benefits are widely shared.
Employment standards and incentives – such as requirements to pay prevailing wages and use registered apprentices – are built into some of the new investments automatically (though these measures could have been stronger). In some cases, workers must be taken care of for projects to qualify for or claim the full benefits of these federal programs.
In discretionary programs (in which federal agencies decide where grants go), applicants for new federal funds can make their proposals more competitive through attention to job quality and access. CAP describes how discretionary proposals are more likely to be funded if applicants can show how the project will support good jobs, expand equitable access and training for high-quality employment, include labor and community stakeholders, and demonstrate that they are living up to their commitments.
States, localities and labor and community groups can play a key role here. As applicants themselves or through pressure on entities receiving grants they can:
- Bar involvement of contractors with a history of non-compliance with labor and safety laws;
- Create community benefits agreements that promote use of local rather than out-of-state workers, include targeted hiring from marginalized communities and disconnected workers, and incorporate training and apprenticeship programs;
- Establish and enforce job quality standards that take into account wages, benefits, career pathways, caregiving supports, predictable scheduling and other worker supports;
- Create public pressure for employers to remain neutral on union organizing efforts.
A recent example of the potential from these projects is the decision of 1,400 workers at Blue Bird in Georgia – a manufacturer of electric school buses heavily subsidized by the new laws – to unionize with the United Steelworkers in a state with only a 3% unionization rate. The federal dollars benefited the company tremendously, which the workers leveraged to win a new voice on the job. The new laws included various measures that helped enable unionization, including requirements that the company maintain neutrality regarding unions and not use federal funds on anti-union campaigning, and that the company’s applications detail the health insurance and other benefits provided to workers.
Union rights are a big concern when it comes to the Kentucky Ford-SK battery plant – one of the largest industrial projects in state history. Kentucky gave the company a $250 million up-front forgivable loan in a specially-called legislative session, but the plant’s starting wage for production workers is only $21 an hour. In contrast, a family of three in Hardin County, where the plant will be located, needs at least full-time employment of $31 an hour to meet a basic family budget. A union at the Fork-SK plant could help negotiate better wages, among other advantages.
Support needed for all communities to access the resources
Some of the new resources are targeted to distressed communities, including areas like eastern and parts of western Kentucky traditionally dependent on now-decimated coal jobs, and communities of color hampered by historic discrimination. The Justice40 initiative of the Biden administration has the goal of “40 percent of the overall benefits of certain federal investments flow to disadvantaged communities that are marginalized, underserved, and overburdened by pollution.”
However, many of those communities need resources and technical assistance to apply for and implement the new funds, including matching dollars. HB 9 that passed the 2023 Kentucky General Assembly provided $2 million for a pilot program of matching funds for grants in coal and power plant communities, but much more help is needed. In comparison, Indiana and Ohio recently allocated $500 million each for similar matching fund pools.
Capacity to apply for and implement projects at the local level is also a challenge. The federal government is providing some support for rural areas, but severe long-term reductions in public employment and compensation, plus declines in coal severance and other local tax revenues as major industries disappear, restrict the capacity needed to access and use federal funds.
In addition, another innovative aspect of the new federal clean energy opportunities is the ability of municipal governments, rural electric cooperatives, non-profits and other public entities to access the tax credits otherwise only available to for-profit businesses through what’s called direct pay. That provision gives entities whose mission is service rather than profits the chance to create local jobs and provide cleaner power through participating in the energy transition. But taking full advantage will require mobilized, resourced and engaged community groups and public institutions.
The new industrial policy gives Kentucky a clean shot at better jobs and shared benefits – if we seize the chance in a way that puts workers and communities first.
