As the tech industry battles state lawmakers eager to rein in the explosion of data centers, they’ve found a useful ally — labor unions.
From California to New Jersey, labor groups are throwing their weight behind the energy-guzzling facilities, even as public opposition grows. As legislators in both parties — but especially in blue states — pitch everything from cost restrictions to water standards to outright bans on new data centers, unions are pushing back to protect what they see as the best opportunity for work they’ve had for years.
“We’re in a moment where we’ve got an industry again, something that’s birthed right here in America,” said Jason Parker, president of the Virginia State Building & Construction Trades Council, which has pushed against efforts to roll back data centers’ tax incentives. “Now all of the sudden everyone is against it. It’s hard to wrap your head around.”
Union opposition helped sink data center regulatory bills this year in states such as Illinois and Pennsylvania. In Colorado, Democrats tabled a bill that would have slapped clean energy requirements and other restrictions on data centers amid opposition from labor unions — even after the main sponsor wrote in new tax incentives designed to bring them on board.
“We worked our butts off to give them what they said they wanted,” said Colorado state Sen. Cathy Kipp (D), the bill’s sponsor. “This was never going to get through without labor support, and we could never get them on board without an incentive. But they were still against the bill.”
The burgeoning alliance with labor is a welcome boost for the tech industry as it grapples with public resistance to the physical infrastructure supporting the AI boom. More than 300 bills have been introduced in states this year to rein in data centers — including 11 states where lawmakers introduced bans on new construction.
At the same time, the tech industry has strengthened its ties with labor groups through training programs and agreements that rely on union workers.
“American AI leadership depends on data centers, and data center construction depends on skilled trades,” said Caleb Max, CEO of the National Artificial Intelligence Association, a trade group advocating for AI expansion. “The AI industry and labor both share an interest in seeing these projects move forward. Faster, well-built data centers mean more good-paying construction jobs, stronger regional economies and continued U.S. leadership in AI.”
The data center boom has scrambled political alliances, with tech companies cozying up to the White House and unions finding themselves pushing back against their typical Democratic allies.
But for workers, data centers aren’t about politics. They’re about jobs, especially as data centers emerge as a dominant source of new construction.
A messaging statement from the International Brotherhood of Electrical Workers calls on its members nationwide to advocate against data center moratorium bills. Bans on the facilities, the union says, “eliminate good-paying union construction jobs” and would mean that communities “lose critical tax revenue and infrastructure investment.”
Even as blue state governors such as Pennsylvania’s Josh Shapiro and New Jersey’s Mikie Sherrill rolled out guardrails on data centers last week, they were quick to include labor protections. New standards proposed by Shapiro, which could be passed by the state Legislature, were written with union leaders and include requirements that developers submit workforce training plans, pay prevailing wage and create at least 200 construction jobs.
Parker of the Virginia State Building Trades said the boom in what’s been deemed “Data Center Alley” in Northern Virginia has provided some of the best job opportunities for union laborers since the North American Free Trade Agreement in the mid-1990s spurred companies to relocate manufacturing outside the U.S. and away from American workers.
“This is good work, strong work, and it’s part of essential infrastructure,” Parker said. If lawmakers relent to public pressure, he said, “what can we build? What industry are we allowed to have?”
Statehouse battles
State politicians who had rushed to entice data centers with tax incentives are now rethinking their support as they reckon with the industry’s impacts on electricity bills, grid reliability and the environment. Labor forces are trying to temper the backlash.
In Colorado, the pro-environment labor coalition Climate Jobs Colorado — which includes the AFL-CIO, LiUNA and other large trade groups — argued that Kipp’s bill would make Colorado the hardest state to build in. Nate Bernstein, the group’s executive director, said it could force construction to neighboring states like Wyoming, where they might burn fossil fuels.
Even after Kipp added an incentive program offering tax breaks to some projects, Bernstein’s group stayed opposed. Kipp pulled the bill days before the legislative session ended in May.
“We are really eager to get back to the table and figure out what policy makes sense,” Bernstein said. Kipp, who has already prefiled her bill for consideration next year, likewise said there’s a “good starting point” for future negotiations.
In Maine, labor unions revoked their support for a Democrat-led bill to study potential restrictions on data centers after lawmakers amended it to include a temporary ban on new facilities. Gov. Janet Mills (D) subsequently vetoed it.
Jason Shedlock, president of the Maine Building & Construction Trades Council, said the bill became a “partisan litmus test,” with Democrats rushing to signal their anti-data-center credentials. He was especially troubled to hear lawmakers dismiss the project for only creating “temporary jobs.”
“The construction industry is about a string of temporary jobs,” he said. The labor movement, he added, “has some work to do to make sure” more lawmakers see that viewpoint.
In Illinois, Gov. JB Pritzker’s push to pause state tax incentives for new data centers for two years has faced political pushback from usual Democratic allies. That includes the powerful International Union of Operating Engineers Local 150, with members in Illinois, Indiana and Iowa.
“Like any other industry, we want to build all these things,” said Marc Poulos, the union’s executive director.
Environmental groups have pushed too for the tax credit pause, especially after lawmakers failed to advance a separate bill earlier this year that would have reined in the industry’s electricity demand and potential consumer costs.
In a separate but related issue, the debate has gone into the weeds on Illinois’ Biometric Information Privacy Act, which lets people sue companies that collect or use biometric data such as facial scans and voiceprints without their permission.
Business groups say the law has opened the door to lawsuits that make Illinois a less attractive place to invest in — raising concerns that companies could locate to nearby Indiana or Wisconsin. One notable case involved Meta Platforms, which was accused of using Facebook’s facial-recognition technology to create and store scans of users’ faces without the consent of Illinois users. The company later agreed to pay $650 million to settle the case.
The General Assembly was still considering the tax incentive pause in the state budget late Sunday before its midnight spring session deadline. Lawmakers also could take up the issue of data centers and whether to tweak the information privacy law during an end-of-year legislative session.
National Democrats are watching state politicians’ negotiations as they work out their own strategy for how to handle the facilities.
Sen. Chris Van Hollen (D-Md.) said he made sure to bring labor leaders — including from building trades and the Laborers’ International Union of North America — into the process of drafting his “Power for the People Act,” introduced in January. That bill would incentivize data centers to provide their own power, cover additional costs and meet labor standards.
“While data center construction opens the door for new, good-paying jobs, many other workers are anxious about the consequences of AI, which is largely driving data center development,” Van Hollen said. “Data centers also pose concerns for many in our communities and risk driving up costs for the very workers who would benefit from the jobs they create. That’s why it’s critical for us to balance these competing issues.”
The jobs factor
To better understand the effect that data centers are having on the construction business, one only has to look at a few key figures.
Data from the Bureau of Labor Statistics found that data center construction rose more than 34 percent between March 2025 and March 2026, to nearly 30 percent of the value of all construction — more than shopping centers, hospitals and schools.
Not all of those projects hire union workers, and national data shows that just under 11 percent of construction workers are unionized. But in some states, especially those led by Democrats, that’s created a bargaining opportunity for lawmakers — as they can build support for proposed data center regulations by adding certain labor standards.
In California, for example, a bill from state Sen. Steve Padilla (D) would give expedited permitting to data centers that meet environmental and labor thresholds without passing costs to consumers. The bill, which has not yet reached the floor, has the early support of the local International Brotherhood of Electrical Workers union.
In New Jersey, lawmakers were able to quickly move a bill that requires data centers to meet certain wage or labor provisions to get tax breaks, coming out of a lobbying effort from the Eastern Atlantic States Carpenters Union.
The new data center standards that Sherrill announced last week also include labor requirements. According to the National Conference of State Legislatures, 12 other states have wage or labor requirements for tax incentives.
Several other bills are pending in New Jersey that would impose energy or cost requirements on data centers. But those have a limited path forward without labor support.
Todd Vachon, director of the Labor Education Action Research Network at Rutgers University, said the political tension around data centers has a lot in common with the climate change debate, as Democrats in both cases have had to balance their union and environmental constituencies.
“Democrats need to figure out how to thread the needle and how to make concessions to both sides to create a regulatory framework that will satisfy the demands of the construction industry to create jobs, but also alleviate the concerns of communities,” Vachon said.
Tech companies are also working to bring unions into the fold, promising to boost labor standards and apprenticeship programs amid the construction boom. North America’s Building Trades Union and OpenAI’s Sam Altman in March announced a collaboration to better labor standards for data centers and improve apprenticeship programs.
Microsoft in April announced an expanded partnership with NABTU to drive AI education in workforce training — building on work the company’s Elevate Initiative AI skills program has already done with the AFL-CIO and other unions.
Kate Andrias, a professor at Columbia Law School who co-authored a recent paper on the role of unions in infrastructure development, said the fact that tech firms are interested in union labor shows that even large companies — desperate to build at scale — recognize the value of organized labor. It is incumbent on legislators, she said, to get labor standards in place that address all community concerns.
“A data center could be built with good union jobs and still raise questions about impact on the community and environment. Those need to be balanced,” she said. “We urge more engagement up front, not just by building trades, but other organizations representing working people, local residents, to make sure that isn’t happening at the expense of other concerns.”
Shia Kapos contributed to this report.
