Essay: Lessons from Puerto Rico, Sweden could shape US labor strategy
A recently released essay collection titled “Industrial Policy 2025: Bringing the State Back In (Again),” from the Roosevelt Institute, includes a piece by Roosevelt fellow and Iowa law professor César Rosado-Marzán. The essay delves into how industrial policy has been used effectively to promote both industry and unions.
Rosado-Marzán’s essay, “Fair Transition Funds, Employer Neutrality, and Card Checks: How Industrial Policy Could Relaunch Labor Unions in the United States,” explores lessons learned in Puerto Rico and Sweden. It suggests how contemporary U.S. industrial policy could sustain “new worker organizing and build power from the bottom up.”
The essay collection explores potential tools of state economic capacity that could complement the tax credits and grants that “formed the core” of President Joe Biden’s industrial policy agenda.
“There is a critical window in 2024 to make the case for a more robust industrial policy toolkit in the next Congress and administration,” said Todd Tucker, director of the Roosevelt Institute’s Industrial Policy and Trade program. “Now is the time for experts like these to inform the public debate by sharing what their fields already know (but busy policymakers might not) about the opportunities of a more diversified industrial policy toolkit.”
In his essay, Rosado-Marzán explains that after discussing the cases of Sweden and Puerto Rico, he “reflects on how contemporary U.S. industrial policy could help sustain new worker organizing and reinvigorate unions.”
“Neutrality and card checks can help curb employer opposition to unions,” the essay states. “Congress can also help create labor and employer comanaged Fair Transition Funds to develop workers’ skills and to match workers to jobs for a new, green economy.”
The Roosevelt fellow further noted that Puerto Rico, a U.S. territory that, while being similar to the mainland U.S. in some aspects, “was able to weave industrial and labor policies in the 1950s to 1970s in its garment industry.”
“Federal labor and employment laws have thus been binding in Puerto Rico unless otherwise explicitly excluded by the U.S. Congress,” the essay notes. “This means that Puerto Rico has been subject to U.S. labor and employment laws, including the National Labor Relations Act (NLRA). However, the Fair Labor Standards Act (FLSA) was one such law that did not always apply to Puerto Rico.”
The professor explains that “Congress exempted it from the FLSA’s provisions until around the 1970s to promote a low-wage policy that could attract U.S. industry to Puerto Rico. As such, in the 1950s to 1970s, the island was a landing pad for U.S. ‘runaway industry’ seeking lower labor costs and taxes.”
As the extension of the FLSA became difficult, the AFL-CIO “switched gears,” according to the essay, and started to engage with the Puerto Rico government to figure out how it could promote unionization in the island’s emerging industry.
Rosado-Marzán wrote: “The government of Puerto Rico was willing to engage if U.S. unions stopped insisting on their plans for FLSA extension. Considering that pact, the government of Puerto Rico supported AFL-CIO unions, including the International Ladies and Garment Workers Union (ILGWU), having a seat on the wage committees of its Minimum Wage Board, a tripartite board with authority to set minimum wages in Puerto Rican industry.
“Under federal and Puerto Rico law, the Board acted as a substitute of Washington, DC’s FLSA. The ILGWU learned how to use the Board to set minimum wages in all garment shops in Puerto Rico. Given the reality of low wages in Puerto Rico, the Board’s minimum wages became the prevailing wages for workers in the garment industry — indeed, in all manufacturing.”
Finally, the essay concludes that in Puerto Rico, centralized bargaining agreements came through wage boards and institutional roles for unions to bargain for employee benefits “at the plant level.”
“Employer neutrality and card checks were also important to build union membership at the plant level,” the essay adds. “In the U.S. today, Fair Transition Funds could promote some form of centralized authority for unions. These funds can smooth workers’ shift to green jobs through training, job placement, and unemployment benefits for those who are between jobs.”
