Dear Democrats: The Only Way to Help Workers Is to Help Business

Almost three decades ago I had the honor of being named the first executive director of the Rhode Island Economic Policy Council, a public-private organization co-chaired by Republican governor Lincoln Almond and Larry Fish, CEO of Citizens Bank. The governor had proposed the council because Rhode Island’s economy was second-worst performing in the nation. As a result, everyone—Democrats and Republicans, labor and business—ranked economic revitalization as job one.

The council, made up of business and university leaders, along with the head of the state AFL-CIO, crafted a 10-point economic development plan that included reforming the state’s unemployment insurance system (Rhode Island then had among the highest UI taxes in the nation), implementing the nation’s most generous R&D tax credit plus a generous investment tax credit, and boosting programs to help with workforce training and university research.

Rhode Island was (and is) a deep-blue state, with Democrats commanding solid majorities in the legislature. As such, passing the council’s plan depended on convincing enough Democratic legislators of its merit. As they considered our plan, the head of the state AFL-CIO, George Nee, and I were invited to speak at a Democratic Senate retreat. After we laid out the council’s analysis and policy agenda, we invited questions. One senator asked: “I know we have to spur economic development, but is there any way to do that without helping businesses?” George looked at him and said, “No.” And that was that; the Senate (and House) voted on a package based on our recommendations and it passed almost unanimously, with Democrats and Republicans voting for it.

I will always remember that interchange because here was George Nee, a committed labor unionist and ally of working people (earlier in his career, George had worked alongside Caesar Chavez), telling Democratic elected officials that if they wanted to help workers, they had to help companies. George wasn’t saying cut their taxes indiscriminately or eliminate regulations. He was saying that absent good economic development policies—such as a tax code that conditioned lower effective rates on investing in key building blocks of worker training, R&D, and new machinery and equipment, while providing funding for industry R&D—workers would continue to suffer. A similar intraparty debate took place on the national stage as President Clinton’s economic agenda faced resistance on the left.

I think of that when I watch the economic policy debates unfolding in Congress today. The United States is on the road to looking like Rhode Island was then: a political entity that had lost its competitive edge. And yet some Democrats, particularly progressives, see policies that might help business, such as an R&D tax credit or funding to attract semiconductor chip factories to the United States, as objectionable on their face. But just as George Nee understood in the 1990s that to help workers you sometimes have to help business, today’s AFL-CIO also understands. That is why it supports important measures like the U.S. Innovation and Competition Act.

This doesn’t mean that Democrats—progressives, in particular—have to like business. Many of the Rhode Island legislators who voted for the package our council developed probably didn’t care for business, either. But they understood that if they wanted to achieve their goals of ensuring a better life for working men and women in Rhode Island, they had to support policies that helped the traded-sector companies that brought wealth into the state.

Democrats in Congress today face a similar choice—as do Republicans, who have their own challenges to address. There is bipartisan legislation on the table that would improve economic life for American workers by providing a package of incentives and strategic investments that will make U.S. companies more competitive. If Democrats cannot bring themselves to support those plans, including ones that directly help large corporations facing intense global competition, the result will be increased economic polarization, fewer manufacturing jobs, a bigger trade deficit, a weaker dollar, less tax revenue, and a loss of technology advantage to China. It is very hard to achieve progressive economic goals without strong and competitive traded sectors, and building them requires policies that help business. For the sake of the Republic, I hope Democrats recognize the connection.