AI as Political Force

Workforce is a key chokepoint for the AI buildout, and this week’s political realignment raises new questions about AI-related policy. Also, the blue wave wipes out familiar faces in D.C. and state capitals, a worker shortage caused by immigration raids in the Rio Grande Valley contributed to one of the election’s most stunning upsets, and a look at how a tech hub is bringing jobs to rural Colorado. (Subscribe here.)

‘Wild West of Data Centers’

AI was a factor in this week’s political earthquake, and the tech should loom even larger in the 2028 presidential election. But don’t expect to hear the term “superintelligence” much as the campaign heats up.

The bipartisan backlash to data centers and worries about AI contributed to big wins by Democrats in Texas, Ohio, Georgia, and beyond. Both winning candidates and strong majorities of voters said AI fed the blue wave. For example, Gina Hinojosa’s victory in the Texas governor’s race fundamentally challenges the AI buildout, with 41% of U.S. capacity in 2028 expected to come online in Texas.

Workforce already has emerged as a primary chokepoint for AI. And the technology’s anticipated impacts on jobs—a boom for construction workers, limited longer-term data center operator roles, and potentially wide displacement for truck drivers and many other occupations—has created a fissure among labor unions.

As data centers became broadly unpopular this year, Greg Abbott, who will be replaced by Hinojosa after three terms as governor, issued a moratorium and halted all related permits. But Hinojosa teed off on Abbott’s earlier bragging about making the state the “epicenter of AI development.” She criticized the impact of data centers on the power grid and the quality of life in rural Texas. 

“They are owned by the richest men in the world,” she said on the campaign trail. “We’re all footing the bill. There are no rules. It is the wild west of data centers.”

With the balance of power shifting, Big Tech companies have been offering more for data center projects, including money for job training. That trend is likely to accelerate. Voters aren’t just looking for investments around data center jobs, though, but are nervous about AI’s impact on the wider economy.

“The real risk isn’t that AI erases work, it’s that good jobs sit empty while anxious workers can’t see a path to them,” says Sean Murphy, director of workforce and postsecondary pathways for the Bipartisan Policy Center. “Closing that gap takes a talent strategy built from the ground up influenced by states and communities.”

Businesses would welcome such an approach, says Kristen Silverberg, the president and COO of the Business Roundtable. When the group surveys its members about what will most determine company success, they consistently point to finding workers with the right skills.

“As AI and other technologies rapidly reshape the skills employers need, Business Roundtable is advancing policies that help Americans build new skills, expand opportunity for workers, and help companies grow and compete.”

Hitting the Brakes: Heavy spending by tech companies, super PACs, and industry-backed groups didn’t pay off as voters across the country rejected data centers. Ohio had the most data center–related ballot measures, and bids to restrict hyperscale facilities in communities across the state appeared to be headed for victory on Wednesday. For example, five proposals passed in Central Ohio, which has been blanketed by ads from Meta touting the company’s $1.5B data center footprint and workforce investment in the region.

Rep. Greg Casar, a Texas Democrat who chairs the Progressive Caucus, said in a statement that the election results were an “early tremor of a much bigger AI earthquake” that’s upending American politics.

“The House Democratic majority must make it a top priority to protect Americans’ jobs, freedom, and lives from AI billionaires,” Casar said.

Valley Turns Blue: Workforce issues beyond AI appeared to play another role in the huge electoral shift in Texas—one that flowed from immigration policy.

The Rio Grande Valley swung back big to the Democrats, in large part because of anger over the Trump administration’s aggressive immigration enforcement, which has removed many longtime residents who entered the country illegally but otherwise were law-abiding, not just criminals and new arrivals.

Those actions not only have upended communities but have threatened entire industries that rely on undocumented immigrant labor, Lynsea Garrison of The New York Times reported after spending a year visiting the Valley. Home builders in particular have been hit hard, with many skilled laborers—including “maestros” with decades of experience—being deported or no longer working out of fear.

“We’ve called over 35 framers just to find one. This is how unpredictable daily life is,” Mario Guerrero, executive director of the South Texas Builders Association, told Garrison.

The shortages have gotten so bad that the association is starting a school to teach Americans the trades, like framing and drywall, most affected by immigration raids. The training program will start with 28 students—which the STBA leadership told Garrison is tiny relative to the need. What the organization really wants is policy change. 

Its leaders told ICE officials and members of Congress as much on a recent trip to D.C., according to Garrison’s reporting—warning of a massive backlash in the midterm elections.

Keep it up, Guerrero told the officials, and you’re going to lose. “And I can guarantee you the Valley will never be red again.”

Uncertainty in Policymaking: Like many Americans, workforce and education policy wags were still processing the election on Wednesday. It’s unclear what the political realignment in state capitals and D.C. will mean for apprenticeship, the federal workforce system, or the AI safety net discussion.

Democrats flipped five governorships and will hold a majority with at least 28 governors for the first time in a generation.

“The leaders who strategically invest in workforce skills will be the ones who deliver on jobs and affordability,” says Murphy, “and that’s an agenda both parties already share.”

The blue wave washed away many veteran Republican members of Congress.

• Rep. Virginia Foxx of North Carolina, a longtime Republican leader on education and workforce, lost her bid for reelection by 99 votes, though the race may go to a recount. As the former chair of the Education and Workforce Committee, Foxx was instrumental in shaping Workforce Pell and led Republican efforts to reauthorize the Workforce Innovation and Opportunity Act that made it to the one-yard line before being scuttled at the end of the last Congress.
  
• Several experienced moderates also lost, including members who had teamed up on bills with Democrats. “I don’t know who’s going to emerge as that bipartisan cosponsor,” one federal policy expert said. It’s hard to anticipate legislative action in either chamber. The Senate HELP Committee is a “wild scenario right now,” the source said. Key Republicans are departing and the returning chair could be Bernie Sanders, who’s no fan of AI.

Beyond last year’s reconciliation bill, the education agenda in D.C. has been all executive action and rule making by administrative agencies, writes Rick Hess, a senior fellow and director of education policy studies at the American Enterprise Institute.

That approach will continue, he says, but with “spiky scrutiny rather than the supine Congress” the Trump administration has counted on. And aggressive congressional oversight could extend to DOGE’s gutting of the Education Department or the administration’s dismantling of the department through interagency agreements.

It was a good election night for the Democratic Socialists of America and the party’s radical wing, Hess writes:

“But the high-profile Democratic wins in places like Kansas, Texas, South Carolina, Iowa, and Ohio were chalked up by moderate Democrats and candidates who pitched themselves as sensible correctives to destructive tariffs, Trumpian lawlessness, and Republican extremism.” —Elyse Ashburn contributed reporting for this article.

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Open Tabs

Job Displacement
Wage insurance, retraining assistance, and entry-level tax credits could ease the transition to an AI economy, writes Robert Litan, a nonresident senior fellow at the Brookings Institution. Labor market disruption equivalent to a sustained 6% unemployment rate would require about $60B a year to pay for these policies. Beyond taxing AI companies to cover those costs (see below), he cites a potential payroll tax on equity compensation and increasing taxes on physical investments.

Taxing AI
Top proposals for taxing AI include taxes on training compute, data center electricity, AI usage, windfall profit, and automation, write Elena Patel, co-director of the Urban-Brookings Tax Policy Center, and Aparna Mathur, a resident scholar at the American Enterprise Institute. Taxing AI would introduce tensions with other policy goals, they write. But broader tax reforms, such as taxing capital income more uniformly, could address those concerns.

Accountability and WIOA
Policymakers should add growth-based accountability measures to the Workforce Innovation and Opportunity Act, argues a brief from America Forward and the Data Quality Campaign. Growth measures consider how much a participant’s income or skills increased, not just how much they earn at the end of a program. The report says WIOA’s current performance system rewards compliance over results and limits transparency.

Hands-On Jobs
The built-environment workforce, meaning workers who directly create or modify human-made physical structures and systems, includes 95 occupations and 15.3M workers, finds an analysis from the Brookings Institution. The workforce is disproportionately white and male, with generally competitive earnings. The report’s recommendations include a call for industry leaders to develop stronger internal career ladders into supervisory and management positions.

K–12 and Careers
Nearly 250 P-TECH schools and programs operate across Texas. Students who attend the career-focused high schools graduate at higher rates and are more likely to enroll in college than non–P-Tech students, finds a study by MRDC. Five years after enrolling in ninth grade, P-TECH students were more likely to be in school and working and less likely to be out of school and not working. More of them have reported wages as well.

Upstart Accreditors
The U.S. Department of Education issued its final rule to reform accreditation in higher education. It was largely consistent with the draft version. The department said the rule reduces several barriers to entry for new accrediting agencies that seek federal recognition, increasing competition and choice. For example, it eliminates a requirement that agencies must accredit an institution or program for at least two years before applying for recognition.

Job Moves
Sean Gallagher has been hired as the practice lead for postsecondary education and workforce at the National Center on Education and the Economy, a nonprofit think tank. Gallagher previously was a director at Huron and the longtime executive director of Northeastern University’s Center for the Future of Higher Ed and Talent Strategy.

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