Data center power deals now come with labor strings attached

Legislatures in three states are attaching labor conditions to data center incentives, and Michigan’s version attaches them to the electricity rate. That is a different risk than a moratorium: the project still gets approved, it just prices differently.

Why it matters

Most of the policy risk we have covered on this beat is zoning risk, including Miami-Dade staff moving to bar data centers from a new industrial zone. A ban or a moratorium kills or delays a site. Michigan Senate Bill 1048, introduced June 18, works on the other lever. It bars the Public Service Commission from approving any special electricity rate or contract for a data center unless the project uses Department of Labor registered apprenticeships, pays prevailing wage, and operates under a project labor agreement or a community benefits agreement. Power price is what makes a site pencil. A bill written that way does not stop a project, it reprices it, and it does so after entitlement rather than before. California’s SB 887 reaches the same place from a different direction: a legally binding community benefits agreement with labor, workforce and community organizations, plus full interconnection cost-bearing, zero-carbon storage and water-efficient cooling. Full-cost interconnection removes the subsidy that has quietly underwritten a lot of siting math.

The numbers

SB 887 passed the California Senate 29-9 and now sits in the Assembly. Michigan SB 1048 was introduced June 18, 2026. Minnesota House File 4153 would condition the data center sales-tax exemption on prevailing wage for construction and refurbishment workers, and would make the large-scale exemption indefinite. The Minnesota Department of Revenue puts the cost at $20M in FY2028 to the General Fund plus the Natural Resources and Arts funds. Testimony at the Minnesota hearing ran 10 against and 7 in favor, which is a fair read of how contested the exemption itself has become. All three bills sit alongside the zoning fights tracked on our data centers hub.

What’s next

For site selection, the underwriting question has moved. It is no longer only whether a jurisdiction will let you build. It is what the power deal costs and who has a seat at the table when it is negotiated. Power availability was already the gating factor on most searches. Labor terms attached to power are becoming a second one, and they land on the rate case rather than the zoning hearing, which means they can surface after land is under contract.