The relative weakness of the American labor movement has broader political consequences, particularly for the ambitions of the Obama presidency. Absent a strong countervailing political constituency like organized labor, well-organized and more powerful stakeholders like business and industry groups are able to exert undue influence in American democracy, thereby frustrating attempts at political reform. I argue that it is impossible to understand the current political situation confronting the Obama administration without an account of the underlying sources of labor weakness in the U.S. In such an account two factors loom especially large. One is the role of the state in structuring labor market institutions and the rules of the game for labor-business interactions. The second is the distinctively racialized character of the U.S. political economy, which has contributed to labor market segmentation, a unique political geography, and the racial division of the U.S. working class. In our current post-industrial, post-civil rights racial and economic order, whether and how the labor movement can overcome its historical racial fragmentation will determine its possibilities for renewal and ultimately its political strength in relation to the Obama presidency. If the labor movement remains an uneven and weak regional organization hobbled by racial fragmentation, the Obama Administration's efforts to advance its core policy agenda will lack the necessary political force to be effective.