As states grapple with the forces of liberalization and globalization, they are increasingly pulling back on earlier levels of welfare provision and rhetoric. This article examines how the eclipsing role of the state in labor protection has affected state–labor relations. In particular, it analyzes collective action strategies among India’s growing mass of informally employed workers, who do not receive secure wages or benefits from either the state or their employer. In response to the recent changes in state policies, I find that informal workers have had to alter their organizing strategies in ways that are reshaping the social contract between state and labor. Rather than demanding employers for workers’ benefits, they are making direct demands on the state for welfare benefits. To attain state attention, informal workers are using the rhetoric of citizenship rights to offer their unregulated labor and political support in return for state recognition of their work. Such recognition bestows informal workers with a degree of social legitimacy, thereby dignifying their discontent and bolstering their status as claim makers in their society. These findings offer a reformulated model of state–labor relations that focuses attention on the qualitative, rather than quantitative, nature of the nexus; encompasses a dynamic and inter-dependent conceptualization of state and labor; and accommodates the creative and diverse strategies of industrial relations being forged in the contemporary era.