What will the Trump administration and the Republican Congress mean for American employers and workers? Probably not as much as some hope, nor as much as others fear.
On January 20th, Donald J. Trump will be sworn in as the 45th President of the United States. After that, America (and the world) will begin to see what kind of policies the new POTUS and Congress mean to enact. Both sides of the Republican government (executive and legislative) see 2017 as a golden opportunity to reverse Obama economic and labour market policies. The implications for employers and employees will be profound.
The root of Trumpism is protectionism: protecting U.S. goods producers from foreign competition, protecting U.S. jobs from being sent offshore, protecting U.S. borders from the illegal (or legal) arrival of people deemed to be a threat. Even after 15 years of Homeland Security, this constitutes a ratcheting-up of control over perceived threats.
Trade is an area where Mr. Trump has expressed a very clear view for almost three decades: free trade has cost the USA millions of jobs and driven the balance-of-trade into a perpetual multi-billion dollar deficit. Mr. Trump has used the bully pulpit of his pre-Presidency to call out corporations for their Mexican investments and every US trading partner sits apprehensive, wondering if they’re next.
Whether one agrees with Mr. Trump’s analysis or not, the next President has considerable authority (delegated from Congress) to impose punitive measures on countries whom he deems to be engaging in hostile or unfair trading practices. It is necessary to acknowledge that possibility and, as it unfolds in practice, factor it into a myriad of business decisions.
Aside from trade, however, the inclinations of the Trump Administration are not entirely clear. The law affects the workplace in many ways and Mr. Trump has placed his new Administration on seemingly disparate sides of various issues.
A good example is human rights, in particular those of the LGBTQ community. On that, Mr. Trump has positioned himself as friendly and as recently as last week one of his spokespersons said that anyone expecting discriminatory decision-making from the Trump Administration (in that case, in terms of State Department job practices) didn’t know what they were talking about. On the other hand, the new Vice President Mike Pence has been a strenuous public opponent of marriage equality and has a career’s worth of anti-gay rhetoric behind him. Trump’s nominee for Attorney General, Senator Jeff Sessions, asserts his credentials on racial discrimination issues but there are loud doubters.
That issue illustrates the paradox of the Trump Presidency to come: while the President has a long personal history of liberal (Democratic) positions, his key appointees all hale from the most staunchly conservative elements of the Republican Party. Which tendency will dominate?
According to the US political website Politico, Trump plans a hands-off attitude towards his team:
“President-elect Donald Trump plans to give his Cabinet secretaries and top aides significant latitude to run their federal agencies, marking a sharp departure from Barack Obama’s tightly controlled management style, according to people involved in and close to the transition.
Members of Congress, transition team officials, real estate lawyers, lobbyists and executives in New York who know Trump expect him to be a chairman-of-the-board style manager in the White House.”
At the same time, no-one who has ever worked with Trump has been given unbridled free rein: he either runs them over with his own pronouncements or simply fires people. Further, the idea that Trump will be a lazy, hazy and remote Chairman flying in for occasional meetings is contradicted by the promised appointment of Jared Kushner (his son-in-law and closest confidante) as a White House advisor. That does not auger well for those who think the next President will be easily swayed by his Cabinet, or for that matter, by Congress.
It has quickly become apparent to the new Republican majority in Congress that, if they want to maintain their base support, they cannot move too widely or too quickly from the Trump shadow. We saw this when their first decision — a surreptitious move to gut the House Ethics Office — ran into opposition from none other than the President Elect, who questioned the timing, if not the propriety, of the move. The GOP quickly retreated and now promises bipartisan action on what must the least pressing issue in American politics.
The GOP Congressional majorities planned an early demolition of the Affordable Care Act (aka “Obamacare”) will be destroyed. Yet some Republicans, notably Dr. Rand Paul (Senator from Tennessee) say the ACA should remain in place, until replacement legislation can be voted upon. Mr. Trump himself has said (in his 60 Minutes interview with Lesley Stahl) that popular features of Obamacare, such as outlawing discrimination against persons with pre-existing conditions and enabling young adults to stay on parental coverage until age 26, should remain.
Mr. Trump first said that replacement legislation should be ready before repeal, but has now retreated slightly. This episode illustrates a willingness to shift ground to placate Congressional allies, but how far or how often he will shift, remains unknown.
Which way will things go? Will policy be written by the many Republicans lined up in positions of influence and power, or will it fly off the fingertips of the President during one of his midnight tweetstorms? The answer, it seems, is “both.”
Despite the uncertainties, some policy changes are more predictable than others:
- Whatever replaces the ACA will likely depend more on private money, meaning that American employers – who have historically borne the heavy cost of insuring employees’ medical costs – could be more burdened than they have been in the last few years. Senator Paul’s mooted legislation is said to enable new forms of insurance networks and risks pools, which again will likely be employer-based.
- The National Labor Relations Board (“NLRB”) has in the past few years made some serious decisions expanding employee and union rights. Major rulings like the 2015 Browning-Ferris case (which expanded the concept of the “joint employer” making companies more responsible for contractors) or the 2016 Harvard and MIT decisions (allowing teaching assistants to unionize) won’t be reversed immediately, but with Trump Administration appointments there will likely be change back towards pre-Obama tendencies at the NLRB.
- At a higher level, the vacant “Scalia seat” on the Supreme Court is promised by Republicans to a strictly conservative jurist. Should that occur, the current 8 member Court’s relative stalemate will be tilted back towards conservatism. Elderly liberal Justices can’t hang on forever, either. It remains to be seen if Democrats can obstruct judicial appointments as ably as Republicans have done in recent years.
- The Obama Administration used executive orders to impose new overtime and minimum pay rules on companies engaged in “interstate commerce” (most employers). Those rules were announced in September, when probably few at the Department of Labor expected a Trump Administration in 2017. These rules have a directly beneficial effect on millions of Americans, many of whom understood Mr. Trump to be “blue collar friendly.” But they are also costly to business. The reversal of such regulations may be a reliable signal that the GOP orthodoxy on economic issues (trade excepted) is not dead in D.C.
- With Mr. Trump’s avowed passion for disrupting existing trade arrangements, he has also promised de-regulation and lower business taxes, to create a friendlier environment for investment in the United States. This is the more appealing side of Trumponomics for Congressional Republicans and is probably the closest thing to a “guarantee” in Washington 2017.
- Finally and on a “macro” scale, Mr. Trump has committed the United States to significant infrastructure improvements (ostensibly to enhance the business environment and, in the case of The Wall, to impede the entry of illegal immigrants from south of the border). Donald Trump has a long, strong personal comfort with debt and is in many respects closer to the left of the Democratic Party, than to his own party, on questions of public spending and borrowing.
If Mr. Trump is able to use his bully pulpit to bully Congress into agreeable action, there will be another round of stimulus (just as there was at the outset of the Obama Administration). That investment could have salutary effects on aspects of the domestic US economy, short term and long. Whether foreign countries and companies can benefit from that, depends much on how many walls — concrete or otherwise — go up in the process.