Trumponomics and the American Workplace


What will the Trump Administration and the Republican Congress mean for American employers and workers? Probably not as much as they hope, nor as much as they 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. But there are already very clear signs.

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 shift.

The new President has personally distinguished himself with two specific fascinations: (1) his own image and (2) trade. The former issue may or may not affect public policy, but the latter – 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. We can see already that American corporations have begun to play along while others (such as GM) have yet to bend the knee.

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, has some notorious history on race issues and lacks much pedigree in advancing any human rights laws.

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. 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 Donald Trump for more than a day has been given unbridled free rein. Trump either runs them over with his own pronouncements (often insulting underlings in the process) or fires people. Further, the idea that Trump will be a lazy, hazy and remote padrone flying in for occasional meetings may appeal to those who want to use his power, but the fact is that Trump has shown absolute loyalty and consistent agreement with one person, his son in law Jared Kushner. As of January 9th Mr. Kushner has announced his intention to divest himself of interests in the Trump business empire so that he can be appointed as a senior advisor in the White House. 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 that, if they want to maintain public 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 Republican Party now holds majorities in both the Senate and the House of Representatives, where legislators have already pushed ahead with steps to dis-assemble the Obama legacy. Yet even there, surprising inconsistency has already erupted between the GOP and the putatively Republican President Elect about how the Affordable Care Act (aka “Obamacare”) will be destroyed.

Since its passage at Christmas 2009, Republicans have held dozens of symbolic votes to repeal it. Now empowered to do just that, both parts of Congress are eager to make repeal of the ACA their first order of business. 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.

Suddenly the House and Senate GOP, which had the knives sharpened and the platters out for slices of the ACA, now hesitate: what to do?

That question will be answered shortly, probably with immediate repeal coupled to promises of fast replacement. But the manner in which Obamacare has already been addressed, by a President not even in power yet and a Congress which eyes him with a mix of suspicion and fear, likely illustrates how laws will be made in the next two to four years.

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.”

Even then, 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 – will 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 two years made some serious decisions expanding employee rights and unions. 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 policy 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. Democrats, however, have started to promise obstructing any appointment in the same manner Republicans did in the previous Senate.
  • The Obama Administration used executive orders to impose a new overtime and minimum pay rules on companies engaged in “interstate commerce” (most employers). Those rules were announced in September, when it is likely 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.” If the Administration rescinds or substantially weakens the regulations, it may be a reliable smoke 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 dose of stimulus will have salutary effects on aspects of the domestic US economy, and possibly on countries which can export into the USA. It will also pile up more deficits and more debt for future generations of Americans to pay off.

Or not.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s