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Last night taught us a lot of things. For entry-level employers who were still unclear of whether they had lost the Republican Party, last night should have provided the necessary clarity. While the Republicans ostensibly had a big night, it was the anti-establishment, anti-institution and, dare we say, the anti-corporate wing of the “party” that provided the victories.
While some priorities for entry-level employers may be in alignment with the Trump Administration, it will not be the Chamber of Commerce or other traditional institutions representing the business community driving the policy of the new president.
Entry-level employers, and really all of corporate America, are left with more questions than answers as they try to distill what happened and what it means for their businesses.
Simply put, an unexpected Republican wave up and down the ballot crashed what Democrats believed was certain victory. It is almost impossible to overstate just how unprecedented this election is historically. We have departed from the conventional qualifications and expectations for president and entered a new era of American politics.
Donald Trump accomplished what all candidates hope to do, but few realize. He realigned the electoral map, putting traditional Democratic strongholds in play. In the process, he secured the most surprising victory in modern American history.
The election post-mortem will slice voting blocs by race, education, income and other characteristics to reveal the “Trump coalition,” but early indications are that Trump awoke a sleeping giant: disengaged Americans — probably blue collar and predominantly white — who rallied around his message of outrage that Washington is not working for them. Trump connected with voters by highlighting illegal immigration, bad trade deals, and a “rigged” system.
In the weeks leading up to the campaign, pundits (this firm included) wondered aloud whether or not we might see the U.S. version of the political behavior (voters not normally counted by traditional polling models coming out in large numbers) that led to Great Britain surprisingly voting to leave the European Union. It is now safe to say that we have, indeed, experienced our very own American version of the “Brexit Effect.” And its impacts are going to be felt in far, far greater ways than what happened with our English friends.
A big chunk of American citizens and corporate leaders woke up Wednesday morning with more questions than answers on the heels of Trump’s shocking win.
Nowhere are there more questions about the future than on Wall Street. U.S. stock futures have taken a historical plunge. Dow futures plummeted more than 750 points. To offer some perspective, on the night of Sept. 11, 2001 the Dow was expected to drop by “only” 650 points upon the stock market’s opening. The simple fact is that markets hate uncertainty. Many investors believe Trump's unpredictable nature and anti-trade stance could bring lots of global uncertainty in both the short- and long-term future.
Make no mistake about it, Trump’s victory was a vote against Washington, against politics as usual, and against the “system.” It was not only a rebuke of the last eight years under President Barack Obama, but also of Mitt Romney, John McCain and George W. Bush.
Americans who voted for Trump voted for disruption, although they cannot articulate what that disruption should be. They voted to take down the system that, in many ways, provides the stopgap against policies that do not help them. They are now going to want to see that disruption in effect. They are going to demand it.
To be effective, President-elect Trump will need to systematically identify priorities and build consensus to affect change. If he charges full-fledge into attacking every entrenched interest on day one, Trump risks a backlash that could paralyze his administration.
One thing working in President-elect Trump’s favor is that he will arrive in Washington, D.C. with Republican majorities in both houses of Congress. His success will largely depend upon members’ willingness to work with him on his major priorities. His caustic relationship with Congressional Republicans will likely dissipate as they unite around common issues, such as repealing and replacing Obamacare. Immigration may be trickier, and blowing up trade deals and adopting protectionist policies may pit Congressional Republicans against the Trump administration.
Beyond those broad themes, the Trump campaign has provided scant insight into the policy specifics of a Trump presidency. In fact, on many issues, Trump has been all over the board. His administration’s ability to build (or not build) consensus within his own party in Congress will be the lynchpin of his first 100 days and the first year. Trump’s first year will be critical as Republicans stare down reelection in 2018 and make calculated decisions on how closely to align with the President.
It’s also worth pointing out that campaigning and governance are very different, as is running a business in the private sector and managing a sprawling bureaucracy. One of the primary jobs of the President and his cabinet secretaries is managing the federal government, broken into agencies.
We can safely assume an immediate reversal of the posture of all agencies — from the Department of Labor to the Environmental Protection Agency. The National Labor Relations Board will continue operating as currently constituted until Trump can seat a new appointee to the board in 2018. There will be no love lost between President Trump and bureaucrats at the Internal Revenue System, the Department of Labor and the Securities Exchange Commission. A full-scale dismantling of federal agencies and subsequent war with public-sector unions is not out of the realm of possibility.
Over the years, Trump has been what he needed to be politically to get a seat at the table and achieve his goals. Issues affecting entry-level employers have not been a primary focus of his campaign.
Employers will probably have very few legislative and regulatory threats to worry about from a Trump administration, but Trump’s disruptions to foreign trade could have dramatic effects on the American economy. President-elect Trump’s greatest influence on employers may be his impact on the economic environment.
Similarly, a single statement by a president can send markets into panic. Trump demonstrated great discipline in the final weeks of the campaign, staying on message as Hillary Clinton defended renewed interest by the FBI into her emails. If President-elect Trump reverts back to bombastic, hyperbolic 3 a.m. statements on Twitter, uncertainty could push a financial crisis into a meltdown.
With a late surge in the campaign, Republicans were able to hang on to their majorities in both the U.S. Senate and House. With numerous Senate seats considered toss-ups, control of the Senate in the 115th Congress had been in significant doubt. Republicans lost seats in the House, but easily maintained their majority and retain control of both houses of Congress.
Their electoral performance will embolden them to work aggressively to repeal the Affordable Care Act and President-elect Trump will open the door to that effort. As a result, the agenda of the labor community will be largely ignored in Washington, so look for labor activists to continue investing in their strategy of taking their issues to the state and local level.
Typically, voters judge candidates for governor apart from the top of the ticket — placing an emphasis on state issues rather than federal. However, the Trump effect carried Republicans to victory across the country. Of particular note, with Republicans winning in Missouri and New Hampshire, the GOP now controls all levels of government in those two states.
The outliers were North Carolina (a canvass of votes will be completed before the winner is officially announced for North Carolina governor) and West Virginia where Democrats won on purely state issues.
Republicans started the night with a 31-18-1 advantage, netted two additional seats and now enjoy a 33-16-1 majority at the gubernatorial level.
Republicans went into the night with majorities in 69 out of 99 state chambers. Pending additional updates and potential recounts, it appears the GOP may have netted another five or six.
Of particular note, history was made in Kentucky with the longstanding Democratic majority in the House flipping to GOP, including the polarizing House Speaker losing his race. The Kentucky House was the last remaining state chamber held by Democrats in the South.
Additionally, Republicans now have gained complete control of governorships and state legislatures in Missouri, New Hampshire, Kentucky and Iowa. With the phenomenon of more states officially turning “red,” look for the labor community to increase pressure on “blue” cities to pursue their agenda.
Since Congress has not taken up minimum wage at the federal level (and is unlikely to), ballot initiatives at the state and city levels will continue to be the norm.
Each minimum wage initiative that appeared on the 2016 ballot (four states and one California city) passed. Of particular importance, while raising their state minimum wage, Maine voters also eliminated the tip credit, giving momentum to national efforts on this issue.
Despite many of their candidates losing, the labor community overall had a good night with regard to ballot initiatives, winning on minimum wage and defeating right-to-work measures.
THE ROAD AHEAD
American politics will never be the same. For the past few cycles, “outsider” candidates have been winning offices across the country, but a year ago it was inconceivable that someone with no experience in public office could win the presidency.
Donald Trump’s mastery of social media is on par with JFK’s understanding of television as a communication medium, or FDR’s use of radio broadcasts. The rise of social media seems to have been a catalyst to merge the culture of reality TV with the political arena. Campaigns, and the type of candidates that run for office, will be different after this election — not necessarily for the better.
After a year of tearing down and undercutting the institutions of government, Trump will now depend on those institutions if he hopes to accomplish anything while in office. He’ll have to reform D.C. while also restoring the legitimacy of those institutions in the eyes of the American public. Furthermore, he’ll be faced with this herculean task when Americans are more divided than ever.
Unique to this campaign was a lack of focus on policy specifics, and quite frankly, a detachment from fact-based arguments or proposals. Trump and his campaign will certainly assert that his “straight shooter” hyperbole addresses deeper truths and is necessary to punch through the noise. However, it’s difficult to imagine how that form of communication will lead to constructive dialogue on complex issues.
Employers may find themselves in the unusual position of facing few immediate threats out of D.C. However, contending with an overall environment of economic uncertainty, which could tighten credit markets and shake consumer confidence and spending, could negatively impact bottom lines.
The biggest, most important takeaway for entry-level employers following Election Day results is the reality that with D.C. closed to the labor community, we can expect a surge in activism at the state and particularly local levels. Now, with no allies at the Labor Department, the only level of government available to activists will be dark blue urban centers.
Even though voters reaffirmed Republican majorities in D.C. and at the state level, they continue to take a schizophrenic approach to employment policies, approving minimum wage and paid leave proposals. Employers would be wise to recognize this reality and acknowledge we still have a lot of work to do.
Editor’s note: This is a special Election Day recap edition of First Call, a news publication with original commentary by the Align Public Strategies team. It provides forward-thinking analysis of the results and political realities that will shape the business environment post-election.