About 4 years ago

01/05/2016 - Election year maneuvers and their impact on retailers

The following article appears in the December 23, 2015 edition of Retailing Today.

By: Joe Kefauver

With 2016 upon us, many employers find themselves nervously awaiting what election-year politics might bring to their doorsteps. Retailers and restaurant operators, more than ever, have been thrust front and center into the political landscape, with labor issues at the top of candidate’s agendas as well as the subject of numerous ballot issues at the state and local level.   As a result, the business models and labor practices of entry-level employers are being evaluated by the public in much the same way the candidates are.

Efforts like the Fight for $15 campaign have capitalized on voter angst related to kitchen table economic issues and workplace policy.  The organization has not only organized minimum wage protests around the country, but forced the issue into the presidential conversation.  In fact, both the Democratic and Republican debates so far have focused significant attention on these issues.  There are a lot of reasons why this is happening.

First and foremost, the labor community, with good reason, has been decrying the perceived lack of attention that these issues have received on Capitol Hill. In fact, legislation to raise the minimum wage, to enact a national sick leave law and to mandate employee “protections” like scheduling reforms have languished for years in Congress. With rare exception, the bulk of the labor agenda has been dead on arrival on Capitol Hill for a long time.

Where labor advocates are having some success, though, is at the regulatory level. Because of the logjam on Capitol Hill, they have been pressing the Obama Administration to leverage the power of federal agencies to accomplish through regulation and enforcement what they have not been able to achieve legislatively. And, the Administration has dutifully responded as witnessed by the unprecedented activism at the National Labor Relations Board where the organization has essentially rewritten the definitions of employers and employees, undermining operators’ leveraging of independent and sub-contractors and identifying new ways to hold companies liable for the labor practices of its supply chain.

Additionally, we have seen vigorous auditing of employers by the Department of Labor’s Wage & Hour Division, the rewriting of the federal overtime regulations and an expansion of the enforcement powers of OSHA—and 2016 will bring more of the same. Many in the labor community feel that with an election looming that will likely be decided by a razor-thin margin, there is potentially only one more year of a “friendly Administration” and they need to achieve as much of their agenda as possible. Expect the White House to put the “pedal down” on these issues.

There may be some relief for employers in 2016 is on the tax front. While there won’t likely be large-scale reform, we can expect to see some action to make permanent the Work Opportunity Tax Credit, shortened depreciation schedules and a long-term commitment to the R&D tax credit.   Politicians are always incented to find some tax relief in election years and this year should be no different. All in all, as far as Washington goes, 2016 will look a great deal like 2015 but with even more zealousness at the Agency level.

Where next year will be a little different is at the state level and the upcoming election will also provide the backdrop as well. Numerous states will have ballot initiatives advancing a variety of labor-friendly causes including minimum wage hikes, paid sick leave allowances, scheduling requirements or, all a combination of them.

We will likely see particular focus on the presidential battleground states as proponents know that even tempting even a few extra voters to the polls with these initiatives may be enough to carry preferred candidates over the line.  As usual, Ohio and Florida, where many recent presidential elections have been decided, will see a lot of ballot initiative activity.

With the recent flare-up of national security and terrorism-related issues, it remains to be seen how much attention will be paid to the issues of income inequality and wage stagnation, etc. What is clear, though, is as we get closer to election day and the labor community plunges significant dollars into candidate and issue campaigns, retailers and operators should be on their guard that not only their business models but their industry and company reputations could become a political football.