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11/10/2016 - Election Day Recap: What Happened and What’s Next

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Election Day Recap: What Happened and What’s Next

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This is a special Election Day recap and original commentary by Align Public Strategies. It provides forward-thinking analysis of the results and political realities that will shape the business environment post-election.

Last night taught us a lot of things, but 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. And 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, that rallied around his message of outrage — Washington is not working for you. Trump connected with voters 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 that led to Great Britain surprisingly voting to leave the European Union (voters not normally counted by traditional polling models coming out in large numbers). 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 are going to wake up this morning, tomorrow and the next day 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 an historical plunge. Dow futures have plummeted more than 750 points. To offer some perspective, on the night of September 11, 2001 the Dow was “only” expected to drop by 650 points upon the stock market’s opening. The simple fact is that markets hate uncertainty — and many investors believe Donald 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 Obama, but also of Mitt Romney, John McCain and George W. Bush.

What Next

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 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.

Trump won with a campaign that avoided revealing policy details for the majority of key issues that will affect P&Ls. That creates a significant problem for business planning. Here are the general conclusions we can make about Trump’s positions:

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Ballot Initiatives

Since Congress has not taken up minimum wage at the federal level (and is unlikely to), ballot initiatives at the state and city level 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.

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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 DC 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 DC. 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 take-away for entry-level employers following Election Day results is the reality that with DC closed to the labor community, we can expect a surge in activism at the state and particularly local level. 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 DC 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.

For more information about how the election will impact your business, contact Align Public Strategies.