The election is over and I’m having a hard time figuring out what the future will bring and what lessons we might have learned. Most of my thoughts are things that those of us who live on the West Coast or North East seem to have a hard time learning.
I do my best not to write about politics. This newsletter/blog post is really about what you as a private business owner might want to be thinking about over the next few months.
Here’s my issue, and this is not going to be a news flash to anyone who has been paying attention to the ever-growing divide in our country. The people who voted for Donald Trump are not all racists and they’re not all rubes who don’t know better. Many of them are very bright people who have felt lied to and misled by “the establishment.”
If we in the blue states can just take a breath, we all might be better off. Oh, and those in the red states, please try to not gloat too much. It didn’t look good when the blue states did after President Obama and won’t do us any good today either from the red states.
Let’s look at the broken promises.
Both Republicans and Democrats have blamed each other for years about the economic challenges our middle-class faces. There is no doubt that the richer have gotten richer and the middle class has gradually been fading.
After all, when our public companies pay their CEO’s 300+ times the average salary of their line workers, there can only be one conclusion….those in the middle will suffer. I’ve read that if we went back to CEO pay differences that existed in 1980 the average worker in a public company would get a $14,000 per year raise.
One thing I can say for sure is that if that were to happen, the $14,000 the average worker got would be spent and the economy would be the beneficiary. The way it works now, the money that would have gone to the middle class won’t be spent, and it doesn’t benefit the economy when senior executives make millions of dollars per year, especially when the businesses they run have mediocre performance.
I don’t think the government should be in the business of telling private companies what they should pay. I do think those company boards should, and those boards should be held accountable for over paying senior executives……especially those who don’t perform well.
If we’re going to bring the middle class back, we need to address the salary discrepancy somehow in public companies.
The best quote I’ve seen from the election cycle that explains our “jobs problem.”
Whether you like Tom Friedman from the NY Times or not he often comes up with very quote-able snippets. This one, in particular, I liked, “It’s not Mexico that has stolen our jobs, it’s the micro-chip.”
This story is one that I’ve told for years. When I was learning to drive, I used to go to a paper factory in Glens Falls with my father to fill the vending machines on the weekend. At that time there were about 1,200 factory workers in this paper mill. Fast forward to today. Today, 250 people are making four times the amount of paper that was being made when I was 16 years old.
What does this mean? It means that the micro-chip and the automation that it brings has been a bigger job eater than any outsourcing of jobs. I don’t see any way that the micro-chip revolution is going to slow.
This means that issues the white non-college voter had before the election will likely be here for the foreseeable future. I would love to see a real conversation about how we’re going to help this group get work that will provide a living wage and hopefully propel their family back to becoming members of a solid middle class. That conversation will have to revolve around training and bringing this group into the digital age.
I don’t know the answer to this problem. I do know that we’re probably having the wrong conversation about what’s killed middle-class jobs.
Do deficits matter?
Listening to the economic proposals coming from the new administration is a repeat of past Republican administrations. Let’s have great big tax cuts and the jobs created will more than pay for the reduction in Federal revenues.
This hasn’t worked in the past, and it’s not likely to work now.
At the same time, if you read about Modern Money Theory, this group of economists will tell you that deficits don’t matter to a point. The problem is we don’t know what that point is.
I love the idea of more infrastructure spending. If you drive on the roads, fly in an airplane or try to move around our major cities you see that gridlock is eating up more and more of our time. The question comes, how do we pay for this in a responsible manner? I’m not a deficit hawk, but I can’t see how increasing our deficit by 50% over the next ten years is a good idea.
Are the election results a good thing for private business or not?
If I’m truthful, I have no idea. I would like to think that those who are making policy will finally understand that the real driver of jobs in this country is the lower middle market private business owner, those with 25 to 500 employees.
So far in my forty years as an adult and business owner, this has not happened. There was some talk in Mr. Trump’s tax plan about treating S Corporations as corporations for tax purposes. If this happens, those tax cuts would be plowed back into businesses and new jobs would be created. If instead, lower tax rates only go to C Corporations, big companies would benefit, but would they create new jobs? Our history would lead me to think the answer would be no.
If you are speaking with your elected representatives, having a conversation about where jobs are created and what tax policies would support job creation would be a great idea.
What I’m going to do.
For the time being, I plan to do nothing and wait to see what comes out of Washington starting January 20th. There are signals that we might be surprised with the direction of the new administration and there is what was talked about during the campaign. I’m hoping the new signals will be the ones that get enacted.
I guess the only thing we can do is wait and see.
Why don’t you hit reply and let me know what you think about our last week? Do you have any ideas that would help create good middle-class jobs? If so, I would love to hear about them in the comments below.
This post is not meant to be a political screed. After every election, I try to figure out what’s good for our community of private business owners and what’s not good. If you read this as a political post, please accept my apologies, especially if I’ve offended you.