The job market is relatively strong so far in 2016, with unemployment falling below 5 percent for the first time since 2008. But as we all know, the 2016 presidential election is coming up, and some believe this uncertainty might affect the positive market. Let’s take a look.
In the last three months of 2015, companies hired an average of 284,000 employees a month. In January, that slowed to 151,000 added jobs. It’s arguable how much this has to do with the elections, though. For example, falling oil prices resulted in a loss of 7,000 jobs in the energy sector.
And there may not be a slowdown at all. Payroll processor ADP recently reported that the private sector added 205,000 jobs in February. If the buzz about February’s job numbers is true, it looks like companies aren’t waiting to hire, even with the uncertainty surrounding the election.
A Limited Talent Pool
If the unemployment rate continues to fall, there could be a slowdown in hiring simply because of the numbers. Again, this would not be a result of the election. Many economists consider an unemployment rate of 5 percent at or near full employment. The narrowing pool of qualified candidates could mean employers take longer to hire due to the fact that it’s harder to find the perfect person for the job.
The Stock Market’s Effect on Hiring
Many think elections impact the stock market, and an impact on stocks could impact labor as well. The presidential election cycle theory posits that returns are lowest in the first half of a presidential term, and highest in the latter half. President Obama has stymied that theory, though. This is causing some analysts to champion another theory: that a declining market could signal a shift in parties. Many think that the stock market is predicting a Republican win.
What the Job Market Would Look Like: President Donald Trump
So what would that look like? Current Republican front-runner Donald Trump has said that one of his major pushes as president would be for the mass deportation of 11 million undocumented US residents in just two years. Of those 11 million, 7 to 7.5 million are working in industries like construction, hospitality, child care, restaurants, and more. And most of these positions are on the lower end of the pay scale. There are simply not enough unemployed Americans who want those jobs, so this would cause a major glut in the labor market.
Trump is also promising to take jobs back from China via a 45 percent tariff on Chinese imports. This could be good news for the manufacturing sector, though again, there is a finite pool of workers in America. And there’s speculation that this could kick off a global trade war, which could hurt a wide variety of industries.
What the Job Market Would Look Like: President Bernie Sanders
The labor market under President Hillary Clinton would look similar to what it is now. But what about Bernie Sanders? Many think his proposals would never get off the ground, that the numbers don’t add up, that it’s all impossible. But let’s ignore all that for a moment, and pretend his policies have gone through, no problem. According to University of Massachusetts Amherst economics professor Gerald Friedman, Sanders’ policies would create nearly 26 million jobs. He would also raise the minimum wage to $15, which could hurt some employers.
Election 2016 and the Job Market
While the election may have an effect on the economy — and vice versa — it does not seem to be affecting the hiring practices of employers. Companies are continuing to fill positions with the best person for the job. And some may even be expediting the process, worried about a potentially narrowing talent pool. While it’s true that this is a time of uncertainty, for now, the labor market is a shining beacon in a sea of market turmoil.