By the end of 2016 we will see a new president of the United States. This will undoubtedly have an impact on our daily lives, as well as have an effect on the business community. As the candidates and political parties gear up for the final stages of the election campaign, we look at the policies of each of them and what this will mean for businesses and investments.
The impact of the presidential race
The US presidential election comes around every four years and the outcome affects the performance of businesses, as well as the stock markets. With the economy remaining in a precarious position, all the candidates will have the health of the country as a central component of their campaigns. Past studies of the effect presidential wins have had on the US stock market show a loss of 1% if the Democrats win and a gain of 4% following a Republican candidate victory.
The key issues
It might still be a number of months away, but the 2016 presidential election will bring about a number of issues that will impact on the country’s business community. Here are the main policies that will have a consequence for businesses and how the main candidates are seeking to address them.
The minimum wage
Currently there is a federal minimum wage in force of $7.25 an hour. This has not increased since 2009 and many low earners have been pressing for a living wage of $15 an hour to be implemented in the major cities, such as New York.
The main Democratic candidate, Hillary Clinton, wants to see $15 an hour imposed for fast food workers in New York, but doesn’t believe this is needed across the entire country. She also supports the minimum wage increasing to $12 an hour. Another of the Democratic hopefuls, Bernie Sanders, wants to see the federal minimum wage rising to $15 an hour.
One of the Republican candidates, Ben Carson, believes the minimum wage should be linked to inflation. Donald Trump, another of the Republicans, believes that wages are already too high and that an increase in the minimum wage would reduce the country’s competiveness on a global level.
According to official figures, US women earn around 78 cents for each dollar that is made by a male employee, making it a potential debate topic. Democratic senators wanted to see the Paycheck Fairness Act of 2014 implemented, but Republicans in the Senate voted against it. Both Hillary Clinton and Bernie Sanders supported the bill and want to bring about a more fair policy for wages. In the Republican debate, the only candidates to back a reduction in the wage gap are Jeb Bush and Chris Christie. Donald Trump has previously stated that if women work as well as men they will earn the same, but he is likely to assess the economic factors surrounding the wage gap before making any wholesale changes.
Affordable Care Act
One of the key aspects of Barack Obama’s presidency has been the implementation of affordable healthcare for everyone. Dubbed Obamacare by many, the majority of the Republican candidates are against the Act. Trump does want to see some form of universal healthcare available and he supports the Medicaid and Medicare plans.
Hillary Clinton will seek to defend the Act against plans by the Republicans to repeal it. She wants to see the benefits expanded and ensure that families reap the rewards, as opposed to just the insurance companies. Bernie Sanders is fighting for a single-payer system for everyone, which will offer more comprehensive universal healthcare.
The effect on investments
As well as having an impact on existing businesses, the winner of the US presidential race will also have meaning for those seeking to make investments. With so much turbulence around healthcare, the high cost of some drugs and the difficulties in bringing in the Affordable Care Act, health investments could be affected. There are also plans by some candidates to increase estate taxes and lower the level at which individuals are exempt. Other election policies that could affect investments are changes to Social Security and income tax reforms.
All the candidates will offer certain positives and negatives for the business and investment communities. We will have to wait and see who wins come November and how many of their policies they manage to implement, before we will know the true effect a new president will have on the country.