Guest Opinions

Trump wins as sluggish economy comes home to roost

Steve Ackerman
Steve Ackerman

Any way you slice it, Donald Trump’s 290 to 228 electoral vote win over Hillary Clinton was a landslide. The Trump team deserves tremendous credit for its win. They spent less, had no ground game, offered few specifics, but still won handily against a machine backed by an incumbent president. In short, Trump tore up the campaign playbook. And with it, rocked the political establishment.

Why did it happen? First, the economy has been underperforming for several years. Real GDP growth is not where it could be following a recession — a little more than 2 percent versus 4-5 percent. This is partly because too many people can’t find permanent work. The Bureau of Labor Statistics tracks different unemployment rates to account for peoples’ different work circumstances. The official unemployment rate stands at 4.9 percent. Economists consider that “full employment.” But, the official rate focuses only on people currently working or actively looking for work. It is a snapshot of the last 30 days. What is not counted are the millions of people who have left the labor force or got some part-time or temporary work, but cannot find permanent work. If we counted people in these circumstances, BLS’s key alternative unemployment rate jumps to 9.5 percent. The bottom line is we are not hiring enough people for full-time, steady work to get this economy moving at a 4 percent-5 percent Real GDP growth pace.

Second, the Affordable Care Act is making the situation worse. Studies show the ACA is causing employers to limit their hiring, cut hours of existing employees, and pass along rising premiums to existing employees. A Kaiser Family Foundation/HRET Employer Health Benefits Survey showed that Obamacare adds $3.13 in per hour costs for a person making minimum wage ($7.25 per hour). Making it too expensive to hire entry-level jobs hurts young people trying to break into the job market. On top of that, premiums in Idaho in 2017 are estimated to jump by an average of 24 percent.

Clinton (and President Obama) avoided these issues, while Trump hit them. And even though Trump offered few specifics, following the Republican “repeal and replace” mantra, people saw him as more legitimate because he was an outsider. Republicans have done little to deal with the effects of Obamacare, and Democrats have stepped around the law’s problems, claiming any change would mean a loss in its benefits.

Third, Obama’s over the top “victory tour.” At a rally in Philadelphia on Sept. 17, President Obama thanked himself for the work he’s done, yelling, “Thanks, Obama.” Humility is not a word I would associate with either Barack Obama or Donald Trump. However, if a politician is going to thank him or herself, it should not be in the midst of anemic economic growth, too little hiring and rising health insurance costs. Given this context, going with Trump didn’t appear like much of a gamble.

Steve Ackerman is an economics instructor at the College of Western Idaho.