By early morning on November 3, most of the nation knew it was finally over: George W. Bush had won the presidency of the United States of America. Members of both major parties breathed a sigh of relief. No recounts. No lawyers. No repeat of the agonizing 37 days. No more personal attacks. And, best of all, no more commercials. The question, however, is what will the election results really mean to the job market, if anything?
To believe that the job market is affected by who the president is means the policies of that president matter. So, has President Bush been pro-business or anti-business? If you look at his first term, President Bush cut the tax burden for businesses, especially small businesses, in response to a softening market. True to form, the job market didn't strengthen right away, but it's steadily done so over the last 14 months. There have been 2.2 million new jobs produced over that time, with 337,000 new ones just announced November 5.
Another sign of the job market is reflected in the unemployment rate. During President Bush's tenure, the unemployment rate was as high as 6.3 percent. Though the tax burden was cut previous to the unemployment high, the cut helped unemployment fall to its recent level of 5.5 percent. Although this level of unemployment is higher than the unsustainable 3.8 percent low in 2000, it's historically better than average. In other words, higher taxes hurt the business owner, thereby negatively affecting employment.
Tax burden policies also have an effect on outsourcing. For example, in Illinois, the tax and fee burden-realistically, another tax-on businesses is high on many fronts: SUTA, workers compensation, etc. Rather than having businesses come to the state under such structure, they've responded by leaving the state or outsourcing the bulk of their jobs out of state. The same response occurs when the tax structure on the national level is the same. Keep the tax burden off of businesses, and keep the jobs in the country.
So with all we've seen in President Bush's first term, expect more pro-business policies in his second term. He's continually discussed the need for getting government off of the backs of businesses with the firm view that it inevitably helps strengthen the job market. His first term policies got the ball rolling. Since presidents like legacies, expect him to do everything to keep the momentum going. Both the election results and the economic outlook seem to be supporting him. IBI