Get some Clarity Elections 2020: Trump and Biden, Republicans and Democrats, individuals and corporations—everyone is staging a real battle against pandemic uncertainty, pressing issues, and continual crisis. 2020 is dividing political parties, stressing businesses, and demanding adaptability from everybody.
Still, each person, each party has different ideas about how to solve America’s most urgent challenges like protecting lives from COVID-19, mitigating increased national debt, handling healthcare cost bursts, and satisfying demands for higher minimum wages. So, we head to the polls in hopes of securing the future we passionately envision for America.
Moreover, 2020 has been no ordinary, typical year. Instead, it has upset and shaken almost every facet of life and work in America for employees, leaders, and businesses at large. Just as it has been a uniquely challenging year, candidates and parties engage novel solutions to the issues in the US.
For example, many businesses are turning to outsourcing talent and teams (including HR functions) to cope with coronavirus-related changes in priorities, work structures, and technologies. In part, this results from increases and decreases in staffing across departments and their respective costs. In fact, four in 10 businesses have significantly reduced employment 58 percent have resumed hiring. To help you see this emerging trend’s relevance today, we have conducted extensive research into the imminent vote.
Here, we compiled research for business leaders on how each party, candidate, and issue could affect human resources and benefits for employees. Use these insights to understand how you can prepare for a post-election world regardless of the outcome. Along the way, ask yourself, “How will I get some clarity Elections 2020 and how it will impact my business, HR efforts, and structured benefits?”
Asking this question and reading this post will prepare you for the impact that the presidential outcome and state-wide changes the general election will bring. So, explore the issues below, and find the right solution for your business.
Minimum Wage Increases Threaten Business Bottom Lines
At stake during the 2020 election is the contentious issue of defining a reasonable, sustainable minimum wage. Democratic nominee Joe Biden envisions a minimum wage of $15 an hour by the year 2026. Across the aisle, Republicans traditionally oppose this substantial increase though President Trump has supported the idea on occasion. While the solution and outcome remain indeterminate and up in the air, there is a definite trend.
States themselves have taken up the responsibility of maintaining or increasing the minimum wage. Already, 29 states have minimum wages that exceed the federal $7.25 per hour. Joining the ranks, states like Florida are already considering wage raises to the level Biden proposes. But, what will the consequence of the presidential election and state initiatives be on this issue?
Economists disagree. Some say that $15 an hour is a reasonable and “living” wage for most workers and employers. They even argue that the minimum wage has slipped far behind inflation, and, in reality, it should be closer to $20 per hour this year. An increase—whether to $15 an hour, or more, or less—is a matter of time for small and large businesses.
Other analysts say that raising the minimum wage—particularly to $15 an hour—will unnecessarily challenge business owners and result in negative consequences for the workers it intends to assist. For example, it could mean that millions of workers lose their jobs due to increased costs and less flexibility in business income. In short, some say that a wage increase would brutalize businesses, raise prices for consumers, and crush those with thin margins.
Business leadership should mind these possibilities and prepare for a wage increase that will stretch their resources and demand strategic changes in structure. Bottom lines could necessitate that layoffs increase dramatically alongside the price of their products or services. Predicting massive layoffs (over and above those which are COVID-related), many businesses are choosing to outsource in order to save on costs and recoup the money potentially spent on upcoming wage boosts.
Potential Tax Bumps Mean Businesses Brace Themselves
Joe Biden proposes a number of tax-raising policies on incomes over $400,000 as well as capital gains and payroll taxes. He has suggested that raising taxes on corporations and imposing a minimum book tax on them could greatly benefit the country. His changes could raise tax revenue by just under $3 trillion in light of the revenue consequences of coronavirus and its economic downturn.
For businesses, Biden proposes many sweeping changes to tax practice. Corporate income tax rates would hike from 21 percent to just under 30 percent. At the same time, a new minimum tax would be introduced for businesses that profit over $100 million every year. This could mean it might be harder for these US companies to stay competitive with countries like Ireland where headquarters are relocating to enjoy very low corporation tax rates.
In addition, Biden wants to roll back President Trump’s cuts for those individuals making over the $400,000 annual threshold. It also means reducing the number of reliefs and pass-throughs that non-corporate businesses have received under the Trump administration.
With many other business-affecting changes Biden supports while leading in many polls, businesses and the wealthy prepare. Businesses are currently assessing the potential outcome of these tax hikes. Those interested in keeping their taxes low are considering deferring their deductions until after the tax increases are possibly enforced.
And, these businesses are also looking to accelerate their income as a result of Biden’s proposed taxing. To boost income and raise the bottom line, businesses and the wealthy are exploring every option, including cutting HR and employee benefit expenditures in order to offset pending, annual losses.
On the other hand, Trump supports the boosting of take-home pay with an unspecified tax cut and “Made in America” credit. For companies, he plans to offer a tax credit for bringing manufacturing jobs back from China, allowing 100 percent of expenses to be counted within certain industries. While he has not specified which assets would qualify for the total deduction, such full expensing remains a highly effective strategy for company costs, boosting growth in the process. And, perhaps more impressively, President Trump is calling for payroll tax forgiveness and cuts. On many occasions, he has recommended the idea of a reduced capital gains tax rate from the current 20 percent down to 15 percent. He also wants to index capital gains for inflation.
While some businesses have seen relief from his tax cuts still in effect, businesses face their expiration if President Trump does not win re-election. Starting in 2020, a deduction for business net interest expenses will be more limited. Then, in 2023, short business investment expensing will phase out. And, by 2026, income tax changes imposed by TCJA will expire, reverting immediately to former policies.
What does this spell for the business owner and professional leader? With expiring tax cuts and relief credits on the horizon and scheduled for removal, more than a few business leaders are considering ways to mitigate returning tax costs. One of those ways exists in an obvious reduction in the cost of employee benefits and HR administration (as well as outsourcing the talent and resources of other departments just as much). The advantage they find through outsourcing certain functions such as HR administration, payroll, and benefits is that they can scale while remaining flexible to fluctuation in hiring and layoffs. They pay less during layoffs, and they can handle hiring needs and surges without raising up new HR staff positions.
Lockdowns, Mandates, and Policies Suggest Another Economic Downturn
At once representing just 4 percent of the global population and more than a fifth of all coronavirus cases, the US also has endured 21 percent of global COVID-induced deaths. As well, most states are still considered hotspots with transitions increasing and decreasing with no seeming sign of stopping the current that is flowing through and devastating communities and organizations of all kinds. So, the American people call for swift and effective action to neutralize the virus while restoring the ways of life and condition of the economy so importantly halted and reversed. Nevertheless, the US remains short on testing and supplies desperately needed to subdue and combat the novel coronavirus.
Trump has consistently left the responsibility to control the virus up to each individual state. He has done so without a national or fully federal plan to scale public health mandates and impede spread. As a result, the national policies form a patchwork that many blame for the trajectory of the outbreak.
Supporters of the Trump Administration are, however, outspoken about their disagreement with the recommendations officials and scientists have made, saying that lockdowns and mandates only fuel economic disaster. Luckily, the Trump Administration did pass a number of initiatives to fight this outcome of the pandemic through emergency spending bills and acts. Many wish to see more stimulating solutions come from President Trump.
Among them, President Trump proposes to develop a vaccine by the end of 2020, return to normal in 2021, and prepare for future pandemics. Still, the majority of all voters currently disapprove of President Trump’s initiatives in response to the outbreak, preferring the proposed response of Joe Biden.
To fight COVID-19, Biden supports saving lives and minimizing the spread through “mounting an effective national emergency response.” He seeks to eliminate barriers to prevention and care by lowering and mitigating healthcare costs as well as making decisive economic maneuvers to stabilize the economy, benefit workers, and support businesses. In contrast to President Trump, Biden’s approach engages the government to assume major responsibility for control of the virus.
Because stricter mandates, lockdowns, and responses could limit economic activity, businesses exist within those who oppose Biden’s position. Not accidentally, they also are moving to anticipate lower hiring rates, more furloughed workers, increased remote workforces, and possibly business closures. They seek ways to “ride the wave” and dynamically respond to the ever-changing activity of the virus and the government’s response to it.
It’s possible that many of these anticipations will lead corporate and mid-size business leadership to outsource and perform more functions at a lower cost. Every dollar will count for some businesses operating relatively small budgets that have fewer resources to waste on reactive, rather than proactive, responses to the revenue-leeching emergency.
Growing National Debts Position Businesses to Cut Spending
Most recently, Democrats and Republicans are divided on a stimulus package. The national deficit and increasing debt bubble weigh in. Republicans are wary of approving a multi-trillion plan, and Democrats insist that spending is the only way to address widespread, pandemic-instigated, economic fallout. Thus, President Trump and former-VP Biden differ on how (or if) they plan to address the national deficit in meaningful, effective ways.
The budget policies supported by Biden would, according to a nonpartisan study, increase the national deficit by $2 trillion because he proposes to increase spending by $5 trillion, offset only by tax increases totaling $3 trillion. He suggests spending most on educational initiatives and programs that would total nearly $2 trillion over 10 years. Some of these expenditures include free college for severely low-income students and a universal institution of pre-kindergarten.
Beyond that, infrastructure spending follows in which nearly the same would be spent on clean energy, high-speed rails, water projects, local transit, and more. Finally, and most contentiously, Biden would spend $1.6 trillion on healthcare to lower prescription costs and letting Medicare negotiate prices against manufacturers.
Conversely, Trump took an opposing stance in 2016 by promising to pay off the national debt in eight, short years. (But, in fact, he increased the national debt from $14.7 trillion to at least $16.8 trillion in 2019 because of the pandemic and tax cuts.) While he has quite a way to go in order to keep that unlikely promise, he is making national debt the second “priority.” When asked about his plan to reduce the deficit, he mentioned that he desires an unprecedented amount of growth, the “hottest economy in modern history.”
While the specific details of his plan have been scarce, Trump is emphasizing the deficit as an urgent issue because the national debt will reach equal size to the entire US economy by the end of the year. The clock is ticking.
Because the government has a decreased ability to solve crises and a greater risk of financial crisis as national debt climbs, voters are tough on both candidates. While Trump has increased the national debt by several trillion, Biden’s proposals would increase it even more, many experts say. Business leaders in particular worry that (another) financial crisis is on the way, and they must be smart to weather its effects if it comes sooner rather than later.
While individuals face decreased savings, income, and security, businesses will endure tax hikes and have to respond with spending cuts. These spending cuts could take many varied forms such as layoffs and outsourced business functions like HR where feasible for continued operation. In addition to paying less during a layoff and being able to handle surges in demands without additional HR hiring, businesses can cut costs by paying for HR and benefits on a per employee per month basis—a variable cost model that suits businesses in many sectors and of many sizes. Contact Corban OneSource to learn more about how this could work for your business with up to 6,000 employees.
Affordable Care Act Changes Poised to Affect HR
How will the 2020 election affect healthcare across the nation? That’s the question that business leaders and organizations are asking themselves as Republicans and Democrats make veering proposals. Much like the approval of the Affordable Care Act, varied healthcare initiatives pose many puzzling possibilities for businesses that offer benefits such as healthcare coverage and for workers themselves who rely on these perks of employment.
The debates over whether the federal government can improve how state governments have interpreted and implemented the Affordable Care Act are intense. Biden aims to reduce the disparities that exist across state lines, and these issues are prominent in the 2020 presidential debate because the coverage gains made by the Affordable Care Act have stalled. In some states, coverage is reversing, and politicians as well as citizens are asking whether the problem can be solved more competently.
Historically, President Trump embraced the GCHI amendment that would repeal-and-replace the Affordable Care Act. More recently, he unveiled the “America First” health plan to deliver better care, more choice, and lower costs. The plan promises decreased drug costs, reduced insurance premiums, and protections from “surprise” bills.
On the other hand, Biden is not shy about his support for a government-run public option for people unhappy with or ineligible for employer-sponsored coverage. Biden is also a proponent of boosting the Affordable Care Act even further so as to shrink the number of uninsured.
For mid-sized and large businesses, these policies could mean vastly different things. Currently, employers must provide information about the Affordable Care Act Marketplace whether or not they offer insurance as a benefit. In addition, they should offer insurance to everyone eligible. It also demands that employers provide only certain amounts in Flexible Spending Accounts, incentivizes wellness programs, and asks businesses to pay an Employer Shared Responsibility cost through the IRS.
These changes have meant extra work and more complex regulatory standards for HR departments and leadership at companies. If the Affordable Care Act is expanded or repealed in favor of the “America First” plan and other proposals, businesses will need to act quickly to fall in line and replace old practices of administering proper benefits.
Summery Clarity Elections 2020
Since it concerns the economy, small business, healthcare, wages, taxes, and more, every election promises consequences for businesses and their attending HR departments to sail the changing tides of government. Regardless of which candidate, party, or solution you prefer, keep ready for the natural consequence of this election by understanding the issues and what they could mean for your organization. I hope this gave you some Clarity Elections 2020.
Corban OneSource is an expert at helping companies with 75 to 6,000 employees gain advantage through outsourced HR departments that are completely remote and more than ready for the present pandemic. Remote teams are able to help you handle increases and decreases in staffing as a result of changing economic conditions, upcoming tax provisions, and fluctuating healthcare requirements.
Get more information about Corban OneSource, and explore payroll and HR solutions that scale regardless of political outcomes.
