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Trump Better Brace for Pushback

With stocks rallying and the Obama-to-Trump transition going smoothly so far, the initial worries about a Trump election causing market turmoil haven’t materialized.

Meanwhile, investors are making guesses about the impact Trump would have on various industries and stocks.

As we mentioned yesterday, pharma and biotech stocks are rallying. But technology stocks have taken a hit, as Trump harshly criticized the industry during the campaign. His anti-free-trade rhetoric is also spooking investors who know many U.S. tech giants depend heavily on sales overseas.

It’s just one example of an important fact to consider during the next couple months: Every new president has to reconcile campaign promises with political and economic reality.

For President-elect Trump, the political side may not be as challenging given his party controls both houses of Congress.

The economic side is another story, as the technology sector’s selloff illustrates. Is Trump really going to throw an anchor around one of the most successful of all U.S. industries?

Here’s another example: Although corporate America likes Trump’s promise to lower taxes and regulations, companies in many sectors are concerned about his promised crackdown on undocumented immigrants and restrictions on legal immigration.

With unemployment falling and wages rising – boosted by newly passed minimum-wage increases in Arizona, Colorado, Maine and Washington – employers are finding it harder to attract and retain good workers at low wages. Many depend on new immigrants to fill those jobs. That’s why employers consistently push for more immigration, not less.

And while they remain in the shadows, the nation’s 11 million undocumented workers account for a significant portion of the labor pool in the agriculture, construction, restaurant and hotel industries. The Pew Research Center estimates that “unauthorized” immigrants make up 5% of the U.S. labor pool. (Pew includes both those who entered the country illegally and those with visas that have expired.) Reduce that number, and wages could go up – helping the workers that remain but harming corporate profits.

Economists, in general, reject the argument that illegal immigrants take jobs away from U.S. citizens. Research shows that economic activity generated by low-wage workers boosts the economy more than enough to create more jobs, not less.

So if Trump follows through on his immigration crackdown, look for pushback not only from groups representing undocumented immigrants, but from their employers, too.


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