Yahoo Finance Trump Wants To Eliminate Many Government Regulations: How Economists Think That Would Affect the Job Market
Donald Trump has secured the Republican nomination for the 2024 presidential election, leaving many to wonder how a second Trump administration would differ from the first, particularly when it comes to economic factors like inflation, the job market and more. One area where he remains consistent is his promise to cut regulations, ranging from those that regulate Wall Street to those that fight the polluting effects of greenhouse gas emissions.
Economic experts weigh in on what it would mean for the job market if Trump were to win the election and make good on his efforts at deregulation.
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Generally Speaking
In a general way, reduced regulation could attract new businesses to invest in the economy, creating more jobs, according to Michael Collins, CFA, founder and CEO of WinCap Financial. “Additionally, businesses would be able to free up cash that is spent to follow regulations and use these funds to invest in other areas of the company.”
However, he was clear about the potential for negative effects on the job market, as well, suggesting that fewer regulations could mean fewer protections for workers, potentially leading to unsafe working conditions or wage cuts. Deregulation could also harm certain industries that rely on government regulations, such as businesses in environmental or healthcare sectors.
“The bottom line is, the impact on the job market will depend on which specific regulations are eliminated and how businesses respond to these changes,” Collins said.
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Repealing Environmental Regulations
Trump has been vocal on his campaign trail about his promise to roll back federal regulations that reduce the amount of greenhouse gas emissions, which climate scientists have warned for decades are contributing to catastrophic climate change. He would likely go after the regulating power of the Environmental Protection Agency (EPA), the government agency that puts checks on polluting industries and against which these industries often rail.
While not explicitly a regulation, Trump has also expressed a desire to pull the U.S. out of the Paris Agreement, “a legally binding international treaty on climate change,” according to its website, which was adopted by 196 countries in Paris in December 2015. The Agreement’s goal is to do what is necessary to limit global warming.
Along with this, Trump’s 2024 promises include canceling the electric vehicle (EV) mandate and any mandates associated with car manufacturers shifting over to greater production of EVs and what his campaign describes as “burdensome regulations.”
Chuck Warren, political expert and host of the Breaking Battlegrounds Politics Podcast, said that eliminating such regulations, particularly those affecting the gas and coal industries, “is expected to have a mixed impact on the job market.”
In the immediate term, it could stimulate job growth in these industries as companies ramp up production without the constraints of stringent environmental regulations, Warren said. “This could lead to increased hiring and potentially higher wages due to the surge in demand for labor.”
However, there are doubts about whether these jobs can be sustained for long periods. Moreover, “Deregulation could lead to environmental degradation, prompting future administrations to reintroduce rules, resulting in employment instability. Moreover, global trends are tilting toward cleaner energy, which might render such jobs short-lived,” Warren said.
Changing How Federal Employees Are Classified
When President Biden took office in 2020, he repealed one of Trump’s executive orders known as Schedule F, which essentially removed employment protections for federal employees, making more roles “at will,” thus easier to fire — even senior employees — particularly if they were seen as having opposing views to the president.
Warren said that transforming government employees to at-will employees would have important ramifications on these jobs. “When government workers can be more easily replaced, turnover rates may increase. It could decrease unnecessary bureaucracy and streamline processes, but it might also lead to a diminished corporate memory and loss of experienced personnel.”
The only good part of this is that it might make it easier for newcomers into public service, he explained, thus enhancing competition and innovation in the roles within government.
Wall Street Deregulation
Trump also appears to have his sights set on reducing the checks and balances of U.S. financial regulators, according to Reuters.
Warren said, “New regulators with different priorities may create market volatility initially, which may affect job security in financial sectors. This means companies will be reluctant to employ until they know what the new regulatory climate is.”
On the other hand, if the new regulators endorse policies that encourage investment and reduce compliance costs, the financial services sector could see an increase in jobs, as firms expand their operations and hire additional staff to handle increased business volumes, Warren explained.
Overall, decisions to deregulate and shift policies as highlighted by the Trump administration could result in job growth within certain sectors in the short term but may present employment instability risks and long-term economic fluctuations, Warren suggested. “This means that regulators have to obtain a reasonable equilibrium between deregulation and sustainable economic practices to achieve a stable job market.”
What Trump might do, of course, is largely a matter of speculation, dependent on what American voters decide on November 5, 2024.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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