We all know that President Elect Trump is pro-business. Most think this should have a good impact on the economy. Already we’ve seen Ford’s decision to invest $700 million dollars to increase production at their Michigan plant versus moving the manufacturing to Mexico. This will mean more jobs and more workers covered by workers’ comp. Many anticipate that this will be the first of many such actions which will help keep jobs in the U.S.
Since the election, the U.S. stock market has rallied to new highs, which is generally good for corporations and insurance companies. Profits are up, more jobs are available and unemployment is low (4.6 percent in November 2016) according to the Bureau of Labor Statistics. All of these factors have an impact on our industry. During the 2008 to 2011 time frame, many companies were suffering financially. Workers were experiencing layoffs, and countless companies consolidated or closed. This resulted in workers’ comp claims, which have been decreasing in general over the last 25 years, decreasing even further. While workers’ comp claims may continue to decline due to better safety, more tech jobs, etc., we do not anticipate decreasing claims because businesses are shedding workers, at least over the next few years. The bottom line is that most analysts are predicting a good economy under the Trump administration.
Mortgage rates have increased slightly since the election but remain at historic lows. Availability of houses and the length of time homes are on the market before selling has decreased from from 2008 to 2011 as well. Based on Street Directory, approximately 40 percent of homes sold within the first month in the U.S. for 2016. The hot real estate markets are generally surrounded by major company corporate offices within a few miles. Again, the large corporations hire local people and carry workers’ comp insurance.
In 2016, we experienced something that has not happened in decades – more jobs than available employees, due in part to the number of baby boomers retiring. The number of Millenials and Gen Xers coming into the marketplace does not equate to the openings currently available. This will have a huge impact on the U.S. market: salaries will go up, fewer qualified candidates may be hired, and potential risks may occur based on limited employee capabilities and training.
One of the big issues in this past election that will directly impact our industry is marijuana. As reported in the Wall Street Journal, more than 1 in 5 Americans now live in states where recreational marijuana is or soon will be legal. Of course, marijuana remains illegal for all use under federal law, but the Obama administration adopted a policy of general noninterference with the state laws. Could this change under the Trump administration? That would mean going against millions of marijuana supporters, against much of the public opinion, and the individual state marijuana laws. While Trump has not been cast as a social conservative, the legalization of marijuana isn’t anticipated to be included in Trump’s initiatives.
Pharmacy is another industry that would have direct impact on the workers’ comp system. Based on the generally pro-corporate policies and Trump’s pro-business perspective, it is unlikely that there will be a negative cost impact (driven by the Trump administration) on the Pharma industry.
In summary, we expect the Trump presidency to have a positive impact on business. While there is much discussion about the decisions that will be made (foreign and domestically), it is anticipated that businesses will grow and markets will be strong. While this is the good news for the workers’ comp industry (more jobs and more businesses lead to more workers’ comp policies), the downside is that many of our hot topics will not change. Also, we will have to see what impact this has on the injured worker rights. Getting the injured worker the evidence-based medicine he or she needs is of utmost importance for the system to work. And we expect to continue to see requests for medical marijuana as well as increases in pharmacy treatments which will have to be managed through the various state networks, as well as through the utilization review process.
As Trump takes office this month my advice is this: Put your seat belt on, and get ready for Mr. Trump’s wild ride. The next four years will definitely be interesting.