The Trump Effect
In 2017, during his inaugural speech, US President Donald Trump pledged to put “America first”. Today, his aim to protect the interests of US people and business is now as much reality as it is rhetoric. Following Mr Trump's recent whistle-stop tour of Europe, Ruth Holmes reviews the impact on global mobility.
2 October 2018
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President Trump made a bold promise back in January 2017: “Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.” Some would say he has been even bolder to deliver on his commitment.Among his first acts in his just days-old presidency was pulling out of the Trans-Pacific Partnership, swiftly followed by his institution of a widely condemned, highly controversial and much-challenged travel ban on people from seven Muslim-majority countries.Since then, the president has continued to unravel other high-profile international agreements, including the Paris accord on climate change. In May this year, the US went further and introduced tariffs on 1,333 Chinese products and on EU, Mexican and Chinese steel in a move some fear will spark a full-on trade war.
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While President Trump and his advisers navigate their way in the world, where does that leave businesses, globally mobile and relocating employees on both sides of the US’s borders?
US job growth despite tighter labour markets
Eighteen months into this Republican presidency, domestic economic data remains positive. The latest US Bureau of Labor Statistics’ Employment Situation Report highlights both employment and the US labour force are continuing to grow, adding a further 213,000 jobs in June after May and April’s figures were also revised upwards.Non-partisan global, independent business membership and research association, The Conference Board , said accelerating business economic activity since the start of 2017 has allowed job growth to strengthen further in the first half of 2018, despite tighter labour markets.“Much of the acceleration is driven by manufacturing employment, now growing at its fastest rate in 23 years,” commented Gad Levanon, the Conference Board’s North America chief economist.“Given the continued strength in the US economy, we expect more of the same for the labour market in coming months: more people joining the labour force, but strong job growth will continue to tighten the labour market, further accelerating wage growth.”Will US job growth continue? CEOs are not as optimistic as they were
This positive domestic growth in the economy and labour market is tempered by shifting sentiment among CEOs on confidence and conditions. The Conference Board’s Measure of CEO Confidence, which grew in the first quarter of 2018, declined slightly by two points to 63 in Q2. (A reading above 50 reflects more positive than negative responses.)CEOs’ expectations on economic outlook are also much less optimistic than last quarter. While it is still too early to tell if those doubting the economic credibility of President Trump’s foreign trade policies are correct, now just 48% of CEOs surveyed expect economic conditions to improve over the next six months, compared to 63% in the second quarter. CEOs’ expectations regarding short-term prospects in their own industries over the next six months were also relatively flat, with only 42% anticipating an improvement in conditions.Summing up, Lynn Franco, director of economic indicators at The Conference Board, said, “CEOs’ optimism regarding the growth prospects for both mature and emerging economies have eased considerably since the beginning of the year. However, most CEOs expect profits will increase over the coming year, with market/demand growth and cost reductions the major driving forces.”Internationally, the Conference Board also found sentiment regarding Europe and Brazil “declined rather sharply”, with confidence regarding current conditions in Europe also declining from “positive to neutral.”Key Trump impacts for mobility
In many ways, the surveys in this mobility space are telling us much that we already know. Volatility and uncertainty are inherent in the decisions being made under the America First policy. There is also complexity and ambiguity in Trump’s messages on trade agreements with a post-Brexit UK.US taxes: expat and business
But, for now at least, it seems to be business as usual for US mobility on the broad themes of cost, talent, assignment types and compliance, with some noteworthy points on taxation.In January, the Internal Revenue Service’s (IRS) issued Notice 2018–01, providing guidance for implementation of IRC 7345. This new code affects people who have “seriously delinquent tax debt” of more than $50,000. Under the guidance, the IRS began sending certifications of unpaid tax debt to the State Department in February 2018, meaning the Department of State can now more easily deny a passport application, limit or revoke a current passport.More articles from the Autumn issue of Relocate magazine:
For global tax, compensation, benefits, rewards and payroll specialists already grappling with a raft of other major tax updates for the 2018 tax year under the Tax Cuts and Jobs Act (TCJA) – including suspensions of the deduction for moving expenses from December 31, 2017 for years 2018–2025 – IRC 7345 means it is more important than ever for globally mobile assignees to be supported in getting their financial house in order.
Challenges for the US include a tightening labour market
A tightening labour market, tougher visa protocols and continued pressure on overheads are all playing out in US relocation research. Cartus’ latest domestic US Relocation Policy & Practices Survey found cost is still the number one challenge for US companies, followed by talent management. Over half of its respondents said that talent shortages are a “significant” or “somewhat significant” issue.Cementing these themes, another Cartus survey Trends in Global Relocation: 2018 Biggest Challenges, finds that after cost control, immigration and tax compliance are the biggest issues.Seven out of ten of the 205 mobility managers surveyed around the world said immigration is more challenging than previous years for both internal and external reasons. Internally, respondents note concerns arise because of managers’ lack of awareness of host location requirements when selecting assignees or setting move timings. Externally, obstacles arise because of visa wait times (63%), application complexity (55%) and geopolitical events like the US travel ban and Brexit (43%).Tax compliance, specifically a lack of business managers’ understanding of the costs taxes add to an assignment, was the next big issue, affecting 49% of respondents to Cartus’ survey. In both cases, the solution is for global mobility to inform and support business managers.Talent management: the millennial influence in the US
Looking through the talent lens, identified by Cartus as the second biggest challenge for US global mobility managers, 65% relied on targeted recruitment. With 48% offering golden handshakes for new joiners, 43% looking to campus recruiting and 35% on internship programmes – activities all very much geared to the millennial generation and a trend also picked up by Crown World Mobility.“This year, we expect millennials to have an even greater influence on mobility trends,” said Lisa Johnson, global practice leader of Crown’s consulting services at the launch of its 2018 Global Mobility Trends report.“Talent has arguably never been more globally mobile than it is today, and millennials are hungry for international experiences.”In the US, it’s not just international opportunities either. Reflecting London’s fading allure among millennials in favour of regional centres like Manchester and Birmingham, there are signs that America’s millennials are striking out of New York, San Francisco, Chicago and Los Angeles.US census data shows millennial population growth outpacing general population growth in places like Denver and Colorado Springs. Further analysis by Brookings Institution demographer William Frey also suggests domestic millennial mobility patterns, inspired by a sense of adventure, more job opportunities and lower living costs, are tending south and west.US employment and recruitment trends
Andrew Chamberlain, chief economist at online recruitment site, Glassdoor, which publishes a top 25 of cities to live and work in for the US and UK, said, “Big, metropolitan cities may be more famous than others, including being home to some amazing companies to work for, but this recognition is also what contributes to them being among the most expensive places to live.“Many mid-size cities stand out for offering a great mix of a thriving job market with plenty of opportunity, paired with home affordability and being regions where employees are more satisfied in their jobs, too.”Cost-driven employers are also decamping in these directions. AllianceBernstein, one of the largest US asset managers, has plans to relocate its headquarters and 1,000 roles, including chief executive, Seth Bernstein, out of New York – its base for the last 50 years – into Nashville, Tennessee.During a press conference, Mr Bernstein said, “Moving our corporate headquarters here allows us to offer advantages to our employees that we simply couldn’t in the New York metro area.” Mr Bernstein also highlighted the more affordable cost of living, lower taxes, housing costs and quality of life.These qualities are actively marketed by regional initiatives like ChooseATL, which aims to connect mobile millennials to Atlanta’s thriving metropolitan area. “The opportunities that millennials crave when it comes to careers, culture and community are abundant in Atlanta,” said Kate Atwood, Choose ATL’s chief executive. “With over 1,000 startups, Atlanta is Inc.’s No. 3 startup hub to watch. More Fortune 500 companies also have headquarters in Atlanta than Dallas and Nashville combined.”With the US economy continuing to pick up after the 2009 recession, mobility in the US seems to be too, albeit this time marching to the millennials’ tune. To read more about the US visit our US news section.Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.
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