Donald Trump has consistently sought credit for the several high-profile jobs announcements made by big companies in the weeks following his election.
"Because of what's happening and the spirit and the hope, I was just called by the head people at Sprint and they're going to be bringing 5,000 jobs back to the United States and taking them from other countries," Trump told reporters back in December. On Twitter, he's boasted about his role in creating and keeping jobs in America.
But is the president-elect, still days away from his swearing-in ceremony, actually behind what might appear to be a hiring bonanza? Economic evidence suggests otherwise, indicating instead that he did not cause most of the new hiring.
GM announced it was creating 450 new American jobs on Tuesday, for example, and moving 6,000 existing technology jobs back to the United States. The company’s official announcement does not mention Trump or the federal government. Instead, it casts the steps as part of a four-year efficiency plan. GM’s financial materials and previous corporate statements support that assertion.
Mary Barra, GM’s CEO, is on President-elect Trump’s economic policy team. Yet she has specifically rebuffed his argument, made in tweets and speeches, that American companies should move more car manufacturing into the U.S.
Speaking at a car show this month, Barra said GM will continue to “build where we sell,” citing the company’s supply chain of production and sales in China and the U.S.
Prior to this week’s announcement, Barra has emphasized that long-term global business fundamentals drive the company’s personnel strategy.
GM employs 215,000 people across 6 continents, including 97,000 in the U.S. and 15,000 in Mexico. As Barra told bankers on a conference call this month, profitability and efficiency considerations mean some GM “products are in Mexico,” while the company “will continue” to also hire in America. On the same call, Barra cited GM’s ongoing effort to insource certain positions, touting “11,000 IT jobs” that returned to the U.S. “over several years.”
In GM’s Monday announcement, most of the jobs cited are actually from the long-term program for insourcing its existing IT jobs. The 450 new U.S. jobs comprise 0.46 percent of the company’s domestic workforce.
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Trump has repeatedly tweeted about companies that have announced new jobs since his election — and tweeted negatively about companies like Toyota, reported to be building a new plant in Mexico.
NBC News reported on Tuesday that some companies, eagerto avoid becoming a target, have preemptively — or retroactively — announced plans to create U.S. jobs. On Wednesday, after a Today Show fact check reported that GM’s hiring was not a direct response to his tweets, Trump took to Twitter to respond.
Michael Hicks, an economics professor who studies the government’s impact on the economy, says public companies do not typically make employment decisions on a Twitter timeline.
“Business expansion plans are probably the result of many months, if not years, of restructuring and business planning,” says Hicks. He adds that many politicians exaggerate their influence over the economy.
While corporate employment and manufacturing plans take a long time to develop, there have certainly been a series of jobs announcements since the election.
Industry experts say that wave of P.R. looks like a response to Trump, even if the underlying hiring is not.
“Many of these moves we anticipated,” says Michelle Krebs, an industry analyst for Autotrader.com.
Car companies have simply began “timing” announcements, she says, to appease the president-elect.
“They are packaging their news that they otherwise might kind of dribble out,” Krebs tells MSNBC, “and doing some storytelling around it in an effort to get out of the crosshairs of Trump.”
Maryann Keller, another industry analyst, told Bloomberg News that car companies are clearly “announcing investments that they would have made anyway.”
Alan Tonelson, an economic analyst sympathetic to Trump’s trade critique, argues that while the president-elect does not deserve credit for some of the announcements, he could ultimately impact corporate conduct.
“It can’t possibly be coincidental that all of these announcements have been made since early November,” says Tonelson, author of a book about “America’s Failed Trade Policies” with China.
“He is going to use that presidential bully pulpit” to target offshoring, Tonelson tells MSNBC, adding, “history has shown that presidents have considerable power to change corporate norms.”
Mark Muro, a manufacturing expert at Brookings, says there’s no doubt the auto industry uses a “long term” timeline for “major capital investments,” so recent moves were not caused by Trump’s words. But he also argued Trump could promote American jobs by prodding CEOs.
Trump is “standing up for American-based production,” Muro told MSNBC, “and conveying a norm that says that advanced manufacturing, and advanced industries, are particularly important.”
Public companies certainly respond to multiple stakeholders, from traditional investors and consumers, to broader pressure from politicians, activists, or “bad P.R.” in general.
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Even rhetorical pressure, however, has its limits.
“It’s always convenient for politicians to take credit for job creation announcements, but no CEO of a Fortune 500 company is going to respond to sort of off-the-cuff policy considerations,” says Hicks, the economist. “they have a board and stockholders to answer to.”
Those board members and stockholders pursue global profits, and the law is also on their side.
GM, like most Fortune 100 companies, is incorporated in Delaware. That means its executives are bound by the state’s business laws, which require executives only make corporate moves to increase the company’s stock value.
Even if an executive believes a certain action would be a good thing — say, hiring more Americans or donating to charity — they can only take the action to the extent it economically benefits the company.
CEOs “must make stockholder welfare their sole end,” as the top judge on Delaware’s Supreme Court explained the rule, in a 2015 treatise on corporation law.
Laws can, of course, change.
In the Trump era, the big question for American corporations is not ultimately what the president says. Trump’s words on Twitter can largely be managed by more words, as corporations learn to couch their announcements accordingly — a process that business experts say is relatively insignificant for the economy.
The billion dollar question is what the president does. Will he actually alter corporate law, or federal policy, or international trade? Then executives would have a reason to change more than their press releases.
