If you were a CEO who wanted to influence the presidential election, how would you do it? You could donate money and crank up your firm's political action committee. Or hold fundraisers and lobby your well-heeled friends for support. You might even publicly endorse your favorite candidate—assuming that wouldn't drive your employees to the other guy.
But here's a more effective way for business leaders to influence Election Day results: Announce major corporate cutbacks that scare the stuffing out of voters.
That, in effect, is what many big companies have been doing in the final days of the campaign. It's a fluke of timing, of course, that third-quarter earnings are coming due just as voters are preparing to go to the polls. It's even more of a coincidence that this particular earnings season, instead of being the usual corporate-health checkup, is more like a trip to the emergency-room, followed by a scary diagnosis.
Here are some of the major corporate layoffs announced over the past two weeks:
- Chrysler: About 5,000, mostly in the United States
- Goldman Sachs: About 3,300 worldwide
- Merck: 7,200 worldwide
- Motorola: Unspecified, but could be thousands, according to press reports
- Tenneco: 1,100 worldwide
- Time Inc.: More than 600, mostly in the United States
- Whirlpool: 1,000 in the United States, 1,900 overseas
- Xerox: 3,000 worldwide
- Yahoo: About 1,500, mostly in the United States
The job situation is worse than those numbers alone suggest. At some of those companies, the latest cutbacks are the second or third round of layoffs this year. Other companies that haven't announced layoffs yet probably will, given that the economic outlook for the next year is getting worse by the day. Many economists think the unemployment rate—6.1 percent now—could hit 7.5 or even 8 percent in 2009.
Obviously, CEOs aren't timing their announcements to influence the election. If they were, they'd probably wait until after November 4. CEOs support John McCain over Barack Obama by a ratio of about 4 to 1, according to a survey by Chief Executive magazine, and bad economic news almost always works against the incumbent president and his party. So the gloom emanating from America's boardrooms effectively helps Obama.
Whatever the timing, workers saw it coming. The latest consumer confidence reading from the Conference Board, which sank to an all-time low, showed that only 8.9 percent of Americans think jobs are plentiful; a year ago, nearly three times as many felt that way. And hardly anybody thinks the job market will improve anytime soon. Only 7.4 percent of people expect there to be more jobs in six months, while 41.5 percent think there will be fewer. That makes Obama a rarity in this economy: An American with relatively good near-term job prospects.