The Business Case For Democratic Policies: Debunking Economic Myths

As Election Day approaches, business leaders are reassessing how political outcomes will affect their organizations. For years, conventional wisdom has suggested that Republican policies—focused on tax cuts and deregulation—are more business-friendly. However, a closer examination of the past 25 years reveals that Democratic-led administrations have fostered stronger economic growth, job creation, and overall corporate performance. Through the lenses of corporate governance, HR, and finance, it becomes clear that Democratic policies provide long-term benefits for businesses.

In this first part of our series, we’ll challenge assumptions and debunk myths around these two key areas:

• Economic growth performance
• Job creation and wage growth

Governance: Economic Policy That Drives Stability

Myth: Republican-led tax cuts and deregulation consistently result in long-term economic growth and stability.

The data shows that economic growth has been stronger under Democratic leadership. During Bill Clinton’s presidency, the U.S. experienced four consecutive years of budget surpluses between 1998 and 2001—the only surpluses in the last 50 years​

Barack Obama, despite inheriting a $1.4 trillion deficit amid the 2008 financial crisis, reduced the deficit to under $600 billion by 2016 through disciplined spending and targeted investments​. These policies fostered long-term stability, allowing businesses to make strategic investments with greater confidence.

In contrast, Republican administrations, including George W. Bush and Donald Trump, expanded deficits through tax cuts that failed to generate the promised economic boom. Trump’s 2017 tax cuts added nearly $1.5 trillion to the national debt, with much of the savings channeled into stock buybacks rather than business expansion or job creation​.

From a governance perspective, these deficits introduce economic uncertainty that complicates strategic planning. Democratic fiscal policies promote stability, allowing boards and executives to make long-term business decisions with confidence.

Job Creation and Wage Growth: Building a Stronger Workforce

Myth: Democratic policies—like raising the minimum wage—harm job creation by burdening employers with higher labor costs.

Over the past 25 years, Democratic administrations have significantly outperformed Republicans in job creation. Between 1993 and 2023, Democratic presidents facilitated the creation of 49 million jobs, compared to just 1 million under Republicans​. Biden’s administration has continued this trend by leading a rapid labor market recovery from the COVID-19 downturn, with unemployment rates reaching historic lows in 2023. In contrast, Trump’s job growth was modest and ended with massive losses during the pandemic​.

Wage growth also tends to be higher under Democratic policies. Despite concerns about increased labor costs, raising the minimum wage and supporting labor unions create a net positive effect. Higher wages boost consumer spending, driving demand for products and services across industries. This consumer demand, in turn, benefits businesses through increased revenue and market stability.

This heightened demand drives revenue growth and creates a more dynamic economy, benefiting businesses through market stability.

HR: Higher Wages and Labor Protections Build Workforce Engagement

Myth: Higher wages increase costs and undermine business efficiency, reducing competitiveness and profits.

Research demonstrates that higher wages and stronger labor protections reduce employee turnover and increase engagement, leading to significant improvements in productivity and cost savings for businesses. Employees who feel financially secure are more productive, motivated, and loyal, lowering recruitment and training costs. According to efficiency wage theory, paying higher wages not only improves productivity but also enhances retention, creating a more stable workforce​.

Democratic policies, such as the Affordable Care Act (ACA), further strengthen workforce stability by improving healthcare access. Employees with better health outcomes experience reduced absenteeism, resulting in higher productivity and fewer disruptions to business operations​.

By prioritizing employee well-being, HR leaders can align workforce strategies with business goals, reducing costs and improving organizational performance.

Finance: Economic Growth Drives Business Success

Myth: Lower wages and minimal labor protections maximize profitability by reducing operational costs.

Contrary to this belief, Democratic policies demonstrate that wage increases create a virtuous cycle — where higher consumer spending boosts revenue, supporting business growth and operational stability. The increased productivity and retention driven by fair wages also improve operational efficiency, ultimately enhancing profitability for companies. Democratic policies—focused on sustainable growth and workforce development—provide businesses with the stability and market conditions needed for long-term success. Investing in employees through competitive wages and career development programs is not an expense but an opportunity to enhance profitability through higher productivity and customer satisfaction.

Conclusion: Are We Better Off Today?

Through the lenses of governance, HR, and finance, the data clearly shows that Democratic policies foster stronger economic growth and job creation. Clinton’s budget surpluses and Obama’s deficit reduction illustrate the importance of fiscal discipline, while Biden’s labor market recovery demonstrates how Democratic policies benefit businesses by promoting workforce stability and consumer spending.

By reducing economic volatility, increasing job growth, and encouraging wage gains, Democratic policies have proven that what benefits workers ultimately benefits businesses by promoting economic stability, job growth, and wage increases. The myth that Republican policies are better for business stability simply does not hold up to scrutiny. As we approach Election Day, business leaders should recognize that what’s good for workers is good for business—and the evidence shows that Democratic policies have consistently delivered better outcomes.

Watch for Part 2 where I’ll address poverty reduction, trade policies and stock market performance.