How the U.S. election may affect managed services providers
Dave Sobel breaks down the tech issues MSPs need to be aware of following the federal and state elections, such as right to repair in Massachusetts and California's Prop 22.
Dave Sobel is host of the podcast The Business of Tech and co-host of the podcast Killing IT. In addition, he wrote Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business.
With the U.S. election now largely behind us, Sobel examines what tech solutions providers might need to start thinking about from a business standpoint. This includes how several laws voters weighed in on, such as Prop 22 in California and an expansion to CCPA, may require preparation.
Transcript follows below.
We've had what has felt like an incredibly tumultuous time in the U.S. Eighty-three percent of registered voters said, "it really matters who wins the presidential election," and as such, a record turnout, with the highest voter turnout since 1900.
The election crushed all prior spending records -- well over double -- and resulted in an incredibly close election. Let's break down what the election means for your typical IT provider or technology services firms.
Looking at this from a business angle only
First, big picture. As much as there are significant cultural differences between the candidates, when we look at this from a business climate perspective we're not really looking much at huge changes. Financial analysts believe due to the shift in White House alone, we're ending up in a predictable place. Don't think I'm being dismissive of the other issues. Instead, I'm focused on the mechanics of business for this discussion.
Fiscal spending will be slightly higher -- but was likely in most scenarios to be higher. Analysts are also predicting no change to corporate taxes, and slightly higher top rates for individuals. The economy itself -- expect moderate growth, but remember, growth was predicted in all the scenarios.
Historically, when a new party takes control of the White House, there has traditionally been a dip in stocks one year out -- in four of seven instances since 1964, it's an average dip of 1%. That said, remember, this year is anything but normal, and even with that history, market returns on average are positive under both parties.
At the time of this writing and release, the Senate is unknown -- and stagnation or fiscal gridlock is a real risk to be aware of.
Norms are a bit scrambled right now anyway -- and predictions aren't always right too. Four years ago, the prediction was that policies enacted in the Trump administration would be a big plus for financials and the energy sector; and, those are the worst-performing sectors under his tenure. Want to go back further? Healthcare did fine under President Obama, despite regulatory attention, and banks grabbed market share.
So, don't freak out either way -- This twitter meme is likely to be surprisingly accurate regardless.
And you know what remains the best indicator? Your business execution skills.
There are specific details of laws you do care about
Proposition 22 passed in California, which is focused on "app-based drivers," and defined them as contractors. This bill is very focused on Uber, Lyft and DoorDash style drivers. It does set a new earnings floor, limits hours and provides healthcare subsidies to anyone working an average of 25 hours a week per quarter. Expect to see more of this in other states, particularly as these companies pushed very hard to pass this.
California voters also passed Proposition 24, which is privacy focused. It's a revamp of the California Consumer Protection Act, and consumers now will be able to ask businesses to not share their personal data. Minors now have additional protections, and businesses that suffer breaches due to lax security no longer can avoid fines by fixing holes within 30 days.
In San Francisco, voters approved a measure to tax companies that pay their top earning employee (usually the CEO), at least 100 times the median salary of their San Francisco workers, and to overhaul business taxes in the city on big tech companies to pay more, and small businesses to likely pay less.
In Florida, minimum wage was increased to $15. Massachusetts passed a right to repair law, which will require car manufacturers to let mechanics and owners access a vehicle's repair data. In particular, this also details the wireless transmission of that data. Portland, Maine voted to ban facial recognition, and private citizens get a payout of $1,000 if they are unlawfully surveilled by police or city agencies.
In Michigan, voters passed Proposal 2, which amends the state constitution to provide electronic data and communications the same protections from unreasonable search and seizure as the homes and papers of Michigan residents receive. The proposal also requires a search warrant to access a person's electronic data or electronic communications, under the same conditions required for the government to obtain a search warrant for physical home and property. This is a first-of-its-kind limitation.
In Denver, voters have opted out of a law prohibiting the use of tax dollars to build a municipal internet. These kinds of laws have forced monopolies and duopolies in many cities and rural areas, and in Denver, they said no. A referendum in Chicago came back powerfully -- 90% of voters believe internet access should be a public utility.
So, why do we care?
Let's start here with a key insight. Most of the details you care about are local politics, not federal. We'll dig in deeper on local next. At the federal level, a coherent, coordinated response to the pandemic will help all Americans, because the best path to economic growth is controlling the virus. Additionally, there will be moves around technology to be prepared for, as the ongoing "tech-lash" causes review laws that helped establish the internet.
Let's dive into some of those state and local issues
California law, as it relates to technology, is far reaching. In Kaseya's 2020 MSP Benchmark, 71% of MSPs are either not very informed or completely uninformed about California's laws. With so much of the U.S. population, economy and technology landscape based around California, this is surprising and appalling. You think you don't deal with Californians? The systems you use do, and they operate in a way that ensures compliance with CCPA.
So, you care about the revisions to the law that not only expands the protections, but creates an agency to enforce the law, investigate violations and assess penalties. I'm not a lawyer -- you get yours on the phone and also start getting educated on this.
Uber and Lyft's work to redefine workers will continue to affect the landscape for employment. As a small provider, you may even WANT some of these protections for your employees, because it allows you to scale up and down more easily if you can leverage technology platforms for labor. For me, there's value in finding solutions to benefits, particularly because they are difficult to provide for some small providers. Concerned about keeping talent? Not having to compete on these benefits would be a big boon for you.
Now, let's talk right to repair. I've covered this in editorials before, so if you missed that, I encourage you to revisit it. The concept is simple -- do consumers have the ability to repair and modify their own consumer electronic devices, rather than the manufacturer require that consumers use only their services?
If you do any hardware repair of any kind, you care -- do you need to be authorized? There are many industries dealing with this -- car repair, farm and medical equipment, as well as consumer tech and business technology. Companies like Apple, Microsoft, Samsung, HTC and Asus all want to control access to repair. Massachusetts voters said no. That is good news for those who want to ensure access to repair devices is available. If you're in the services business, you probably care to be tracking this, and in the U.S., this is generally playing out in state houses, not at the federal level.
Next up on my focus list is broadband connectivity. On the podcast, I've highlighted over and over how the major carriers are lagging the world in 5G, how the move to working remotely during the pandemic has exposed how many households and communities do not have access to broadband, and how Black households are being underserved with 10% lower levels of broadband penetration when compared with white households.
Here's another way to consider that -- your market is being limited so that large carriers can be more profitable. Think about this. If good connectivity was available to anyone, you would be able to serve any business and any community. Right now, there are customer needs you can't solve because of this limitation.
And in Denver and Chicago, voters agree. There's opportunity here to help local governments -- also known as small businesses -- develop and deploy municipal connectivity. To do that, you care about how the politics plays out. And, some savvy providers are going to take this on to partner with local governments and expand the market.
This can't even be a comprehensive list.
The opportunity is there for solutions providers
I live in the D.C. metro, so lobbyists aren't just a concept, they are neighbors and people in the community. One gives advice that is solid for even small companies. Business leaders are expected to step up, as on issues of global and national concern, employees, customers, investors and activists are looking for business leadership.
Politics is a dirty word, despite it meaning the activities associated with governance of an area. That's also known as leadership and is citizenship. Leading on issues where you can make a difference in your community is good for business and standing for something matters. It's a differentiator, it's great marketing and it's the right thing to do.
You may see red and blue states, but if you actually represent the data based on population, you see we are so much closer than you might think. In fact, we're far more purple than we are red and blue.
You can look at these as a list to hold you back, or a list to open up opportunities. Smart, savvy business leaders will see the opportunity for them and move.
About the author
Dave Sobel is the host of the podcast The Business of Tech, co-host of the podcast Killing IT and authored the book Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business. He owned and operated an IT solution provider and MSP for more than a decade, and has worked for vendors such as Level Platforms, GFI, LOGICnow and SolarWinds, leading community, event, marketing and product strategies, as well as M&A activities. Sobel has received multiple industry recognitions, including CRN Channel Chief, CRN UK A-List, Channel Futures Circle of Excellence winner, Channel Pro's 20/20 Visionaries and MSPmentor 250.