Voters went to the polls thinking about how four-decade high inflation rates had scorched their wallets.
In addition to considering what the array of candidates could do to bring relief to high prices, voters considered ballot measures on everything from millionaire taxes to minimum wage and rent control.
The patterns on those ballot results are not consistent across states. For example, the vote for a millionaire tax prevailed in one heavily Democratic state, but not another. The fights on mandated wage increased achieved split results.
That reflects the uncertainty in the races for Congressional majorities. Tight elections are still making it too close to determine if Democrats can maintain control of the House of Representatives and the Senate.
On Wednesday, President Joe Biden acknowledged that the Democrats took losses — just not as many as pollsters predicted. He also noted that inflation weighed heavily on voters. “There are still a lot of people hurting that are very concerned,” he said.
“But the voters were also clear that they’re still frustrated,” Biden added. “I get it. I understand it’s been a really tough few years in this country for so many people.”
Investors and consumers got another remainder of the rise in the cost of living after the federal government released October inflation data on Thursday, showing it had slowed to 7.7%.
Here’s a look at what midterm elections might usher in for people’s wallets:
Markets do not like uncertainty — in other words, the Congressional toss-up happening now, although the cooler inflation data was welcomed on Wall Street. On Friday, the Dow Jones Industrial Average, DJIA, +0.10% the S&P 500 SPX, +0.92% and the Nasdaq Composite COMP, +1.88% closed up.
Beyond the realm of the midterm-election results, other persistent headwinds have been dragging down portfolios: high inflation, rising interest rates and recession worries. Where the market bottom comes is still a guessing game.
Markets generally react well to a split Congress, experts note. When one party controls Congress and the other controls the White House, that can slow down — or outright neutralize — the chance of laws changing federal regulations, tax provisions and, ultimately, corporate bottom lines.
There’s still room to fall, according to Arend Kapteyn, an economist at UBS Group AG UBS, +6.04%. In the face of weak corporate earnings and even more Federal Reserve interest-rate hikes, the S&P 500 SPX, +0.92% could shed another 16% by the middle of next year.
More healthcare coverage
South Dakota voters elected to make their home the latest red state to expand Medicaid, a government health-insurance program that covers low-income people, people with disabilities, and more.
The Affordable Care Act originally intended for people with incomes 138% below the federal poverty level — which, today, is about $38,000 a year for a family of four — to qualify for Medicaid. But in 2012, the Supreme Court voted to let states determine whether they wanted to participate in the expansion.
So far, 40 states, and D.C., have gone along with Medicaid expansion, according to the Kaiser Family Foundation. Meanwhile, 11 states, almost all in the South, have resisted expansion, including the nation’s most uninsured state: Texas, where 18% of people lack health coverage, according to U.S. Census Bureau data.
South Dakota’s Medicaid expansion measure, which passed with 56% of the vote on Tuesday, could cover more than 40,000 people, according to Politico. The state’s Republican governor, Kristi Noem, had opposed the program, but said she would implement the measure if it passed.
Voters fought back against pandemic-era rent increases Tuesday after facing sky-high price hikes earlier in the year, even as the market shows signs of cooling: Rent-control ballot measures passed in Orange County, Fla., and Portland, Maine, and a third rent-control measure may squeak out a narrow win in Pasadena, Calif.
The most contested local proposal, however, was likely in Orange County. Though nearly 60% of Orange County voters approved an ordinance that would limit rent increases to 9.8% for one year, a Florida court said the ordinance was unconstitutional and that its ballot summary was misleading after a lawsuit from industry groups. Unless the county wins a legal appeal, the ordinance can’t become law despite voters’ wishes, according to the Orlando Sentinel.
Orlando, Orange County’s largest city, was in the depths of an affordable-housing shortage even before the pandemic. Earlier this year, Walt Disney World DIS, +5.03% said it would set aside 80 acres of its land for affordable housing development.
Rental increases there have slowed, but the county’s median rental prices are at $2,122 this month, up from the $1,500 median price seen in January 2021 — a more than 41% increase, according to data from Zillow Z, +5.89%.
“‘The election results do not change the fact that this flawed and unconstitutional rent-control measure was invalidated by the court.’”
“The election results do not change the fact that this flawed and unconstitutional rent-control measure was invalidated by the court,” Chip Tatum, a spokesperson for the Florida Apartment Association, one of the groups that sued to block the ordinance, said in a statement. “With the election behind us, we look forward to working alongside Orange County leaders on real solutions that will stimulate the construction of housing that is desperately needed.”
Voters in Portland, Maine, which already had rent controls in place, green-lit a referendum that will allow landlords to only implement standard annual rent increases of 70% of the rate of inflation, rather than the current rule of 100%, according to the Portland Press Herald.
Application fees were also banned, as were security deposits worth more than one month’s rent, according to the Press Herald.
Similarly, voters in Pasadena may cap rent increases at 75% of the consumer price index’s annual increase, according to Pasadena Now; the measure was ahead by 114 votes as of 3:30 a.m. local time Wednesday, the outlet said. If approved, landlords would also only be allowed to raise rents once a year, and could only evict tenants for “just cause,” like non-payment of rent.
Nebraskans have themselves to thank for an incoming minimum wage hike.
After voters approved a measure to gradually bump pay on Tuesday, workers making the minimum wage can expect to earn $15 an hour by 2026, up from their current wage of $9 an hour. The minimum wage will go up by $1.50 a year until hitting $15, at which point further increases will be tied to inflation, according to Nebraska Public Media.
Nebraska isn’t the only red state where minimum wage increases have prevailed in recent years: voters in Florida elected to gradually raise their state’s minimum wage to $15 in 2020 from $8.56 an hour.
Voters in deep-blue D.C., meanwhile, handily approved a ballot measure Tuesday that would end the separate minimum wage for tipped workers, ensuring they have the same $16.10-an-hour pay floor as non-tipped workers by 2027, according to the Washington Post. (A similar measure was approved in 2018, but repealed by the D.C. Council, according to the Post.) Opponents of the measure had said it would limit workers’ earning potential and saddle businesses with higher costs.
Still, minimum-wage initiatives were not successful across the board on Tuesday. Voters in Portland, Maine, rejected a measure that would have axed the tipped minimum wage and raised the overall minimum wage to $18 an hour, according to the Portland Press Herald.
Voters in Massachusetts and California, two Democratic-leaning states, considered whether to raise state income taxes on millionaires. Massachusetts voters supported the idea, but California voters rejected it.
State-level tax measures hinge on local needs and perspectives and it’s worth considering the differences between the two proposals. The Massachusetts “Fair Share Amendment” is putting a 4% surtax on top of the state’s flat 5% flat income tax rate. The surtax kicks in for households making at least $1 million, and the extra tax revenue goes to education and infrastructure spending.
“We’ve done what some thought was impossible — passed the Fair Share Amendment to create a permanently fairer tax system and deliver billions of dollars in new revenue for our public schools, colleges, roads, bridges, and transit systems,” Jeron Mariani, Fair Share for Massachusetts campaign manager.
The Associated Press projected Question 1’s win with 52% in support and 48% against the measure.
But in California, voters rejected a 1.75% tax increase on residents making at least $2 million. The AP projected the loss with 59% voting against Proposition 30. The money would have been earmarked for electric-vehicle purchase incentives, charging stations and wildfire responses in the state, but it was mixed up in tangled politics.
Lyft LYFT, +12.59%, an array of environment groups and the California Democratic Party are some of the ballot’s backers. The state’s Democratic governor, Gavin Newsom, the California Teachers Association and a number of local chambers of commerce were part of the coalition against Proposition 30.
“California voters decisively rejected this poorly crafted and unnecessary tax hike. The fact is Proposition 30 was a solution to an issue the state is already addressing,” the ‘No on Prop 30’ campaign said in a statement.
“ If Democrats did manage to hold the House and Senate, there’s a chance they’d continue pressing for higher taxes on rich households.”
The ballot measure’s opponents argue Lyft was trying to electrify its cars via tax money. The company said there was nothing in the ballot that would have given special treatment to Lyft or any ride-share company. “The election results are an unfortunate setback for the climate movement,” the company said.
Beyond the state measures, there are open questions about what’s next for federal income taxes. If Democrats did somehow manage to hold the House and Senate, there’s a chance they would continue pressing for higher taxes on rich households, one expert said. If it’s divided government, then the chances of tax changes narrow to a possibility of a tax cuts — if a recession comes and proves to be severe.
The most immediate tax question is whether Democrats and Republicans can work out a deal by the end of 2022 that might yield another round of child tax credit payments. Many businesses want corporate tax-code changes before less favorable rules kick in for 2023. Democrats and child tax credit supporters are trying to get more child tax credit payment in any deal.