Why Obama could still lose in November

Worsening jobs figures, Romney's ad blitz and low approval ratings are reasons for Obama not to be complacent.

A somewhat blithe consensus has built up around the view that Mitt Romney is destined to lose the US presidential election. Prediction markets Intrade and Iowa Electronic Markets have the incumbent on 70.3% and 72.4% respectively to win, whilst Nate Silver, a superstar election seer, has Obama a huge 76.1% favourite. But for all the President’s advantages, and they are admittedly formidable, a good deal of uncertainty remains going into the final six weeks of the campaign. Here are three reasons why the race is more unpredictable than most pundits appreciated.

1. The economy, stupid. Long before the Clinton campaign coined that famous maxim, politicos have known that the single most important factor in presidential elections is the state of the economy. Ronald Reagan’s question to the nation in 1980, "do you feel better off than you did four years ago?" was widely thought to have skewered the hapless incumbent Jimmy Carter. Romney is clearly looking for the same tactic to work in 2012. The irony of Carter’s predicament was that in fact about ten million jobs had been created during his presidency – his misfortune was that the recession began in his re-election year, creating the impression of failure at the worst possible time. Obama’s job creation numbers are far worse than Carter’s: the economy has (narrowly) lost jobs since his election and only 4m of the 9m jobs lost in the recession have been recovered. Moreover, no president since Roosevelt has been re-elected with unemployment at more than 7.2% (it is currently 8.1%). But, like Roosevelt, Obama inherited a horrendously underperforming economy and, as with Roosevelt, the economy appears to be improving as his re-election approaches.

The danger for Obama, however, lies in the precariousness of the jobs growth figures. Some point out that the unemployment rate has been flattered by discouraged workers dropping out of the labour market. And the weak jobs growth figures from September – along with the current level of the ISM - have set up a tense end-game for the Obama administration. With two more months of data to come, Obama could be hugely damaged should those figures turn negative in the run-up to polling day.

Chart 1: US unemployment

2. This is the year of the super-PAC The incumbent funding advantage in presidential elections usually works in two ways: firstly the incumbent simply raises more money in most years due to their greater familiarity with donors and the tendency of backers to prefer a proven winner over an insurgent challenger; secondly, they generally avoid the costly battle for their party’s nomination that drains the challenger of cash before the real contest has ever begun. Both these advantages hold this year too (Obama had raised $600m in total to Romney’s $335m by the end of July), but they should be greatly mitigated following 2010’s controversial Supreme Court ruling in Citizens United v. the FEC. This ruling essentially eliminates the restrictions that existed on individual and corporate donations to "political action committees"; as a result, deep-pocketed donors, of which the Republicans seem to have rather more than the Democrats, will be able to target unlimited ads at the key swing states in the final weeks of the campaign.

The impact of these super-PACs was huge during the Republican primary, with Mitt Romney’s Restore Our Future super-PAC vastly outspending his rivals and destroying big poll leads, like Newt Gingrich’s 20-point lead in Florida, with a deluge of negative ads. Of course, it won't be so easy for Romney to squash President Obama in this manner. For one, he has his own super-PAC, albeit one less well-funded. It also remains unclear whether the Republican super-PACs have raised anything like the kind of funds some were predicting (data going up to 31 July showed a relatively modest $140m between them). But their eventual impact is impossible to predict, which leaves open the possibility they could make a critical difference in the crucial swing states like Florida and Ohio come November.

3. Approval ratings still dangerously low. Obama’s approval ratings are nowhere near high enough at this stage to justify complacency. Most analysts expect the bump he enjoyed following the Democratic Convention to fade by the end of September, which should erode much of the lead that appears to have excited prediction markets. Chart 2 shows the difficulty Obama has had in maintaining his approval ratings at levels comparable to those of the last four Presidents to enjoy re-election in the US.

Chart 2: Presidential approval

My view is not that Romney is more likely to win the Presidency - I don’t think he will. Obama’s approval ratings may be relatively low but they are significantly higher than those of Presidents Carter and Bush at this point in their unsuccessful re-election campaigns. He is also leading to varying degrees in states worth 332 electoral college votes (270 are needed to win). However, once one adjusts the current polls for the convention bounces and allows for the not inconsiderable likelihood of more disappointing economic news between now and the election, Romney’s task is not quite the Herculean labour that many seem to think.

Richard Mylles is a political analyst at Absolute Strategy Research, an independent consultancy based in London.

Barack Obama meets with supporters at OMG Burgers on 20 September in Miami, Florida. Photograph: Getty Images.

Richard Mylles is a political analyst at Absolute Strategy Research, an independent consultancy based in London.

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.