The Impact of Citizens United on Large Corporations and Their Employees

Abstract

The goal of this research is to determine whether the Supreme Court’s landmark 2010 Citizens United ruling changed the contribution strategies of employees of major corporations. Using an original dataset of campaign contributions by employees of Fortune 500 companies, we analyze the contribution strategies of these individuals in the 2008 and 2012 presidential election cycles. Overall, our results suggest three important conclusions. First, Citizens United did not alter Fortune 500 employees’ contribution patterns to traditional political committees. However, the emergence of Super political action committees (PAC) in 2012 may have pulled employees’ contributions from 527 groups, at least in the short term. Second, we find large differences in contributions across resources, and the differences become even more dramatic after Citizens United when CEOs contributed millions to Super PACs. Finally, Fortune 500 employee contributions to traditional political committees still outweigh Super PAC contributions in both numbers and amount. And, importantly, employees of the world’s largest corporations were not the driving force behind the increase in spending after Citizens United.

Keywords

Citizens United political spending corporate political activity Fortune 500

The Supreme Court’s landmark 2010 Citizens United ruling created some concern about the impact that the decision would have on the campaign spending of corporations, the main subject of the ruling. Among the ruling’s most vocal critics was President Barack Obama, who called Citizens a major victory for “big oil, Wall Street banks, health insurance companies and the other powerful interests” (Liptak 2010). While there was a 426 percent increase in independent expenditures from the 2008 to the 2012 presidential election, evidence suggests that large corporations have not been a major source of the increase in campaign spending (e.g., Hamm et al. 2014; Hansen, Rocca, and Ortiz 2015) and that Citizens, in fact, had little noticeable impact on how corporations spend on politics (Bonica 2016). Rather, dramatic increases in independent expenditures (IE) following the Citizens United ruling have come from individuals, some of whom may be employed by wealthy businesses and corporations.

The goal of this research is to determine whether Citizens United changed the contribution strategies of employees of major corporations. Using an original dataset of political activity and campaign contributions to candidate committees, party committees, political action committees (PAC), 527 groups, and Super PACs by the employees of Fortune 500 companies, we analyze the contribution strategies of these individuals in the 2008 and 2012 presidential election cycles to better understand the effect of the 2010 Citizens United decision on the behavior of individuals and patterns of spending.¹

The Supreme Court’s 2010 Citizens United decision had two main impacts on campaign spending. First, it allowed outside groups, most notably corporations and labor unions, to spend money out of their general treasuries on “express advocacy” and “electioneering communications,” without limits. Prior to the ruling, corporations and unions were restricted under the Taft-Hartley Act of 1947 (PL 80-101) from making IEs in support of or in opposition to federal candidates. Second, it opened the door for the creation of “Super PACs,” political committees registered with the Federal Elections Commission (FEC) that make IEs to expressly support or oppose candidates to federal office, but cannot contribute directly to federal candidates. Because they only make IEs, Super PACs can accept unlimited contributions from individuals, corporations, and unions.

Thus, Citizens United significantly altered the spending options available to corporations and their employees, particularly wealthy corporate managers. Prior to this ruling, any campaign contributions from employees were sent to a traditional PAC (perhaps working on behalf of the corporation), or directly to a campaign or party committee. A traditional PAC can make donations to candidates and can engage in express advocacy through IEs to elect or defeat a clearly identified candidate for federal office. Importantly, however, individual contributions to these PACs are capped, and corporations cannot donate funds from their treasuries to a PAC. The creation of Super PACs following Citizen United and its progeny (particularly Speechnow.org v. FEC) opened up an unprecedented option for donors. Unlike traditional PACs, whose contributions from individuals are limited to $5,000 per PAC, per year, Super PACs can accept unlimited amounts from individuals, corporations, and unions (see Briffault 2012).

Our questions, then, are these: how have these new spending options in the post-Citizens environment been exploited by the employees of large corporations? To what extent are these individuals responsible for the dramatic increase in overall spending? And has Citizens United altered the behavior of individuals for the benefit of corporations or the ideological goals of the wealthy individuals in those corporations? The answers to these questions have important implications for the issue of resources and representation (Baumgartner et al. 2009; Baumgartner and Leech 1998; Kimball et al. 2012; Lowery and Gray 2004; Schattschneider 1960; Schlozman and Tierney 1986).

Overall, our results suggest three important conclusions. First, Citizens United did not alter Fortune 500 employees’ contribution patterns to traditional political committees (e.g., corporate and industry PACs, or party and candidate committees). However, our findings suggest that the emergence of Super PACs in 2012 may have pulled employees’ contributions from 527 groups, at least in the short term. Second, consistent with research on participation, we find large differences in contributions across resources, which we measure as employee rank. The differences become even more dramatic after Citizens when CEOs contributed millions to Super PACs. Finally, we find that despite the rise of Super PACs in 2012, Fortune 500 employee contributions to traditional political committees still outweigh Super PAC contributions in both numbers and amount. And, importantly, employees and owners of the world’s largest corporations were not the driving force behind the 426 percent increase in spending after Citizens.²

Background

Students of representative government have long been concerned with the representational consequences of unequal resources among the electorate. For example, those with higher resources are more likely to participate in the electoral process (e.g., Rosenstone and Hansen 1993), which, in turn, biases policy outputs in their favor (e.g., Hill and Leighley 1992). This is particularly true with campaign contributions, which have been shown to affect electoral outcomes (e.g., Abramowitz 1991; Abramowitz, Alexander, and Gunning 2006) as well as the distribution of legislative services (e.g., Denzau and Munger 1986; Hall and Wayman 1990; Hojnacki and Kimball 2001; Rocca and Gordon 2013) at all levels of government (e.g., Gierzynski and Breaux 1991; Powell 2012). The relationship between resources and representation has taken on added importance in recent years, as prominent and wealthy business leaders—including CEOs of major companies—have assumed some of the United States’ most important political positions, including President of the United States (Donald Trump, chairman and president of The Trump Organization), Secretary of State (Rex Tillerson, CEO of Exxon), Secretary of Commerce (Wilbur Ross, a billionaire investor), Secretary of Labor (Andrew Puzker, CEO of CKE Restaurants), Secretary of Treasury (Steven Mnuchin, hedge fund chief and former Goldman Sachs banker), and Administrator of Small Business (Linda McMahon, former CEO of World Wrestling Entertainment).

Simply stated, the relationship between contributions and political outcomes suggests that representation is skewed toward those with resources. And few individuals in the American political landscape, who desire to affect elections and public policy, have greater resources than large corporations and their executives. The vast majority of studies on corporate political activity operate at the firm or industry level of analysis (see Hillman, Keim, and Schuler 2004). Two key assumptions underlie much of the research on firm and industry behavior. First, and most prominent in political science and economics, is the assumption that profit-maximizing firms engage in political activities to increase revenues and decrease costs (Baysinger 1984; Boies 1989; Grier, Munger, and Roberts 1994; Hansen and Mitchell 2000; Hillman and Hitt 1999; Keim and Baysinger 1988; Masters and Keim 1985). On the revenue side, firms might seek government contracts or other financial gains, while on the cost side, political activity might aim at reducing regulations or securing tax relief. The second assumption, employed by management scholars, emphasizes that managers of corporations strategically choose to engage in political activities to enhance the short- and/or long-term value of their firms (e.g., Hillman, Keim, and Schuler 2004; Keim 2001; Mathur and Singh 2010; McWilliams, Van Fleet, and Cory 2002; Salorio, Boddewyn and Dahan 2005). Thus, these scholars assume that firms expect something in return (i.e., some benefit) from their political spending.

Chief among these desired returns are influence over electoral outcomes and policy (Baumgartner et al. 2009; Grossman and Helpman 1996; Magee 2002). The importance of the Citizens United ruling is that it gives corporations additional spending tools to accomplish these goals. They can make IEs or contribute through their affiliated PACs. Or they can draw from their general treasury for IEs, which includes unlimited contributions to Super PACs, or 527 and 501(c) groups.³

Hansen, Rocca, and Ortiz (2015) find that Citizens United had little to no effect on Fortune 500 IE spending, arguably due to the potential risk of backlash. Fortune 500 companies used their PACs in 2012 as they did in 2008; they did not spend any funds directly on electioneering from their general treasuries and only ten of the Fortune firms gave to Super PACs. Despite warnings to the contrary, most notably from President Obama during his 2010 State of the Union Address, they conclude that Citizens United did not open the floodgates to corporate spending in federal elections.

But the floodgates did open, albeit from an unexpected source. The driving force behind the increase appears to be individuals, not corporations as many expected (e.g., Liptak 2010). A key consequence of Citizens United (and the rulings that followed) is that it opened the door for individuals to contribute unlimited amounts of money to IE-only groups. Overall, 61 percent of all Super PAC donations came from individuals in 2012.⁴ Many of these individuals, particularly the largest contributors, were wealthy leaders of major corporations. For example, Sheldon and Miriam Adelson of Las Vegas Sands and Adelson Drug Clinic contributed $92 million of their own money to conservative groups, while Harold and Annette Simmons of Contran Corp. spent $27 million, and Bob Perry of Perry Homes spent $24 million. Fred Eychaner of Newsweb Corp. contributed $14 million, and James and Marilyn Simons of Renaissance Technologies sent $10 million to liberal groups. According to the Center for Responsive Politics, a total of $828,224,700 was raised by Super PACs in the 2012 election cycle, 47 percent of which was delivered by the top 1 percent of individual donors.⁵ Because of Citizens United and its progeny, individual donors now have greater flexibility in how they can contribute to particular causes.

Theory

Although a growing body of literature systematically examines the motivations and decisions of individual contributors (e.g., Barber 2014; Brown, Powell, and Wilcox 1995; Crespin and Deitz 2010; Francia et al. 2003; Gimpel, Lee, and Pearson-Merkowitz 2008; Grant and Rudolph 2002; Rosenstone and Hansen 1993; Verba, Schlozman, and Brady 1995), very few examine contributions in the post-Citizens context.⁶ And aside from Bonica’s (2016) study, even fewer examine the spending patterns of employees of major corporations, some of whom have potentially a great deal to gain from their contributions, such as personal access to legislators, or even the president.

We assume individual givers are rational and, thus, their choice to contribute depends on the costs and benefits of doing so (Downs 1957). At one end of the decision lie the costs, which many scholars of participation argue are governed by an individual’s access to resources (e.g., Brady, Verba, and Schlozman 1995; Rosenstone and Hansen 1993). The higher one’s resources (e.g., money, time, and civic skills), the more likely one will vote, contribute money, and give his or her time to political causes (e.g., Brady, Verba, and Schlozman 1995). On the other end lie the benefits, or what individuals hope to gain from their political activity. According to Francia et al.’s (2003) work on campaign contributions, motivations vary across three types of donors. “Investors” donate to obtain access and material benefits in an effort to protect their economic interests. “Ideologues” give their time and money to ideological allies hoping to influence the composition of political institutions, such as Congress. Finally, “intimates” give, hoping to gain opportunities to socialize with political elites or obtain other private benefits. But these motivations are not likely mutually exclusive; individuals who engage in election activities may possess any or all of these motivations.

How might these logics apply to employees of major corporations? First, consistent with the resource model of political participation (Brady, Verba, and Schlozman 1995; see also Ansolabehere, de Figueiredo, and Snyder 2003), we expect those with greater resources to contribute greater amounts to political groups. And we expect the divide to increase after the Citizens United ruling, when the options for contributions—particularly unlimited contributions—increase. Less straightforward is where employees spend their money. If contributors associated with major corporations are interested in access and facilitating relationship building in the hopes that it will result in incremental policy change that will enhance profits for the corporation, they might contribute to corporate and industry PACs. Or they may do so in support of their employer, whose PACs seek access and policy change (e.g., Hall and Wayman 1990) on behalf of their parent firm. If, however, they are donating for ideological reasons, parties, 527s, or campaign committees might be the logical choice. And now, the opportunity for unlimited donations to Super PACs provides even greater opportunities for influencing election outcomes, particularly as Super PACs may engage in express advocacy (unlike 527s who are barred from directly advocating for or against candidates).⁷ As research suggests, individuals are primarily guided and driven to contribute because of ideological beliefs that they share with their chosen candidate or party (Ansolabehere, de Figueiredo, and Snyder 2003; Barber 2014), but those with greater resources may also be motivated to invest in long-term access or for the possibility of private benefits.

Individuals who are guided by the degree to which their ideology matches that of their preferred candidate will behave more like ideologues, while those motivated by the incumbency bias might invest in long-term relationship-building and behave more like investors. As Super PACs, 527 groups, and traditional candidate committees are better suited for electoral strategies, they might be more attractive to “ideologues,” who give their time and money to ideological allies hoping to influence the composition of Congress or the party of the President.⁸ In contrast, because of their emphasis on relationship-building and incremental policy change, corporate and industry PAC giving might be the logical choice for “investors,” who seek access and material benefits in an effort to protect their economic interests (Francia et al. 2003).

An additional important point here is that employees of major Fortune 500 companies, as opposed to their employers, can do either without much risk of public fallout (Hansen, Rocca, and Ortiz 2015). Even if the public recognizes the name of a major corporate manager or CEO (which is unlikely), our belief is that a portion of the public would find the contributions of a private individual spending their own money less objectionable than a corporate entity spending directly from profits accrued from consumers’ patronage. What this means, then, is that employees of Fortune 500 or other wealthy companies are relatively unconstrained in their political giving, and that the only real constraint is the limitations of their own personal resources. Employees may choose to spend on behalf of the corporation, investing in its long-term future and profitability, or choose to spend as ideologues, promoting a particular candidate or party that matches their ideological preferences, or some combination.

In sum, we expect employees with greater resources to contribute greater amounts to political groups and that the divide increased after the Citizens United ruling, when the options for unlimited contributions increase. We expect this divide to be particularly pronounced among ideologues, after the creation of Super PACs. While individuals could contribute unlimited amounts to 527s before Citizens, Super PACs’ ability to engage in express advocacy—versus 527 groups’ inability to do so—rendered 527s redundant in post-Citizens elections. Furthermore, the Supreme Court’s ruling eliminated any uncertainty about the legality of corporate campaign spending, thus removing any barriers to unlimited donations to political committees that engage in express advocacy (Briffault 2012). This, we expect, leads to a significant increase in ideologues’ contributions after Citizens, particularly among employees with greater resources, with minimal effects on investors’ behavior, however, as the rules governing industry and corporate PACs did not change following Citizens.

Data and Method

The goal of this research is to analyze the effect of the Supreme Court’s 2010 Citizens United ruling on employee contributions in federal elections and the logic or motivations underlying these contributions. As a first step, we examine the contribution patterns of employees in the world’s largest companies using Fortune magazine’s well-known listings of the 500 largest companies. We use all companies that appear in any of the years from 2007 to 2012, giving us a total of 584 companies. Our dependent variables are all employee contributions from the corporations’ disclosed electoral spending figures during each electoral cycle, collected from the FEC online databases. These include individual contributions to (1) the corporate affiliated PACs, (2) industry PACs, (3) Super PACs, (4) 527 groups, and (5) other political committees including party committees, individual candidate campaign committees, and PACs unaffiliated with the corporation.⁹

We acquired the data for individual contributions to these groups from the FEC database of individual contributors. These data only include contributions made during the 2008 and 2012 general election cycles, as determined by the FEC. The FEC requires that contributors disclose their employer and job title. We used the “employer” field to identify the individuals who worked for a Fortune 500 company. That left us with 276,639 observations across both general election cycles (133,538 in 2008 and 143,101 in 2012), narrowed from approximately 31.4 million individual contributions across both cycles.¹⁰

We used the “occupation” field to create occupational rankings. In addition, we double-checked all individuals donating $1,000 or more using a Google search of their names. We found that some contributors who reported a general job title, such as investment banker, were actually management; these misreportings were corrected in our data. For the combined 2008 and 2012 election cycles, we identified 94,023 contributions from 46,807 rank-and-file employees, 154,212 contributions from 43,020 managers, and 28,404 contributions from 4,802 CEOs.

We employed the same methods to collect individual contributions to 527 groups, regulated by the U.S. Internal Revenue Service (IRS) and available from the Center for Response Politics’ online bulk database.¹¹ Out of a total of 286,285 individual contributions to 527 groups during the 2008 and 2012 presidential cycles, 5,388 contributions came from Fortune 500 employees; more specifically, 2,618 contributions from rank-and-file employees, 2,545 contributions from managers, and 225 contributions from CEOs.

To create firm-level data, we collapsed the employee contributions to the firm level by employee rank (rank-and-file, manager, CEO) and contribution type (corporate, industry, traditional, Super PAC), respectively. The unit of analysis is, therefore, the firm by year (i.e., each Fortune 500 firm appears twice in our data, in 2008 and 2012). To get a picture of the political contribution patterns of Fortune 500 employees, we examine these firm-level data. First, we use simple descriptive statistics such as difference-of-means tests to determine whether or not employees’ contributions changed over time.¹² We have two key independent variables. The first is presidential election year, which we use to compare contribution patterns between the 2007–2008 and 2011–2012 election cycles. The second is employee rank, where we distinguish between top management (CEOs, board members, chairmen, and vice-chairmen), management (presidents, vice-presidents, directors, and managers), and rank-and-file employees (engineers, pilots, bankers, sales representatives, etc.). These divisions are also a proxy for resources, as we assume management will have access to much greater resources than rank-and-file employees and are likely to contribute a significantly larger proportion of total donations.¹³

Next, we use a multivariate Tobit model to predict aggregated individual donation behavior at the firm level; we test whether conventional profit-maximizing models explain contribution levels across types of donations. We examine two dependent variables using the firm-level data: total contributions to (1) corporate and industry PACs and (2) traditional PACs (i.e., party and campaign committees), 527 groups, and Super PACs. The former is akin to an “investor model” because corporate and industry PACs work on behalf of corporate interests. These PACs are “special interest groups” in this respect because they are concerned only with their specific corporate or industry policies (see Chamon and Kaplan 2013). The latter is akin to an “ideologue model” given that the most common targeted groups—candidate/party committees, 527 groups, and Super PACs—are much more likely to follow an electoral strategy, similar to “general interest groups” who work on behalf of candidates with similar ideologies (Chamon and Kaplan 2013). We control for variables typical of models of corporate campaign contributions from decades of literature (e.g., see Grier et al. 1994; Hansen and Mitchell 2000; Hansen, Mitchell and Drope 2005; Hart 2001), including whether or not a firm has a PAC, whether or not a firm lobbies, measures of visibility, regulation, size, government contracts, concentration, and union coverage, along with dummy variables for different industry sectors, with manufacturing as the base industry. We also control for the election cycle with a dummy variable for 2012 and interact each of the independent variables with the year dummy.¹⁴

Results

Looking across election cycles and types of spending, the results suggest that Fortune 500 employee contributions to party and campaign committees, and corporate and industry PACs—which we refer to as “traditional” political groups—did not change much after the Citizens United ruling. This is evident in Figures 1 and 2, which display the total number of contributions and the total dollar amounts, respectively, to different groups across electoral year. According to Figure 1, the overall number of contributions in 2008 and 2012 are strikingly similar within each category. In Figure 2, total dollar contributions (in constant 2012 dollars) to corporate and industry PACs, respectively, were almost identical in 2008 and 2012. For example, firms’ employees contributed a total of $26,887,880 to corporate PACs in 2008 and $27,390,620 in 2012, and they contributed $3,966,907 to industry PACs in 2008 and $4,339,166 in 2012. Only about $5 million separated the total contributions to other traditional committees (e.g., PAC, party, and candidate campaign committees) across electoral cycles, with a total of $83,044,440 donated in 2008 versus $88,016,088 in 2012.

Figure 1.

Total number of contributions by Fortune 500 employees across committee type.

Figure 2.

Total contributions by Fortune 500 employees, across committee type and presidential election year.

The only noteworthy change between 2008 and 2012 occurred with 527 groups. While Figure 1 shows little change in the number of contributions to 527s (from 1,734 in 2008 to 1,984 in 2012), Figure 2 shows a significant drop in the total dollar amount, from $9,810,814 in 2008 to $3,442,774 in 2012. A driving factor in both the $9.8 million figure in 2008 as well as the subsequent drop is Sheldon Adelson of Las Vegas Sands, who contributed $5,000,000 to 527s in 2008 and only $2,000,000 in 2012. However, there is still a nontrivial decline between election cycles if we exclude Mr. Adelson, from about $4.8 million to approximately $1.4 million.

The same general trends hold for average employee contribution across corporations as well, shown in Figure 3. There is very little difference between 2008 and 2012 in the three traditional spending categories, the exception being contributions to Super PACs, which did not exist in 2008 and a slight drop with 527 groups. The drop in average employee contribution to 527s makes sense given that Figure 1 shows an increase in the number of contributions to 527s while Figure 2 shows a decrease in the aggregate dollar amount of contributions. We see, however, that average Super PAC spending is much larger than any traditional category. And that average jumps significantly to $9,899 (from $6,878) if we include Mr. Adelson, who alone contributed $48,346,625 to Super PACs in 2012. The large average contribution to Super PACs is the result of very large contributions being given by only a handful (741) of individuals relative to the tens of thousands of donations given to the other categories. In all, these aggregate findings support our expectations that (1) Citizens United had a minimal effect on Fortune 500 employees’ contributions to corporate and industry PACs (i.e., investors) and (2) that the emergence of Super PACs likely diverted resources from 527 groups.

Figure 3.

Average corporate-employee contributions, across committee type and year, 2008 and 2012.

Table 1 depicts firms’ average aggregate employee contributions to each group, within employee rank and across election year. Not a single difference-of-means test is statistically significant at even the .10 level, again suggesting that Citizens United did little to change employee contribution strategies to traditional political committees.¹⁵ For example, the average amount of contributions from rank-and-file employees to corporate PACs went up by less than $2,000 and to industry PACs by only $213. And average donations to traditional political committees went up only by about $500. The only difference that approaches statistical significance is CEO contributions to 527 groups. Unlike contributions from rank-and-file employees and managers, both of which increased slightly (though at statistically insignificant levels), CEOs contributed far less money to 527s in 2012 than 2008. Excluding Sheldon Adelson, the average aggregate contribution from CEOs of Fortune 500 companies dropped from $6,003 in 2008 to $843 in 2012. But, again, this difference is not statistically significant, landing just outside the even more lenient standard of p < .10.

Table 1.

Average Aggregate Corporate-Level Contributions, Across Election Year.

	2008	2012	Difference (SE)
Contributions by All Employees
To Corporate PACs	$46,040	$46,901	$861 ($6,650)
To Industry PACs	$6,793	$7,430	$637 ($1,580)
To Other Traditional Committees	$142,199	$150,712	$8,513 ($20,289)
To 527 Groups	$16,799	$5,895	−$10,904 ($10,520)
To Super PACs	—	$24,370
Rank-and-File Contributions by Firm
To Corporate PACs	$4,602	$6,455	$1,853 ($2,382)
To Industry PACs	$653	$867	$213 ($228)
To Other Traditional Committees	$40,067	$40,564	$497 ($3,611)
To 527 Groups	$532	$581	$49 ($128)
To Super PACs	—	$408
Managers’ Contributions by Firm
To Corporate PACs	$32,422	$32,487	$64 ($5,002)
To Industry PACs	$3,624	$3,828	$204 ($1,202)
To Other Traditional Committees	$63,989	$66,327	$2,337 ($11,422)
To 527 Groups	$922	$962	$39 ($471)
To Super PACs	—	$1,833
CEOs’ Contributions by Firm
To Corporate PACs	$9,017	$7,956	−$1,057 ($939)
To Industry PACs	$2,514	$2,734	$220 ($366)
To Other Traditional Committees	$38,143	$43,822	$5,679 ($4,069)
To 527 Groups (excluding Adelson)	$6,003	$843	−$5,160 ($3,298)
To Super PACs (excluding Adelson)	—	$22,125

Using difference-of-means tests across the election cycles, no differences are statistically significant. The same holds if we use difference-of-means tests such as the Mann-Whitney and Mood’s median tests. The unit of analysis in this table is the firm. The “All Employee” and “CEO” to Super PACs categories exclude the $48,346,625 Sheldon Adelson, CEO of Las Vegas Sands, contributed to Super PACs in 2012. When included, the average contribution to Super PACs by all employees jumps to $106,228 and the average contribution by CEOs jumps to $103,988. “Other Traditional Committees” refer to any political committee that is not either a corporate PAC, industry PAC, 527 group, or Super PAC. They include candidates’ campaign committees, other PACs (e.g., labor), and congressional campaign committees. PAC = political action committee.

Notwithstanding the large but statistically insignificant drop in CEO contributions to 527 groups and the obvious increase in Super PAC contributions, Citizens had little effect on Fortune 500 employee contributions across election cycles. What effect, if any, did Citizens have on spending across employees? Table 2 depicts difference-of-means tests of firm-level contributions across employee rank, within election year (managers and CEOs are included together in Table 2). Consistent with the trend depicted in Figure 1, employees did contribute to the new Super PACs in 2012. As one would expect, contributions to Super PACs increased as personal resources increased. Whether or not Sheldon Adelson is included, managers’ contributions to Super PACs far outpaced contributions from rank-and-file employees. There is about a $23,600 difference when Adelson is excluded ($408 vs. $23,960) and an incredible $105,413 difference when he is included in the comparison ($407 vs. $105,821). Indeed, as might be expected, managers outspent rank-and-file employees across all categories (all differences are statistically significant at the .05 level). Without Adelson, the largest difference between managers and rank-and-file employees occurs in their contributions to traditional PACs, rather than in the unlimited arena of Super PACs or 527s. In 2012, managers contributed about $69,600 more to party and candidate committees than rank-and-file employees. Even so, it is hard to ignore the influence of Mr. Adelson. Resources clearly matter, and the ability of one wealthy CEO to contribute close to $50 million in one election cycle underscores the potential of Citizens to act as an accelerant for the contribution gaps.

Table 2.

Average Aggregate Corporate-Level Contributions by Election Cycle, across Employee Type.

	All
	Rank-and-file	Managers	Difference (SE)
Contributions to Corporate PACs by Firm
2008 Presidential Election	$4,601	$41,439	$36,838* ($3,689)
2012 Presidential Election	$6,455	$40,446	$33,990* ($3,903)
Contributions to Industry PACs by Firm
2008 Presidential Election	$653	$6,139	$5,485* ($939)
2012 Presidential Election	$868	$6,562	$5,695* ($918)
Contributions to Other Traditional Committees by Firm
2008 Presidential Election	$40,067	$102,132	$62,064* ($7,515)
2012 Presidential Election	$40,564	$110,148	$69,584* ($6,717)
Contributions to 527 Groups
2008 Presidential Election	$533	$6,926	$6,392* ($3,304)
2012 Presidential Election	$582	$1,806	$1,223* ($479)
Contributions to Super PACs by Firm
2012 Presidential Election	$407	$105,821	$105,413 ($82,197)
Means excluding Las Vegas Sands	$408	$23,960	$23,552* ($7,442)

These t tests compare contribution totals across employee type holding presidential election year constant. “Other Traditional Committees” include any political committee that is not either a corporate PAC, industry PAC, 527 group, or Super PAC. They include candidates’ campaign committees, other PACs (e.g., labor), and congressional campaign committees. In this table, the “managers” category includes CEOs. Contributions to 527 groups exclude Sheldon Adelson. Like the Super PAC relationship, including Mr. Adelson dramatically increases the substantive difference across ranks, as well as the standard error. PAC = political action committee.

Indicates a statistically significant difference (p < .05) across employee type.

Because individual employees can make multiple contributions, as an additional test of our findings, we aggregate contributions to the level of the individual, rather than the corporation. As Table 3 shows, the average number of contributions by all employees increased slightly from 2.82 in 2008 to 3.03 in 2012, a statistically significant difference (p < .05). Similarly, the average contribution increased from $800 to $867, also a statistically significant increase. However, when we separate individuals once again by rank, we see striking differences across the behavior of different types of employees in these firms. For rank-and-file employees, the number of contributions increases slightly from 1.92 to 2.09, but the mean dollar amount decreases by about $15, a statistically insignificant change. For managers, the mean number of contributions again increases slightly, but the difference in the mean dollar amount (up by $12) is again not statistically significant. For CEOs, however, while there is no difference in the mean number of contributions, the mean dollar amount increases significantly from about $2,000 to $3,500. Even without Sheldon Adelson, the mean increase is more than $1,000 and significant. CEOs are the only group whose mean dollar contribution, but not number of contributions, significantly increased, providing additional evidence of a growing contribution gap following Citizens.

Table 3.

Average Number and Size of Contributions by Employee, across Election Years.

	2008	2012	Difference (SE)
Total Number of Employees	47,325	47,304
Mean Number of Contributions	2.82	3.03	.20* (.03)
Mean Dollar Amount	$801	$867	$66* ($27)
Rank-and-File Employees	22,902	23,905
Mean Number of Contributions	1.92	2.09	.17* (.03)
Mean Dollar Amount	$595	$580	−$15 ($9)
Managers	22,004	21,016
Mean Number of Contributions	3.40	3.78	.38* (.06)
Mean Dollar Amount	$872	$886	$13 ($14)
CEOs	2,419	2,383
Mean Number of Contributions	6.13	5.80	−.33 (.30)
Mean Dollar Amount	$2,089	$3,578	$1,489* ($495)

The unit of analysis in this table is the Individual employee. When we exclude Sheldon Adelson, CEO of Las Vegas Sands, the results are similar, with the increase in the mean contribution dropping to $1,071.34 but still statistically significant at the .001 level.

How do Fortune 500 CEOs compare with other contributors? Table 4 lists the top twelve donors to Super PACs overall in the 2012 election cycle. Sheldon Adelson is the only individual associated with a Fortune 500 company and also an overall outlier, with he and his spouse giving more than $92 million to Republican Super PACs. As shown in Table 4, the top twelve donors are from a diverse group of firms that includes large holding companies, a law firm, investment and private equity firms, media and real estate, among others. The one thing that they seem to have in common is that they are all extremely wealthy individuals on a mission to elect or defeat particular candidates running for elected office.

Table 4.

Top 12 Super PAC Donors Overall—2012 Election Cycle.

Donor	Employer	Donation2012 election cycle	To Reps	To Dems
Sheldon and Miriam Adelson^a	Las Vegas Sands/Adelson Drug Clinic	$92,796,625.00	100	0
Harold Simmons	Contran Corp.	$26,865,000.00	100	0
Robert Perry	Perry Homes	$23,950,000.00	100	0
Fred Eychaner	Newsweb Corp.	$14,050,000.00	0	100
Michael Bloomberg	City of NY	$13,672,973.00	0	100
John Ricketts	Hugo Enterprises	$13,050,000.00	100	0
James and Marilyn Simons	Renaissance Technologies/Simons Foundation	$9,575,000.00	0	100
Fred Eshelman	Pharmaceutical Product Development Inc.	$6,558,150.00	100	0
Robert Mercer	Renaissance Technologies	$5,409,354.00	100	0
Steve Mostyn and Amber Anderson	Mostyn Law Firm	$4,753,850.00	0	100
Peter Thiel	Clarium Capital Management	$4,735,000.00	100	0
John Childs	JW Childs Assoc.	$4,225,000.00	100	0
TOTAL		$219,640,952.00	67%	33%

Source. Center for Responsive Politics https://www.opensecrets.org/outsidespending/summ.php?cycle=2012&disp=D&type=V&superonly=N (accessed May 1, 2018).

PAC = political action committee.

$48,346,625 of the $92,796,625 contributed by the Adelsons were in Sheldon’s name.

So, while it does not appear to be employees or owners of the world’s largest firms who took advantage of this new avenue of spending to influence politics, it is largely a handful of extremely wealthy business owners who are far outspending all other types of donors. What Citizens United did was to remove the statutory ceiling for wealthy individuals who “maxed out” in how much they could contribute to candidates’ campaigns. According to the Center for Responsive Politics, 84 percent of the pro-Romney Restore Our Future Super PAC contributors in 2011 had also reached the legal limit on donations to Romney’s campaign (cited in Briffault 2012, p. 1678). This point is made clear in Figure 4, which compares Super PAC contributions from Fortune 500 employees with those from the top twelve contributors not employed by Fortune 500 companies. Excluding Mr. Adelson, the top twelve individual Super PAC donations totaled $130,944,327 in 2012 versus only $14,207,437 from all Fortune 500 employees. Indeed, these twelve Super PAC contributors came close to matching Fortune 500 employees’ total contributions to all PACs and committees in 2012: $134,951,952 (excluding Mr. Adelson).

Figure 4.

Total Fortune 500 individual donations compared with top overall Super PAC donations, 2012.

Finally, we use a profit-maximizing model of donor behavior aggregated to the firm level to see if donations to different types of committees reflect different motivations vis-à-vis their corporations. We expect individuals’ contributing on behalf of the corporation/industry to do so in proportions that reflect corporations’ own profit-maximizing strategies, such as greater spending for firms that face heavier regulations or seek larger government contracts. The results are presented in Table 5.¹⁶

Table 5.

Tobit Model of Aggregate Donations by Corporate Employees (Logged).

	Corporate/industry PACs(investors)	Other committees, 527s, and Super PACs (ideologues)
Independent Variables
Corporate PAC	7.26* (0.55)	0.48* (0.15)
Lobby	1.40* (0.58)	1.04* (0.15)
Visibility (WSJ articles)	0.001^† (0.001)	0.001* (0.0001)
Regulation	−0.003(0.01)	0.004* (0.002)
Revenue (billions $)(constant 2012 dollars)	0.01^† (0.01)	0.003(0.002)
Employees (millions)	−2.44(2.52)	0.47(0.70)
Number of Firms in Industry	0.00(0.00)	−0.00(0.00)
Government Contracts	−0.23(0.14)	−0.11* (0.04)
Concentration	−0.002(0.01)	0.003(0.003)
Union Coverage	0.01(0.02)	−0.01(0.01)
Finance Dummy	0.67(0.66)	0.58* (0.18)
Information Dummy	1.29(0.92)	0.87* (0.25)
Utilities Dummy	−0.98(1.01)	−0.19(0.28)
Retail Dummy	−1.45^† (0.79)	−0.16(0.20)
Service Dummy	0.48(0.77)	0.42* (0.21)
Mining Dummy	1.34(1.28)	0.17(0.36)
2012 Dummy	−0.04(0.96)	0.25(0.26)
Corporate PAC × 2012	−1.44⁺ (0.76)	0.13(0.20)
Visibility (WSJ articles) × 2012	−0.001(0.001)	−0.0004* (0.0001)
Retail × 2012	2.01⁺ (1.11)	0.22(0.29)
Constant	0.06(0.68)	9.28* (0.18)
N	1,163	1,163
Pseudo R²	.09	.10

Each independent variable was also interacted with the 2012 Dummy variable to test for differences across election cycles. Only the significant interactions are shown. PAC = political action committee; WSJ = Wall Street Journal.

†

p < .10, two-tailed. *p < .05, two-tailed.

Among the most important predictors of aggregate donations given by investors (to corporate and industry PACs) and ideologues (to campaign and party committees, 527s, and Super PACs) are corporations’ levels of political activity. The existence of a corporate PAC and whether or not the firm engages in lobbying are both statistically significant (p < .05) and positive. That is, the more active corporations are in politics, the more active their employees will be. Corporate political activity is particularly important in the investor model, as the substantive effects of Corporate PAC and Lobby are by far the largest among the explanatory variables. Furthermore, the results suggest that a firm’s exposure to external groups stimulates employee contributions to electorally oriented groups. A company’s visibility vis-à-vis the public (Wall Street Journal) and the degree to which they are regulated by the federal government (Regulation) encourage contributions in the ideologue model. Also, employees of firms in the Financial and Information industries contribute more to electorally oriented groups than other industries while Government Contracts drive employee contributions down. Overall, these results seem to support the idea that, first, corporate political activity encourages employee political activity, and, second, individuals who give to traditional campaign committees and now Super PACs have different motivations such as ideology or private benefits, possibly separate from the profit-maximizing access and relationship-building goals of the corporations and the individuals who support that effort.

Addendum: The 2016 Presidential Election

How did corporate spending in the 2016 presidential election compare with 2012? We can draw a few conclusions from aggregate-level data. First, according to the Center for Responsive Politics, overall outside spending increased again from the previous presidential election, jumping from $1.3 billion in 2012 to $1.7 billion in 2017.¹⁷ Spending by Super PACs, alone, nearly doubled from $609 million in 2012 to $1.1 billion in 2016.¹⁸ Interestingly, total federal expenditures by 527s neared the 2008 pre-Citizens level of $283 million, to about $251 million (although this was still far short of the $550 million spent by 527s in 2004).¹⁹ Perhaps 527s are adapting to their new environment, as groups are apt to do (Green, Coffey, and Cohen 2014). These spending patterns provide further evidence that the Citizens United ruling continues to have dramatic consequences for overall election spending, and outside spending in particular.

Second, consistent with our analysis of the 2012 election, these increases were not driven by Fortune 500 companies or their employees. Like 2012, not a single Fortune 500 company contributed to a Super PAC in 2016 (Hansen, Rocca, and Ortiz 2015).²⁰ Furthermore, of the top 100 individual contributors to outside groups (including Super PACs), only six were affiliated with a Fortune 500 company: Sheldon Adelson of Las Vegas Sands (ranked second at $77.9 million), Larry Ellison of Oracle (ranked thirtieth at $5.3 million), Mark Epstein of Qualcomm (ranked forty-fifth at $3.8 million), Charles Johnson of Franklin Resources (ranked seventieth at $2.2 million), Charles Schwab of Charles Schwab and Company (ranked ninety-fifth at $1.6 million), and Kelcy Warren of Energy Transfer Partners (ranked ninety-sixth at $1.5 million).²¹ Contributions from the top 100 increased markedly in 2016. In 2012, thirteen individuals contributed more than $4 million, while in 2016, forty-three individuals gave $4 million or more. The smallest top-100 contribution in 2016 was $1.4 million, with the average contribution more than doubling from $3.6 million in 2012 to $7.8 million in 2016. These three observations echo those from the 2012 presidential election: we saw (1) another sharp increase in contributions to outside spending groups (2) not driven by Fortune 500 companies themselves, (3) but by wealthy individuals not affiliated with Fortune 500 companies.

What about the employees of Fortune 500 companies? Did their behavior change in 2016? To answer this question, we compare the companies with the ten highest total employee contributions in 2012 with their totals in 2016. We used the FEC’s new online tool to identify the 2016 contributions from individuals employed by the following companies (excluding Sheldon Adelson’s Las Vegas Sands): Goldman Sachs, Oracle, Google, Morgan Stanley, Microsoft, Comcast, Huntsman, Wells Fargo, KKR, and Citigroup. Figure 5 depicts the results.²² In every case, total employee contributions dropped between 2012 and 2016. Goldman Sachs had the single largest decrease, falling from a total of $6.9 million in employee contributions in 2012 to $2.4 million in 2016. On average, spending by the top ten employee contributors in 2012 dropped by half, from $3.1 million to $1.5 million in 2016. The most active Fortune 500 employees in 2012 were far less giving in 2016, suggesting further that concern over Citizen United’s effect on corporate spending may have been overblown.

Figure 5.

2016 total employee contributions of top ten contributors from 2012.

Conclusion

The goal of this research was to determine whether the Supreme Court’s 2010 Citizens United ruling affected the contribution strategies of Fortune 500 employees. The motivation stemmed from previous findings that Citizens had a minimal effect on major corporations and that they were not, in fact, the source of the rise in contributions to IE-only groups such as Super PACs (Hansen, Rocca, and Ortiz 2015). Can the same be said for their employees? Overall, our results suggest three important conclusions. First, Citizens United did not alter Fortune 500 employees’ contribution patterns to corporate and industry PACs, or party and candidate committees, as their 2012 contributions to these groups did not change all that much from 2008. However, our findings suggest that the emergence of Super PACs in 2012 may have pulled employees’ contributions from 527 groups, at least in the short term. Time will tell how 527s adapt to their new environment, and it is worth future research. Second, consistent with research on participation, we find large differences in contributions across resources, which we measure as employee rank. The differences become even more dramatic after Citizens when CEOs contributed millions to Super PACs, the most dramatic example being Sheldon Adelson of Las Vegas Sands.

Finally, we find that despite the rise of Super PACs in 2012, employee contributions to traditional political committees and corporate PACs still outweigh Super PAC contributions in both numbers and amount. Furthermore, there is no significant difference in average corporate employee contributions between 2008 and 2012, and a preliminary look at the 2016 election cycle suggests that their overall contributions dropped in 2016, providing further evidence that Citizens had little noticeable impact on how major corporations spend on politics (Bonica 2016). The huge increase in spending after Citizens seems to have been driven by individuals; however, with the exception of Sheldon Adelson, not from the employees or owners of large Fortune 500 companies. Further research is needed to determine more broadly who these wealthy individual contributors are. That said, the implication of Citizens is that individuals (even just one, such as Sheldon Adelson) can potentially have a huge influence on the political process.

What does this mean for representation? In The Semisovereign People, Schattschneider (1960, p. 35) argued that pressure politics is selective, involving only a small minority; the notion that the system is representative of the whole community or all interests is flawed. The system is “skewed, loaded and unbalanced” representing only the upper economic class. And in his words, “the flaw in the pluralist heaven is that the heavenly chorus sings with a strong upper-class accent.” Our findings suggest that we have moved to an even further extreme where representation is no longer controlled by a small number of select groups, but a small number of individuals who are able to dominate the system. And, given the 2014 Supreme Court McCutcheon v. FEC decision, we seem to be moving even further in that direction. The court’s decision in this case removed the aggregate caps on individual contributions to federal candidate campaigns, PACs, and political party committees, allowing an additional avenue for unlimited spending by the wealthy.²³ The consequences of McCutcheon are worth future research.

Supplemental Material

Appendix – Supplemental material for The Impact of Citizens United on Large Corporations and Their Employees

Supplemental material, Appendix for The Impact of Citizens United on Large Corporations and Their Employees by Wendy L. Hansen and Michael S. Rocca in Political Research Quarterly

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Supplemental Materials

Supplemental materials for this article are available with the manuscript on the Political Research Quarterly (PRQ) website.

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