The Right Opinion

Business Rejects Obamacare

How the law will slash low-wage worker hours while failing to provide them with health insurance.

By Arnold Ahlert · Nov. 12, 2012

Elections, as it is often said, have consequences. As a result of the president's reelection, the Affordable Care Act, aka Obamacare, will be fully implemented. Unsurprisingly, several businesses are looking for ways to avoid the costs associated with the law. Just as unsurprisingly, American leftists consider such efforts to keep one's business profitable – or solvent – unseemly.

Zane Tankel, chairman and CEO of Apple-Metro, an Applebee's New York-area franchise, explains the obvious. “We've calculated it will [cost] some millions of dollars across our system,” Tankel told Fox Business Network last Thursday. “So what does that say – that says we won't build more restaurants. We won't hire more people.” Apple-Metro runs 40 Applebee's restaurants and employs from 80 to 300 people at each of its locations.

Jimmy John Liautaud, founder of Jimmy John's sub franchise, echoed that sentiment. Like a number of smaller businesses, he is considering cutting employee hours to 28, to get under the Obamacare cap of 30 hours that defines full-time employment. Under the law, a full-time employee must be given healthcare insurance, or the company must pay a $2000 fine, if it fails to do so. Part-time employees don't have to be covered. “We have to do that, said Liautaud. "There's no other way we can survive it, because we think it will cost us 50 cents a sandwich. That's just the actual cost. If you have 40 or 50 employees at a restaurant, and the penalty is $2,000, and you're going to pay an $80,000 or $100,000 penalty, there goes the profit in your restaurant,” he added.

John Arensmeyer, CEO and founder of Small Business Majority, a national small business advocacy organization, served on a panel at the White House summit on healthcare reform in 2009. He contended that it is “counterproductive to criticize” the law at this point. “Now that the election is over, if there's any political motivation behind it, I'm not sure what the objective is,” he said. “It's the law of the land, and there's no chance it's going to be repealed after the reelection of the president and the Supreme Court decision earlier this year, and we think it's time for all businesses to come together and figure out how to make this work.”

Apparently it hasn't dawned on Mr. Arensmeyer that the CEOs of Apple-Metro and Jimmy Johns are doing precisely that.

They are not alone. John Schnatter, CEO of the Papa John's pizza franchises, also revealed he would most likely begin reducing employees' hours. Back in August, he told Politico why. “Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis,” Schnatter said, even as he noted that “our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare.” Despite that reality, Schnatter remained defiant. “If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders' best interests,” Schnatter vowed.

He reinforced that argument at Edison State College's Collier County campus the day after the election. After conceding that all Americans having health insurance is a good idea, he calculated that the implementation of the law would cost his company $5 million to $8 million in additional costs – year in, year out. Thus, he expects individual franchise owners will reduce employee hours in order to avoid covering them. “That's probably what's going to happen,” he said. “It's common sense. That's what I call lose-lose.”

The Darden chain of restaurants, owners of owns Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and the Yard House, is also looking for a way to avoid the costs associated with ObamaCare. In October, the restaurant group began conducting a test at a select number of its restaurants in four markets, emulating a common theme: limiting employee shifts to get under the 30 hours that mandates converge. Ironically, the company, one of the nation's 30 largest employers, already offers health insurance to all its approximately 185,000 employees. Yet the limited-benefit plan they offer is a type of coverage being phased out under Obamacare, which will ban annual limits for most plans. Three other restaurant chains, White Castle, McDonald's and Denny's, are also looking for ways to avoid the employer mandate scheduled to go into effect in 2014.

The leftist backlash is predictable. Prior to the election, Washington, D.C., employment law attorney Robert B. Fitzpatrick claimed that if the president won, “I would think aggressive enforcement people within the administration would pursue cases like that. And say listen, you're just playing with the numbers, playing with the hours to try to avoid compliance with providing health care to employees,” he told Fox News. “And there are going to be consequences.”

The Huffington Post was upset that employers notified employees that their votes might have consequences, noting that employers who “sent notices to workers urging them to vote for Romney, or warning of potential problems if Obama won,” might face charges of “intimidation” – even as they were forced to concede that the Supreme Court's Citizen United decision protected employers' rights to do so. Prior to that decision unions could promote candidates. Corporations could not.

The Huffington Post was also trolling for people who think they were fired because Obama got re-elected. In bold print, in two different articles at their website, the following message appeared: “Has your boss fired workers as a result of President Obama's reelection? Email Jillian.Berman@huffingtonpost.com and tell us about it.”

And then there was Twitter. The prevailing sentiment was that decisions to limit hours or lay off workers are “selfish,” “ridiculous,” “unpatriotic,” and worthy of a “boycott.”

Such fascist characterizations may be emotionally satisfying, but they miss the point. A Las Vegas business owner who fired 22 of his 144 employees after the election, counters such perceptions with a dose of reality in an anonymous phone call to a local radio station. “I have always put my employees first,” said the employer. “I always made sure that when I went without a paycheck that I made sure they were paid. And I explained that I always put them first and unfortunately I'm at a point where I'm being forced to have to worry about me and my family now and a business that I built from just me to 114 employees… Elections do have consequences, but so do choices. A choice you make every day has consequences and you know what, I've always put my employees first, but unfortunately today I have to put me and my family first, and you watch what's gonna happen.”

No doubt for many on the left, the idea that an employer might put his family's interests ahead of his employee's is little more than selfishness run amok. And in a burst of even more unrealism, these same, self-professed champions of the middle class apparently can't comprehend (or don't care) that a boycott of “offending” businesses will result in even more employees getting laid off.

Yet perhaps the most remarkable disconnect demonstrated by the left has to do with the election campaign itself. Barack Obama couldn't run on an economic record that included 43 months of joblessness above 8 percent, the weakest recovery on record, or record numbers of Americans who became attached to government programs such as Food Stamps, welfare or Social Security disability. Thus, he chose to run against the “fat-cat bankers on Wall Street,” private sector businesses who “didn't build that” and the rich who aren't paying their “fair share” and are “holding the economy hostage" as a result. He demonized wealth-producers in general, and Mitt Romney in particular.

Now, he and his followers not only expect the entire business community to fall in line behind them, but absorb the extra, and perhaps ultimately debilitating, costs of Obamacare – without so much as a whisper of protest, no less.

It is bad enough the left can demonstrate such a profound ignorance regarding human nature and economics. Yet what is far more unsettling is the premise on which such ignorance rests: in short, the American left apparently believes that the essence of free-market capitalism, namely "incentive,” is interchangeable with the essence of socialist-driven, redistributionist impulses, namely “coercion.” Nothing could be further from the truth, elusive as that truth may be to those who never seem to tire of finding ways to spend other people's money. One suspects it will become glaringly and grimly apparent over the next four years.

Arnold Ahlert is a columnist for FrontPage Magazine.

19 Comments

D. Cummings in Arizona said:

Amen to this article. Obamacare is a disaster.

Monday, November 12, 2012 at 8:13 AM

Doktor Riktor Von Zhades in Western KY said:

The ultimate goal of the left is for all private businesses to be zero sum. Unfortunately when you get to that point, you no longer have businesses to be concerned about any longer.

Monday, November 12, 2012 at 9:10 AM

Ct-Tom in NC said:

Ayn, please call your office!

Doesn't this sound exactly like Atlas Shrugged?

Monday, November 12, 2012 at 9:34 AM

READY4ACHANGE in ILLINOIS said:

WOW. All I can say is WOW - heaven forbid there be repercussions from this election - or the one before. Fantastic article Mr. Ahlert!

Monday, November 12, 2012 at 10:10 AM

Teresa in Timberlake N.C. said:

Why didn't all of these people speak up BEFORE the election?? It's too late now.

Monday, November 12, 2012 at 11:57 AM

Craig in California (RURAL RED) said:

What surprises me is that those businesses you mention Arnold are not already doing the part time gig, there's plenty of reasons to have part time employees already, Obamacare simply adds another nail to the coffin.
Google: Electoral Maps, Washington Post.
Find one that shows results by County. You'll see nothing but Red except for big cities, the rust belt, border towns and academia (S.F and New England). So, as I see it, those are the places that will be hurt most by the Obamacare Business tax. They asked for it, they got it! Rural America will go on as usual (barely). I'll just continue to stock up, because eventually they will be paying us a visit, but we will be ready for their fight for survival. Those of you, my fellow redcoats, unfortunate enough to have to live in the Blue, get out while you still can! Need a job? Find a swing state, move there, I hear there's plenty of pork to go around. Maybe we can tip the scales next time around.

Monday, November 12, 2012 at 12:08 PM

Peggy Antoniak in Ft Lauderdale said:

Why is it the middleclass and poor always suffer. I would love to have this problem. My son, thanks to Obama care, will be able to have insurance and a pre-existing condition will not stop him from getting it.

Monday, November 12, 2012 at 12:34 PM

India in GA replied:

Here's the problem, Peggy.

A very small percentage of the public is unable to get health insurance due to pre-existing conditions. Rather than focus on that specific problem, and solve it (Obamacare does not solve that problem, by the way), the Obama administration and Congress chose to take over the entire healthcare industry. Healthcare in the U.S., in terms of price, availability, number of healthcare professionals and innovation, was already suffering because of heavy government interference.

Now, Obamacare will allow the federal government manage the entire thing into oblivion.

I do wish the best for your son with his medical condition.

Monday, November 12, 2012 at 1:08 PM

G Dub45 in Lee's Summit, MO replied:

Peggy, et al -
Speaking as a Health Insurance Broker, I must forever question those who claim they cannot obtain Individual Health Insurance due to a pre-existing condition.
While I work in only two states these days, both of those states have had their own High-Risk pools for decades. One has only to prove state's residency ( oh, I am sorry - that might require a photo ID ) and a letter from a Broker stating that the individual cannot obtain Private Health Insurance due to a pre-existing condition rendering a denial - and that individual is APPROVED instantly.
The mis-conception ( or lie ) that pre-existing conditions render the applicant un-insurable simply has been taken as truth.
Please see: http://ezinearticles.com/?Florida-High-Risk-Pool---What-Is-the-Florida-Risk-Pool?&id=5067383

Tuesday, November 13, 2012 at 11:30 AM

Robinius in Broomfield, Colorado replied:

Obamacare will fail from within. I assume your son has a job. The business that employs him does not do so because they like him. He provides a service that his employer values to a certain degree. When the cost of employing your son exceeds the value of his employment one of two things will happen. He will be laid off or he will have his hours reduced. Either way it's not good for your son. The employer has no "duty" to employ anyone. If he goes out of business - same result - your son loses. Welcome to the real world.

Monday, November 12, 2012 at 3:15 PM

richard ryan in Lamar,Missouri replied:

Peggy, people like you are largely responsible for the problems this country are now facing. You are trying to have a pity party and whining for the rest of us to take care of you. I am nearing 80 years of age. I was born with CP and worked for 46 years. Of that period of time I was out of a job for a total of 3 weeks. I could have been on welfare all that time, but chose to make a life for myself. I didn`t ask anyone to take care of me. Don`t expect me to be sorry for you. Take care of your own problems. I am sick and tired of whiners like you.

Monday, November 12, 2012 at 7:24 PM

ata777 in FL replied:

Peggy, you're exactly right. Your son will be able to have insurance. What he WON"T have--due to a doctor/hospital shortage, or the reality that many doctors will refuse new government healthcare patients rather than go bankrupt--is a place to use it.

Tuesday, November 13, 2012 at 8:17 AM

Monique Bell in Sacramento, CA said:

I am a small business owner of an online clothing and jewelry company. I currently reside in the Socialist state of CA. Everything that these owners are saying is true. I was at a recent event where all of the vendors were already planning to move from CA because they can't keep doing what they love and actually keep a roof over their heads. Once Obamacare kicks in, they know they will stop doing the smaller shows because they wont be able to afford doing shows and pay for health care. Yes they might fall under the 250,000 business requirement but money that they would be investing in their business now has to pay for health insurance. This is crazy all the way around.

Monday, November 12, 2012 at 12:53 PM

Zach Taylor in Clearwater, FL said:

Get ready for hospitals run like the DMV.

Monday, November 12, 2012 at 3:37 PM

JAC in Texas said:

As a small business owner, I can easily see that it's less expensive to the business to reduce one full time employee from 40 hours to 25, then hire another 25 hour employee, than it is to either pay a fine or offer ObozoCare's health insurance. The hours are covered, but the costs go down. I'm sure that will become the prevailing business model over the next four years.

Monday, November 12, 2012 at 3:38 PM

Gregory in Yakima said:

This sky is falling non-sense was discredited on Nov.6. Whining won't get you anything but sympathy. Your message is a new lie every day plus a repetition of stale lies. You kids were certain the President was born in another country, that he was plotting Muslim conspiracies, that he's a communist. You look more than foolish: you make yourselves look stupid.

Your paranoid delusions echoed ad naseum are being laughed at by regular folks. Obama Care will be the highlight of the 21st century. Generations will marvel that anyone opposed this necessary legislation. Your anti-science mix of a God and politics Party will be remembered for its colossal failure first, and it's inevitable drift to irrelevance second.

The new world consists of same sex marriage, an end to drug wars, secular government and women's reproductive rights among other notable accomplishments. But perhaps best of all, President Obama will probably nominate two Supreme Court Justices. I hope Clarence Thomas and Antonin Scalia are the two. What a couple of zero's they've turned out to be.

Monday, November 12, 2012 at 3:58 PM

richard ryan in Lamar,Missouri replied:

Greggy, just go jump in the ocean with the rest of the slimy creatures. You and the rest of the gimmee crowd are killing the country. Get the hell out of our lives.

Monday, November 12, 2012 at 7:27 PM

Kevin from Arkansas in USA replied:

"Generations will marvel that anyone opposed this necessary legislation."

I guess you missed the memo, Greg, as you think it's all good. Did you notice The November 9th strike against Hostess? The union, no doubt energized by the re-election of obama, rejected the offer from Hostess. Hostess promptly and permanently closed three manufacturing facilities.

http://www.miamiherald.com/2012/11/12/3093987/hostess-closing-3-bakeries-following.html

And just how many companies have announced closures and layoffs since the election? You can read it here:

http://www.theblaze.com/stories/how-many-businesses-have-announced-closings-or-lay-offs-since-obama-won-a-second-term/

and keep a daily track here:

http://www.dailyjobcuts.com/#.UJwVDQHUOEh.facebook

But it's all good for you, people losing their jobs After all you've admitted that increasing the welfare/entitlement plantation is good for the Democrats. Democrats can't have people being upwardly mobile. Too many votes might be lost.

===========
You (Conservatives) need enthusiastic Hispanics and African Americans and a thriving middle class.
Gregory in Yakima
Saturday, September 29, 2012 at 12:03 PM

Tuesday, November 13, 2012 at 8:30 AM

costa rica's call center in san jose, costa rica said:

OBAMACARE enhances outsourcing. Enacted in July 2010, The U.S. healthcare reform (“ObamaCare” or the “Patient Protection and Affordable Care Act”) is intended to pressure large and small employers through force and taxation. The result will show companies deciding to send customer support, sales, lead generation and appointment setting jobs offshore or risk going out of business. U.S companies can take advantage of a dedicated bilingual employee who is 100% committed to their project. ESL nearshore employees in Costa Rica are just as or more effective than transitional in-house employees. In addition, giving the business the freedom to scale up their offshore staff strength without getting caught in the Obamacare challenge in 2014.

http://www.obamacareoutsourcing.com

Thursday, April 25, 2013 at 5:12 PM