Business Rejects Obamacare
How the law will slash low-wage worker hours while failing to provide them with health insurance.
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 “It’s the law of the land, and there’s no chance it’s going to be repealed after the reelection of the president and the Supreme Court decision earlier this year, and we think it’s time for all businesses to come together and figure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.