Businesses Already Cutting Hours, Bracing for Costs of Obamacare

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By Amy Payne

The Heritage Foundation

It seems that every day now brings another business owner in the news talking about cutting workers’ hours or making other cost-cutting moves in anticipation of Obamacare’s impact in 2013.

Here are just a few of the business owners’ comments on the health care law:

  • “We’ve calculated it will [cost] some millions of dollars across our system. So what does that say—that says we won’t build more restaurants. We won’t hire more people,” Zane Tankel, chairman and CEO of Apple-Metro, which runs 40 Applebee’s restaurants. >> Tweet this quote
  • “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 $80,000 or $100,000 penalty, there goes the profit in your restaurant.”—Jimmy John Liautaud, founder of Jimmy John’ssubs, who said he was considering cutting workers’ hours to come in under the Obamacare mandate threshold. >> Tweet this quote
  • “It’s a great concept. We want to have everyone insured. The problem is, who is going to pay for it and how are we going to accomplish this?” — John Metz, who operates roughly 40 Denny’s locations and five Hurricane Grill & Wings franchises in Florida, Virginia, and Georgia, and has said he may have to add an Obamacare surcharge to his menus. >> Tweet this quote
  • “New unit construction will cease if we have to allocate moneys for that construction to the [Affordable Care Act]. And building new restaurants is how we create jobs.” — Andy Puzder, CEO of CKE Restaurants, which owns Hardee’s and Carl’s Jr.

Heritage’s Alyene Senger explains that these businesses are responding to Obamacare’s employer mandate, which has a job-killing effect:

Obamacare requires all businesses with 50 or more full-time employees to provide health coverage for their workers or pay a $2,000 penalty for each employee after the first 30 workers. The employer mandate creates incentives for businesses to avoid higher costs by, for example, hiring part-time employees instead of full-time employees, since businesses will not be penalized for failing to provide health insurance to part-time employees….Businesses can also avoid penalties by keeping the number of employees under the mandate threshold of 50, which further discourages creating new jobs.

These businesses’ plans are only the effects based on what we know about Obamacare. There are still many, many crucial details that we don’t know. Health and Human Services (HHS) just released some of the new rules that will govern what kind of coverage insurers must offer —and Heritage’s experts are still going through the 300-plus pages of regulations to sort out what they mean.

In the meantime, forget President Obama’s “if you like your plan, you can keep it” promise. Two government agencies have estimated that more than 11 million people will no longer have their employer-sponsored health coverage once Obamacare is fully implemented. Other studies have put that number much higher.

With employers dumping employees into government-run insurance exchanges or Medicaid (which are still unsettled proposals), the future of health insurance will be taxpayers footing the bill. This is a huge money problem on top of the skyrocketing entitlement programs that already exist. But on a personal note, it’s not the best solution for the under-employed or under-insured.

Take Dave Willingham, a 32-year-old interviewed by Huffington Post after taking a job at a community college cafeteria in Washington State. “When he recently accepted his job after a bout of unemployment, he was told up front that he would not be getting more than 19 hours per week. That’s because workers who average 20 hours per week qualify for benefits like health care, vacation and sick pay, he said.”

In his cafeteria job, Willingham earns a little more than minimum wage and receives food stamps. But this isn’t the situation he wants for himself:

“That subsidy is a huge blessing for me,” Willingham said. “But at the same time, I’d rather have the agency and dignity that would come with actually having more money coming in and getting to make that decision for myself….Ultimately, it would be nicer to feel more in control of my own life and destiny.”

Becoming dependent on the government for health care is not a step toward personal control or an improved life situation for workers like Dave Willingham. But sadly, that is exactly where Obamacare is taking hourly workers.

Learn More:

Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs by James Sherk

Obamacare and the Employer Mandate: Cutting Jobs and Wages by Brian Blase

 

1 COMMENT

  1. Thanks for the postings. Now, we know what restaurants to avoid as if they are cutting back, it will affect their food sooner or later. Best to go where they don’t whine and have fresh food and are not cutting back. These are scary comments for the person who dines out.

  2. (a) If businesses of this size, with large pools of employees, had provided afordable healthcare options to their employees..there would have been no need for the ACA. (b) If the private sector providers had cut costs and remained independent from manufacturers and special interests..there would have been no need for the ACA. They brought this on themselves with their greed and indifference.. and leaving it as it was, in the private sector’s hands, was no longer a viable alternative. Welcome America to the rest of the civilized world, and good bye to the most expensive healthcare system that existed on the planet.

  3. People go into business to make money while providing a service to other people. If government requires too much from them, they will go out of business, leaving other people unemployed. Why is it so hard for liberals to understand the government “revenues” are gotten through taxes, fees and penalties from working Americans? If businesses are forced to cut back their employees because they cannot afford to pay them (because that amount of money is going to the government, which will hand it out to someone else that it deems “more worthy”), then everyone loses. The economy suffers, people lose jobs, govt “revenues” are reduced and handouts will also be reduced. Avoiding businesses that don’t “pay up” is only hastening the decline.

  4. Many people prefer hope to math. Hope makes us glad. Math makes us sad. It does not “care.” It’s unfeeling and lacking in compassion. The conflict between math and hope never ends.

    Some really depressing news—math has always won the fight in the past. Now we will see. Events will resolve the question regardless of the debate.

  5. Carl’s Jr can afford to fly in their corporate suits on their personal company jet, but can’t afford to keep grunt level workers and have to cut full-timers down to part-time? This isn’t the fault of Obamacare. This is the fault of corporate greed. Otherwise, those 6-figure salaries would take a cut to help the middle-class workers that grind the gears of their company. This goes to show who they really care about…themselves.

  6. You just wait, Obama care is going to cost everyone, and cost dearly. I don’t blame the business community for downsizing their employment size at all. Our fearliess leaders in Washington are responsible for this. We need to hold them accountable.

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