As it turns out, the number of American workers who have been forced into "part time" status by their respective companies has been on the rise since 2006, well before ObamaCare -- or even Obama himself -- was ever a factor. In 2006, the onset of the recession had just begun, which created a less-than great business environment, especially for the fast food industry. This, in turn, caused businesses to cut back on hours for their employees in order to minimize costs. Meanwhile, profits for the fast food industry have actually gone up since the recession. Approximately 92% of the fast food industry turned a profit in 2012; roughly 78% have been profitable for the last three years; and 75% have higher revenues now than before the recession (source).
|Restaurant CEO's have racks on racks on racks.|
One of the reasons why the fast food industry is THE lowest paying industry in America is because the vast majority of its workers are already part-time employees who work less than 30 hours a week. For example, out of all the workers employed by Darden Restaurants, 75% of them are part time workers under the 30 hour mark. In other words, businesses like Darden, Wendy's, Taco Bell and the like will not have to provide health insurance to the vast majority of their respective employees.
Nevertheless, even if we concede that most of the day-to-day operational costs of the fast food industry are passed on to its workers, and even if we concede that it had already begun the trend of relegating its workers to "part time" status as early as 2006, and even if we concede that many of its staff were already "part time" workers to begin with, the question still remains as to whether or not ObamaCare will actually create a significant and unique burden on these businesses.
Health care insurance plans for individuals will run you about $6,000/year. Taking this into consideration, John Schnatter of Papa John's estimates that ObamaCare will add an additional $5 to $8 million dollars of annual expenses to his business. To compensate for this new cost, Schnatter has gone on record as saying that he will have to increase the price of his pizzas by 10 to 14 cents per pizza. The good people over at Forbes, however, checked out his math and concluded that it doesn't quite add up:
Last year, Papa John’s International captured $1.218 billion in revenue. Total operating expenses were $1.131 billion. So if Schnatter’s math is accurate (Obamacare will cost his company $5-8 million more annually), then new regulation translates into a .4% to .7% (yes, fractions of a percent) expense increase. It’s difficult to set that ratio against the proposed pie increase, given size and topping differentials, but many of their large specialty pizzas run for $16. Remarkably, a 10-14 cent increase on a $16 pizza falls in a comparable range: .6% to.9%. But the cost transference becomes less equitable if you’re looking at medium pizzas, which run closer to $12, meaning a .8% to 1.15% price increase.
For the sake of argument, let’s say that Papa John’s sells exactly half medium/half large specialty pizzas. Averaging the ranges for both sizes, then averaging that product yields a .86% price increase — well outside the range of what Schnatter says Obamacare will cost him.
1. Are employers using ObamaCare as a scapegoat to cut back on workers' pay?
2. Will ObamaCare cause a real burden for many businesses out there?
3. Putting aside the moral implications involved, is it "bad for business" for companies to publicly declare that they will not provide health insurance for their workers?
4. If ObamaCare did not exist, would the fast food industry still continue to reduce hours for workers?
5. If ObamaCare doesn't kick in until January 1, 2014, then how can it be forcing businesses to cut back on employee hours today?