• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Morning Bell: Businesses Cutting Hours, Bracing for Costs of Obamacare

    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’s subs, 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

    Bronson Stocking, a member of Heritage’s Young Leaders Program, contributed to the preparation of this article.

    Quick Hits:

    Posted in Obamacare [slideshow_deploy]

    31 Responses to Morning Bell: Businesses Cutting Hours, Bracing for Costs of Obamacare

    1. TCSr says:

      Have we heard any complaints from Congress about how Obomacare impacts their personal lives? Well of course not, they have their own special medical coverage… for life! More of the 'do as I say, not as I do' we get a regular dose of from Washington. The sad part, we keep taking it. I still believe what I did 4 years ago, Obama, given the chance, will bring this country down to a level that (we) it's people will do anything and agree to everything to get back some of the life we used to have. By that time, we're all takers and the producers have moved on to other places. Welcome the new world order.

    2. Glen R Cook says:

      The next time some one says the government would never try confiscate guns, say the one word reply, "Prohibition."

    3. Milton Richards says:

      Just curious… There are hundreds of sections of Obamacare containing the phrase "to be determined by the Secretary." Does that mean that future "Secretaries" could re-write (or elliminate) the rules? If not, then how can a currently appointed Secretary singlehandedly bind the actions of future Secretaries?

    4. Geeg says:

      I know of two fast food franchise retail chains that are going to swap a number of their full time employees between the two retail chains that are in close proximity to each other so as not to force their employees to spend more on travel costs. Each soon to be full-time employee will now work 28 hours a week in each restaurant, the owners will drop their medical coverage, but the additional 16 hours of extra work will yield them the extra money that they need to buy medical insurance if they want to purchase it themselves. The owners will hire a few more part-time workers to fill the void created by the lost full-time employees. For the employees, it is better than the alternative

      • Mark Simmons says:

        …and this will happen soon, because there is a six month look-back clause in ObamaCare. So they'll actually be penalized in 2014 based upon the hours employees work as of July. So they have a little over 6 months to transform their workforce.

    5. If the tyranical Obama regime doesn't kill us , the reaction may make us stronger . Let those that voted for tyranny get a taste of reality .

    6. ThomNJ says:

      Where I work there have been layoffs and some of us cut to 4 days per week from 5 (along with the proportionate pay cut). I estimated that the firm could save roughly $500,000 per year AFTER paying the obamacare fine. I fully expect that dropping our medical coverage is only a matter of time – very short time.

    7. PaulE says:

      Companies, especially small to medium size ones, have to work economically in order to stay in business. They don't have the luxury of some of the Fortune 500 firms that can rely on "special deals" or "special breaks", because their political contacts or heavy donations to Washington, which buy them exemptions. ObamaCare, which is essentially a political solution designed to achieve expanded healthcare insurance coverage, based on a federally mandated model of what health insurance should provide, through a series economically onerous taxes will of course provoke all manner of businesses to take action to minimize the damage to their viability. Expect many, many more business in future to elect to dump their employees into the government exchanges as the costs of implementing ObamaCare rise. Any law passed to achieve a poorly thought out social objective, that chooses to ignore the obvious economic consequences of its passage will have the same result.

    8. sdfultz says:

      I say tell them good-bye! American independent owners would love less competition from these mega stores.
      I understand their statements, but I would like to see the profit margins. My question is the effect tolerable or do we just want a miserable unhealthy workforce, they should take heed of Costco's example of how to treat employees.

    9. Dave says:

      John Metz had a good idea in the comments contained in the article. Every business should include on its menu, price list and invoices what the surcharge is for Obamacare. Hopefully, that would begin to educate the public on the real costs of this government mandated entitlement program. Also, businesses should calculate the impact of reduced hours and fewer jobs on on their workforce and include that in their reports to shareholders.

      • Ben C. says:

        I have already done this in my business. i simply generated another computer code for the government liability and out it comes on the invoice. The consumer response "why should I have to pay for this?" I just smile and state "where do you think the money comes for these programs? the money tree in the back yard? "

    10. Al Connellyl says:

      It is disheartening that Romney and RNC did not utilize examples such as these during the campaign. I would suspect that a large number of voters for Obama came from these very same small business employees who assumed that their jobs were safe and that Obamacare would provide more health benefits for them. Now they will have little choice other working two jobs and/or accepting Food Stamps and Medicade thereby adding to the huge number of people on the government dole.

    11. DMWF says:

      Yesterday I was watching Stephen Moore at David Horowitz's 'Restoration Weekend' and Moore told a story about two fast-food restaurant owners that had locations directly across the street from one another (a Burger King and a Wendys). To circumvent the 30+ hour rule, they worked out a scheme where employees would work 20 hours at one business and 20 hours at the restaurant across the street to retain a 40 hours work week for each stores employees. Obamacare = Both poverty inducing and, therefore, punishment of the working class.

    12. Mark Simmons says:

      Actually it's not just 11 million that won't be able to keep their health plan, it's ALL OF US. 11 million may completely lose their employer health plan, but the rest of us will be forced out of our current plans into a more costly 'government approved' plan. All the new regulations and changes to plan structure under ObamaCare forces all current plans to disappear. No one will provide the plans offered today, because they won't be 'government approved' and thus both employer and employee would be subject to the same penalties.

      See it's not that you must have health insurance, you have to have 'government approved' health insurance. Essentially, that means the same limited platinium, golf, silver and bronze plans that will be the mainstay of the government run Exchanges.

    13. chyatt says:

      Both liberals and conservatives alike will soon see the effects of the "law of natural order". This president was elected in part by a group of people who are for the most part unqualified to fuel their own vehicle. Our politicans prey upon the stupidity of the masses in our country for thier existence. Just like Hostess, many businesses will soon start to respond to the over regulation and designs of both our government and unions. When a company takes all the risk (there is more risk to owning a company than most average idiots can possible understand) and then is told that 50% of everything they make will be stolen by the government to support those who don't work and did not bother to get an education, there is something terribly wrong.

    14. chyatt says:

      When the wealth in our country becomes diluted to the point that all have "equal shares" it will represent the end of our way of life. For many it will be a very short period of having money that they will not be able to manage. They will waste it on drugs, cell phones, video games, alcohol and big screen TV's. The money that is being stolen and given to "non-producers" will never again be able to circulate in our economy and generate more than it's original value of a single $1.00.

      • CAgirl summer of 69 says:

        add to that list tattoos, body piercings, nails, hair extensions, sneakers and designer bags.

    15. chyatt says:

      It will not be re-invested to spur more growth, it will not be loaned to allow people to buy houses, it will end up in the hands of some company like Sony. And the idiots left in the U.S. will end up supporting capitalism in other countries, at least until the personal money supply is expensed. The business in this article that said "our profits are gone" hit it right on the head. And as I began, the "law of natural order" is going to be worse than any of us can imagine.

      • There are 90 million people either on government assistance (not including SS or Medicare) or who work for the government…paid for by the working taxpayers and 109 million working taxpayers. Tell me…how is this sustainable? The government welfare office in PA reported that a single woman with 2 children earning $29,000 receiving government assistance has more disposable income than a single woman with 2 children earning $59,000. Is this insane or what?

    16. Juan Martinez says:

      If you consider the perspective of the Applebee's workers, who are just normal folks trying to earn a living, Obamacare is a godsend. A cook at Applebee's makes $10/hour, maybe $10.50 – no benefits, no tips. How do you pay for rent and clothing and commute costs on that, let alone trying to support kids? The restaurant industry, and most of retail, thrives on dirt cheap labor, but these people are working hard and barely getting by. They are the class of citizens with no health insurance who must rely on the local hospital emergency room if they ever get sick or injured. This is crazy. I think the guy who runs 40 restaurants SHOULD put a surcharge on his menus for Obamacare. I, for one, would gladly pay $0.50 more per sandwich at Applebee's if I knew they were giving their workers a fair shake. I really would. CostCo and Starbucks both offer health insurance for all their employees. It's the right thing to do.

    17. Brad S. , Detroit says:

      In reality, Obamacare is nothing more than Health Care Price Controls. Ask Hoover how well price controls worked out . . .

    18. Blair Franconia, NH says:

      Privatize Obamacare.

    19. allen l. says:

      VOTING has consequences, YOU VOTED for the Wrong Guy and you knew he was DUMB he never had to work in his life he is a forgiven Exchange Student who Grandmother stole a SS number and changed the Birthcertifcate and as time goes by it will appear. I don't give a rats a– I just go to my new home in Costa Rica and come back here to visit every year just like going on Vacation. Bye Suckers and stop crying this is what you voted for and if you didin't than shame on you . Ha ha ha see you in the fall when I come back to go sking. Have a nice Holiday. Mate.

    20. allen l. says:

      VOTING has consequences, YOU VOTED for the Wrong Guy and you knew he was DUMB, he never had to work in his life, he is a forgiven Exchange Student who Grandmother stole a SS number and changed the Birth certifcate and as time goes by it will appear. I don't give a rats a– I just go to my home in Costa Rica and come back here to visit every year just like going on Vacation. Bye Suckers and stop crying this is what you voted for and if you didin't than shame on you . Ha ha ha see you in the winter when I come back to go sking. Have a nice Holiday. Mate. God you Yanks are Stupid.

    21. Mindy says:

      What the American public needs to realize is that in most every country where there is government run healthcare or socialized medicine they pay close to 20% of their income for that coverage and it is not close to the quality of what we have had in this country! With Obamacare we will soon be paying what they are and the quality of care and what is covered will astound people! Wake up America for if you have ever experienced socialized medicine like I have you would never want government to control your health!! We were treated in Rome and since we were foreigners and able to pay our hotel doctor lots of upfront cash he put us in the front of the line at the emergency room. When we were first arrived while our doctor was parking the car they told us it would be days before we could be treated! Their was a gymnasium sized room of waiting patients! We were pushed to the head of the line because our doctor must have had a deal with head physician there to share money! The hospital was horrible and thank God it was nothing serious because I would not have wanted my pets treated in this hospital! And it is was one of Rome's best! We also have good friends in Slovakia warning us with their horror stories and not to vote in government based healthcare!! I don't know the answer for our healthcare crisis but I know we can certainly come up with something better than Obamacare !

    22. CVB says:

      Heritage Foundation says Obamacare "…creates incentives for businesses…". Wait until the media gets hold of this!

    23. Paul says:

      Anyone doubting these cuts should check how things are at your locale grocery or retail establishment. How many checkout lines are open? Bet there are fewer than you remember a few months ago.

      Talk about just rewards, local state university announced that all part-time instructors will be restricted to 24 hours! Hope they like it.

    24. Phoenix says:

      Perhaps it's time to go back to our conservative roots. Stores and such (except maybe amusement parks and the like) could actually close on Sunday and save costs. Families could get together and relax with each other. Perhaps go on a picnic or take a reasonable drive. (Be sure to fuel-up the day before) Maybe visit other families or relatives, play ball, take walks, go sledding, hit the beach or local pool.
      Many may remember what we did then.
      We shopped ahead of time and got ready and then praised the Lord, enjoyed His day and spent time with other PEOPLE, You know: face to face and person to person. Remember? It was nice!

    25. Dennis McKee says:

      Mr. Obama, how exactly do your policies create jobs?

    26. Jim says:

      Obamacare was designed by scrofulous people, who do not care about citizens or businesses. These immoral people are thinking only of themselves. Look at almost every union in existence getting a waiver over a year ago. Does that tell you who Obama is thinking about? I expect to see an extraordinary amount of businesses cutting hours of full-timers and hiring whenever that might take place part-timers. Do not be surprised to see Obama come out with new rules dropping the number of employees down to 1 or 2 so he can force every business into Obamacare. How citizens can fall for a president who only tarnishes American and keep him in office for a second term is mind numbing. With all of the new taxes, the lessening of take home pay I expect to see consumer spending crashing and discretionary spending won't exist. Get ready for another recession styled by Obama and company alone. Can't wait to hear him spin it.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.