With the full implementation of Obamacare a few years away, many CEOs are already blaming the President’s healthcare initiative for rising prices. The poster boy for this corporate backlash is none other than Papa Johns’ CEO John Schnatter.
According to Schnatter, the cost of providing health insurance for the chain’s full-time employees will add about 14 cents to the cost of a large pizza, and he’s vowed to pass the extra costs onto consumers.
“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best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,” he warned.
But as the ensuring backlash proved, most consumers don’t mind paying an extra 14 cents to make sure people making near-poverty wages are guaranteed decent healthcare.
Comedian and social commentator John Stewart pointed out the fact that the two million pizzas that Papa Johns is giving away in their most recent promotion would more than cover the costs needed to provide health insurance for Papa John’s employees under Obamacare.
Papa Johns is not alone in it’s “outrage” at having to pay for employee health insurance under Obamacare. John Metz, owner of RREMC Restaurants, a company that operates 40 Denny’s restaurants and a number of Dairy Queen outlets, made waves when he announced plans to introduce a 5% surcharge to customers’ bills to cover the additional Obamacare charges. He went as far as to suggest that customers could reduce the amount of tips they left in order to pay for the 5% surcharge:
“If I leave the prices the same, but say on the menu that there is a 5 percent surcharge for Obamacare, customers have two choices,” Metz told the Huffington Post. “They can either pay it and tip 15 or 20 percent, or if they really feel so inclined, they can reduce the amount of tip they give to the server, who is a primary beneficiary of Obamacare. Although it may sound terrible that I’m doing this, it’s the only alternative.”
To openly label a price increase as an Obamacare surcharge clearly speaks more to politics than to economics. Clearly his chains haven’t implemented a “food surcharge” to cover rising food prices, or “utility surcharges” for rising heating and electricity costs.
Metz, like many businessmen, is also planning to go a step farther by reducing the number of hours his employees are allowed to work in order to skirt Obamacare provisions. Employees working less than 30 hours are not eligible for healthcare benefits under the President’s healthcare plan. Jimmy John Liautaud, founder of Jimmy John’s sub shacks, also warned that his firm is considering cutting the hours of workers to 28 to get around the Obamacare law. Darden restaurants, operator of Red Lobsters and Olive Garden establishments, is no longer offering full-time schedules to many of its employees in a “test” preparation for enactment of the President’s healthcare reform.
These restaurant CEOs are just following a corporate trend of hiring mostly part-time workers in order to avoid paying for full-time benefits like healthcare……..think the Wal-Martization of America.
But as of Forbes contributer Rick Ungar points out, when businesses like Mr. Schnatter’s Papa Johns act to avoid providing employee healthcare, the costs are simply passed on to the public:
“By avoiding the health care reform law through paying less to his employees as a result of cutting back their hours, Schnatter is only increasing the costs that you and I pick up when his employees—having no health insurance—show up at the emergency room for basic care because they have nowhere else to go. Thus, while Mr. Schnatter is deeply distressed by the notion of taking some responsibility for the health of the very employees who make his business work so that he can earn millions, he is perfectly happy to have you and I subsidize his profits by allowing us to pick up the cost of health care for his workers because he will not. “
Maybe it’s time to balk at companies who shirk their responsibilities, letting workers toil at near poverty wages while denying basic benefits like healthcare.
BMWK, does the way a business treats its employees affect whether or not you do business there? Would you be willing to pay 14 cents more for a Papa Johns’ Pizza so that it’s employees could enjoy healthcare?