Money Monday: Would You Patronize A Business That Denies Its Employees Health Insurance?

BY: - 19 Nov '12 | Money

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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“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best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?

About the author

Alonzo Peters wrote 190 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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14 WordPress comments on “Money Monday: Would You Patronize A Business That Denies Its Employees Health Insurance?

  1. loe

    Where does the ideal that it’s an employers responsibility to provide health insurance come from? I will continue to patronize papa Johns cuz i love their pizza. Just because Obama is black doesn’t mean i need to suspend my ability to think on this issue. If you decide to work for Papa Johns knowing they don’t provide health insurance, that’s on you! I worked for Burger king for 4.25 an hour, never got health care benefits. It should be up to the employer whether or not they provide healthcare, or what ever benefit the employees can NEGOTIATE for with their employee! Healthcare benefits were negotiated between unions and their employers, not the governments place to make employers pay for health insurance. Face it, Obamacare is gonna cause people to be laid off! Mathematics is just as fundamental as reading but somehow we act like it doesn’t matter in business!

    Reply
  2. loe

    I wish some of yall would try running your own business and providing health insurance for your employers. Stop taking the workers are down-trodden surfs and the employers are all the living embodiment of the “MAN” keeping the people down mind-set. Businesses aren’t welfare systems or dream factories for everyone looking for a better life, the point of a business is to make money. Your job exists because there is a need for you, it doesn’t exist cuz you need a job! Healthcare is very expensive, obviously it’s gonna make a huge dent in people’s profits. Promotionals are used for the reason to positively effect the companies bottom line, like advertising, healthcare benefits will only negatively effect the bottom line!

    Reply
    1. Lamar Tyler

      When food costs go up are they going to cut employee hours too and hold a news conference to tell everyone? What about when fuel prices rise and it costs more to ship across country? Doubt it, more than likely they’ll just pass it along to the customer instead of grandstanding like they’re doing here. This is just one company in a long line of trying to paint Obama as the boogeyman who’s going to make you loose your good job.

      Reply
      1. Niambi

        I agree Lamar! Instead of this just being the normal cost of doing business like other things they are using this as a political ploy

        Reply
    2. Alonzo

      Ioe,

      I think the issue with Papa Johns is that the cost to provide healthcare for his employees is relatively low – 14 cents per pizza, which as many have pointed out is less than his 2 million pizza giveaway. And while that promotion may indeed bring in additional business and ultimately improve the bottom line, so to does providing healthcare improve the bottom line by ensuring that you do not have sick workers on the job that make other workers and customers sick. In addition healthy workers are more productive workers. And as Lamar pointed out below many take issue with Papa Johns grandstanding on the issue when he doesn’t make the same fuss over rising food costs or heating costs.

      Reply
  3. Aja

    Bump Papa Johns! (That’s my family website way of voicing what I want to say about this place.) After a couple negative experiences, I’ve sworn them off for good after last Saturday when I took my buy one get one free coupon that I paid for by buying my Entertainment Book and the only way they would “honor” my coupon is if I paid twice as much for my pizza, making my coupon worthless. When I asked the manager why that was the case, he had the nerve to tell me “we wouldn’t make money if we didn’t do it that way.” I guess the views of the CEO travel all the way down the chain.

    Reply
  4. BrothaTech

    Imma need “Papa John” to stop giving away a bunch of free pizzas with his new “Ace-boon-coon” Peyton Manning during Monday night Football instead of trying to scheme on his employees and blaming it all on Obama.

    Reply
  5. Niambi

    First of all i don’t even like Papa John’s pizza so they will never get my business. Secondly, they want to blame Obamacare but these CEOs are diverting their attention from the larger issue at hand which is that they don’t even care enough about their employees to make sure they have health insurance.

    Reply
  6. Brittany

    Yes the employer may have to incur a cost, but to cut the hours of the employees to skirt the law shows that they are more concerned about the money than their employees. It’s a shame when you don’t care about the people who work for you. And someone mentioned if they don’t like the fact that Papa Johns doesn’t have health insurance, they shouldn’t work there. I’m pretty sure some of the employees don’t have the option to just walk out and find a job with benefits, if they could I’m sure they would. Lets give these people the opportunity that so many of us have. It will drastically improve the quality of life for them and ultimately the country. Lastly, just because health insurance is offered doesn’t mean they will take advantage of it, if they don’t feel it’s affordable on their salary.

    Reply
  7. VP3

    I see where people are coming from and I do agree with the mindset that employers should take care of their employees and not worry about the bottom line because with the workers the money will come. Something far worse is happening here that we are not talking about. Citizens are starting to believe that healthcare is a “right” and that is far from the case. Just like “freedom” the ability to maintain good health is a natural part of being a human being not a right because the “right” to anything makes you susceptible to having what is in question taken away by law or individual(s) which is what is happening in this country from my point of view.

    Reply
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