August 9 2012
Many people who once upon a time might have embarked upon lives of financial independence by taking entry-level jobs in the fast-food industry won’t be able to do that in the future—thanks to Obamacare.
The Patient Protection and Affordable Care Act offers small businesses an incentive—but, unfortunately, it’s an incentive to remain small. Any business that employs 50 or more is required under the act to purchase government-approved health insurance for employees or face stiff fines from the federal government. So what does the owner do?
A Bloomberg Businessweek article sums up the dilemma for a fast-food franchise owner:
Franchisers whose staff at one or more restaurants hovers around that 50-worker mark are wrestling with a tricky set of choices. If you expand a little, will the new profits be sucked up by health-care bills? Maybe it’s worth staying under the 50-worker mark and avoid triggering the requirement?
Maybe you should cut workers’ hours so they won’t qualify as employees that must be covered? The Journal cites an owner of two Quiznos restaurants who did just that. After Obamacare passed, he abandoned plans to buy more restaurants. He thinks the tradeoff might not be be worth it. And he’s probably not the only one.
In addition to the loss of jobs, Obamacare is going to impose another tariff on those of us who don't turn up our noses at the occasional franchise meal (I plead guilty): the price of a pizza will go up. The CEO of Papa John’s has said that Obamacare will increase the price of a pie from eleven to fourteen cents, or fifteen to twenty cents for an average order.
One tweeter speculates that Papa John’s will probably end up making do with more part-time employees. An apparently liberal tweeter, however, managed to capture the liberal snob response in fewer than 140 characters: “But if Americans eat less greasy Papa John’s, their healthcare costs will decline.”