ObamaCare Leaves Restauranteurs with a Bad Taste

The full consequences of the law on low-wage workers are bubbling to the surface.

Stiffed waitresses know there’s no such thing as a free lunch. They may soon learn there’s no such thing as free health care, either.

It’s newsworthy that ObamaCare proponents find a businessman’s proclamation that he intends to comply with the law newsworthy. Dean Hodges, the owner of 18 Jimmy John’s franchises West of the Mississippi, emailed the Huffington Post that he will seek to provide insurance to his uncovered full-time employees. “I’m trying to save for it and plan for it so I can comply with the government, provide health care, and still pay for it,” the sandwich shop proprietor wrote.

Doesn’t highlighting this man-bites-dog story paradoxically affirm that businessmen regard the signature legislation of the present administration as hostile to their livelihood? Restaurant proprietors, whose slim profit margins often revolve around such seemingly petty matters as napkins used and ketchup consumed, have reacted negatively to the increased overhead of insuring employees who work 30 or more hours a week that the Affordable Care Act mandates. Despite its name, the food service industry isn’t finding the law very affordable.

Darden Restaurants, the largest U.S.-based restaurateur, has begun experimenting with limits on employee hours in four markets. The owner-operators of Olive Garden, Longhorn Steakhouse, and Red Lobster released a statement to the Orlando Sentinel affirming that limiting employee hours is “just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time.”

John Metz, owner of dozens of Denny’s, Dairy Queen, and Hurricane Grill & Wings franchises, discussed imposing an ObamaCare surcharge on meals to defray costs—and to not hide them within the bill.  He points out that “to pay $5,000 per employee would cost us $175,000 per restaurant, and unfortunately, most of our restaurants don’t make $175,000 a year. I can’t afford it.” To avoid the added burden of ObamaCare insurance dictates on employers regarding full-time employees, Metz plans to cut back on hours. “It’s ridiculous that the maximum hours we can give people is 28 hours a week instead of 40,” Metz told the Huffington Post. “It’s going to force my employees to go out and get a second job.”

Zane Tankel, CEO of Apple-Metro, said on the Fox Business Network that under a best-case scenario he would have to engage in minimal layoffs at his 40 Applebees franchises in New York because of the health-care overhaul. “We’ve calculated it will be some millions of dollars across our system,” Tankel explained. “So what does that say? That says we won’t build more restaurants. We won’t hire more people—exactly the opposite of what the president says.”

Even Dean Hodges of Jimmy John’s concedes that conforming to the law’s provisions won’t be easy. Hodges notes that just 38 of his 550 employees currently receive health-insurance benefits. He estimates that ObamaCare will compel him to insure another 150. “If I add 150 people to the same plan, we’re talking over $500,000 in premiums. Ten of my 18 stores would become unprofitable.... if I’m unprofitable I can’t go on, I can’t exist, and I can’t employ anyone.”

And unemployment, which has been the nagging concern of millions of Americans during Obama’s first term, figures to get worse in the second administration because of the implementation of the health-care legislation. The unemployment rate exceeded eight percent for 43 months during Obama’s first administration. It exceeded eight percent for just 39 months during the previous 60 years. Put another way, the total amount of time the unemployment rate stayed above eight percent under Presidents Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush I, Clinton, and Bush II doesn’t rise to the amount of time it spent above that mark during President Obama’s first term.

Like the infinite extension of unemployment insurance and the various stimulus boondoggles, ObamaCare offers perverse incentives regarding employment that planners overlooked. Because the Obama Administration didn’t plan for it, business owners, like Dean Hodges of Jimmy John’s, have to.

Will forcing health-care costs on sub shops inflate the cost of a sandwich? Depress the wage of a sandwich maker? Knock workers off the payroll and onto the dole? Put taxpayers on the hook for the health care of the unemployed? Turn the franchise owners’ profits into losses?

The questions weren’t asked when bureaucrats formulated the legislation. They will be answered once they implement it.

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