First came Olive Garden. Then Papa John’s. But for Avram Goldstein, communications director for the liberal Health Care for America Now, the real punch to the gut came last week. “Oh jeez,” he said to himself. “Not Five Guys.”
Goldstein is a regular at the Arlington-based burger chain, where he never gets any guff for ordering fries, hold the salt. Could he keep going if the company joined the ranks of business sounding the alarm about price spikes or job cuts because of Obamacare?
Happily for him, it turns out it was a franchise owner in North Carolina, not the burger chain as a whole, promising higher prices over the health law. But it isn’t a new dilemma for pro-health-reform activists, who have put their money where their mouths are after a wave of companies foretold of dire consequences when the law’s insurance mandate kicks in.
Last year, Darden Restaurants Inc., the parent company of Olive Garden and Red Lobster, said it was considering moving a number of its employees to part-time status to avoid a requirement that they offer health insurance to anyone working 30 hours per week or more. They later pulled back because the bad PR hurt sales.
Papa John’s CEO John Schnatter provoked ridicule after saying the law would add as much as 14 cents to the cost of a pizza. Perhaps more problematic for the progressive-minded were remarks by Whole Food CEO John Mackey, who compared the law to “fascism.” The noted libertarian later apologized for his language, though he has continued to predict higher prices.
How will Obamacare affect businesses’ bottom line? It’s one of the most debated questions arising from the new health law.
When it comes to worker hours, the response by companies will probably be mixed, according to the folks at ADP, a benefits-administration and payroll services firm, which has been asking this very question of its clients. What they’ve found is that companies with larger profit margins that already provide health coverage to most of its employees might not have much of a problem. But for businesses with slim margins and a low-wage, high turnover workforce – the fast food biz, for instance – there may well be an incentive to rely on more part-timers to keep costs down.
When it comes to prices, in many cases, the higher cost of insurance will most likely make its way to the consumer in some form, the firm argues.
But the bigger picture is more complex, and businesses will have to make individualized decisions. Christopher Ryan, ADP’s vice president of strategic advisory services, has been traveling the country talking to businesses about the Affordable Care Act. He offered the example of a boutique retailer he recently visited that initially thought it would have to rely on more part-timers because of the law. But then the owner looked at the business’s cash register receipts by tenure. Turns out the workers who’d been there longer brought in more money than their less experienced colleagues.
“Health benefit is one of the strongest motivators for attraction and retention and is more likely to attract someone who is going to stay for a longer period of time,” Ryan said in an interview.
No word, though, on the impact of all those activists voting with their feet.