The International Franchise Association (IFA) and the U.S. Chamber of Commerce’s new study brings hard data to the stories we’ve heard from franchisees throughout the country – Obamacare is raising costs, reducing jobs and slowing growth. Stephen Bienko, who owns 15 College Hunks Hauling Junk franchises, is but one example of the stories behind these numbers. He appeared on Bloomberg Surveillance this morning to detail the impact of the ACA on his business.
Stephen Bienko Asserts That Part-Time Workers Who Want To Increase Their Hours And Go Full-Time Would Be Better Able To Do So Without Obamacare. “If it was not for the Affordable Care Act, yes, we would be making them full-time, 40 plus hours per week [and paying their healthcare benefits]. One of the biggest issues with the Affordable Care Act is the change of the 40 hour work week to 30 hours. Changing that status not only affects the financial reality, but it also affects the culture within a company.” (Stephen Bienko, “How Obamacare Impacts College Hunks Moving Junk,” Bloomberg TV, 11/13/2013)
Due To The Law, Bienko Is Having To Reduce Hours To Plan Ahead For The Employer Mandate. “I have already begun to reduce my employees’ hours, and that’s the way you have to do it as a small business owner, you have to plan ahead…The delay does nothing for us. We have to plan ahead…”(Stephen Bienko, “How Obamacare Impacts College Hunks Moving Junk,” Bloomberg TV, 11/13/2013)
As the IFA-U.S. Chamber study shows, Bienko is not the only one feeling the effects of the employer mandate. Below are more stories behind the numbers (see our fact sheet HERE for more, as well as highlights from the U.S. Chamber of Commerce HERE).
Fact #1: Twenty-nine percent of business decision-makers in franchise businesses report increasing costs due to the law.
Brooke and Les Wilson Of Two Men And A Truck Estimate Obamacare Will Result In $100,000 To $120,000 In Higher Costs. “Les said they already provide health and dental insurance for employees, but they’re expecting more of their employees to elect for coverage because of the individual insurance mandate. They’re estimating that they will see their health insurance costs increase by $100,000 to $120,000 per year after the full roll-out of the law. Les Wilson said he believes the ‘biggest obstacle’ for them may be primarily from rising costs of premiums from their insurer. ‘That’s going to be where a significant amount of costs come from…,’ he said. ‘I think it’s a knee-jerk reaction to the uncertainty.’” (Laura Oleniacz, “Durham Two Men And A Truck Franchisees Lobby Lawmakers,” Herald Sun, 9/23/13)
Mike Bidwell, President Of The Dwyer Group, Which Owns A Number Of Franchise Brands, Has “Never Talked To Any Business Owner That Has Been Enthusiastic” About Obamacare. “I have never talked to any business owner that has been enthusiastic about it,’ says Mike Bidwell, president of The Dwyer Group, a holding company for several service-based franchises, including Aire Serv and Mr. Rooter. ‘I have never seen anything that has resulted in such a unified negative response.’” (Kate Taylor, “Franchisees Fear Obamacare as Uncertainty Paralyzes Growth,” Entrepreneur, 10/1/13)
Fact #2: More than 50 percent of both franchise and non-franchise businesses with 40-70 employers plan to make personnel decisions to stay below the 50 full-time equivalent employee threshold.
Sean Falk, A Salsarita’s Fresh Cantina, Great American Cookies, Mrs. Field’s Famous Brands And Pretzelmaker Franchisee, Says The ACA May Force Him To Reduce Employee Hours To Keep His Doors Open. “Currently, I employ 43 full-time equivalent employees. If my business grows and I create more jobs, I will also drastically increase my costs due to the employer mandate. This has an undeniable impact on my bottom line and is making me reconsider opening new locations…Also, I may be forced to reduce my employees’ hours to less than 30 hours per week so that they do not acquire full-time status. With these challenges and changes, I fear that it may be a struggle just to keep the doors open on my 12 existing businesses.” (Sean Falk, Remarks At U.S. House Of Representatives Committee On Small Business, Washington D.C., 2/13)
Sam Ballas Of East Coast Wings Company Found That Franchisees With Three To Five Units Will See Huge Cost Increases With Obamacare – Forcing Those With Fewer Than Three Units To Stay There. “Mr. Ballas’s company studied the past two years of financial data from its restaurants, and modeled how many units a franchisee could own and remain profitable after covering full-time workers. The model showed that franchisees who operate in three or fewer stores are likely to remain under the mandatory insurance threshold, while an owner who manages five restaurants efficiently would have just enough scale to offset the cost of paying for insurance or the penalty.” (Julie Jargon, “Eateries Fear Health Law’s Bite,” WSJ, 5/14/13)
Mary Kennedy Thompson Of Mr. Rooter Plumbing Argues The 30-Hour Definition Of Full-Time Will Require Business Owners Like Her To Limit The Number Of Full-Time Hires. “As I travel the United States speaking with franchisees in markets large and small, the ACA is the top concern of those small-business owners. While the employer mandate was delayed, there are still serious concerns for small-business owners, in particular the requirement that employers with at least 50 full-time employees offer health insurance to those working at least 30 hours a week — as opposed to the traditional 40-hour workweek. Many ask how a 30-hour workweek ever came to be seen as full time. The impact of this future rule causes employers like me and my franchisees to not only limit the number of full-time employees hired, but also cut current employees’ hours to avoid that 30-hour threshold.” (Mary Kennedy Thompson, “Small Businesses Have Full-Time Problem With Affordable Care Act,” Waco Tribune, 10/13)
Bob Funk, President Of Express Employment Services, Which Provides Businesses With Temporary Work, Says That Obamacare Is A Boon For His Business But Bad For The Economy. “‘Obamacare has been an absolute boon for my business,’ he says as we sit in his new office headquarters near downtown Oklahoma City. ‘I’m making a lot of money thanks to that law. We’re up 8% this year. But it’s just terrible for the country. I see that firsthand every day.’ Why is the health care law good for Express but bad for the country? ‘Firms are just very reluctant to hire full-time workers,’ Mr. Funk says. ‘So they are taking on more temporary help, which is what we do.’” (Stephen Moore, ” Where The Jobs Are—And How to Get One,” WSJ, 9/20/13)
Fact #3: A return to the traditional definition of a full-time worker will increase the ability of businesses to grow and give employees more flexibility on hours.
Stephen Bienko Of College Hunks Hauling Junk Argues That By Returning To The Traditional Definition Of Full-Time, Employers Would Be Provided Flexibility To Give Part-Time Workers More Hours And Pay Them More Wages. “For decades, employers have used a 40-hour workweek as a standard for workforce culture, and continuing this would eliminate the need to revamp longstanding employer personnel policies… For my part, I would be able to give my part-time employees more hours and pay them more wages without incurring additional costs.” (Stephen Bienko, Remarks At U.S. House Of Representatives Committee On Small Business, Subcommittee On Health And Technology, Washington D.C., 10/9/13)
Andrew Puzder, CEO of CKE Restaurants, Points Out That The Logic Is Simple – Making Full-Time Employment More Expensive Will Result In More Part-Time Work. “The logic for businesses is simple. If you have three employees working 40 hours per week they will produce 120 labor hours. Five employees working 24 hours per week also produce 120 labor hours. Employers must offer the three full-time employees health insurance or pay a penalty. They have no such obligation to the five part-time employees, making part-time employment less costly. Make something more expensive and employers will use less of it; make something less expensive and they will use more of it. This unintended consequence of Obamacare must be addressed. The bipartisan ‘Forty Hours Is Full Time Act’ introduced in the House and Senate earlier this year offers a viable solution.” (Andrew Puzder, Obamacare and the Part-Time Economy,” WSJ, 10/10/13)
Don Fox, CEO Of Firehouse Subs, Argues That The 30-Hour Definition Undermines The Flexibility Of Scheduling That Provides Employees Convenience And Opportunity To Earn More Money. “Put plainly, the ACA undermines the flexibility of scheduling that has helped ensure a quality dining experience for customers, not to mention provided employees the convenience of flexible schedules and the ability to earn more income as their time permits. Employees throughout the restaurant industry have embraced and enjoyed this benefit for decades, and they are about to lose it. As it stands, the net effect of these requirements will be a limitation of the earning potential of the 13.1 million of American who work in the restaurant industry.” (Don Fox, “Obamacare’s Acute Affliction On Restaurant Workers,” Forbes, 9/12/13)
Read more about how Obamacare will hurt employers and employees at Free Enterprise.