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Opinion

Opinion

Health care costs stymie job creation

December 5, 2011

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— In 1941, Carl Karcher was a 24-year-old truck driver for a bakery. Impressed by the large numbers of buns he was delivering, he scrounged up $326 to buy a hot dog cart across from a Goodyear plant. And the war came.

So did millions of defense industry workers and their cars. And, soon, Southern California’s contribution to American cuisine — fast food. Including, eventually, hundreds of Carl’s Jr. restaurants. Karcher died in 2008 but his legacy, CKE Restaurants, survives. It would thrive, says CEO Andy Puzder, but for government’s comprehensive campaign against job creation.

CKE, with more than 3,200 restaurants (Carl’s Jr. and Hardee’s), has created 70,000 jobs, 21,000 directly and 49,000 with franchisees. The growth of those numbers will be inhibited by — among many government measures — Obamacare.

When CKE’s health care advisers, citing Obamacare’s complexities, opacities and uncertainties, said it would add between $7.3 million and $35.1 million to the company’s $12 million health care costs in 2010, Puzder said: I need a number I can plan with. They guessed $18 million — twice what CKE spent last year building new restaurants. Obamacare must mean fewer restaurants.

And therefore fewer jobs. Each restaurant creates, on average, 25 jobs — and as much as 3.5 times that number of jobs in the community. (CKE spends about $1 billion a year on food and paper products, $175 million on advertising, $33 million on maintenance, etc.)  

Puzder laughs about the liberal theory that businesses are not investing because they want to “punish Obama.” Rising health care costs are, he says, just one uncertainty inhibiting expansion. Others are government policies raising fuel costs, which infect everything from air conditioning to the cost (including deliveries) of supplies, and the threat that the National Labor Relations Board will use regulations to impose something like “card check” in place of secret-ballot unionization elections.

CKE has about 720 California restaurants, in which 84 percent of the managers are minorities, and 67 percent are women. CKE has, however, all but stopped building restaurants in this state because approvals and permits for establishing them can take up to two years, compared to as little as six weeks in Texas, and the cost to build one is $100,000 more than in Texas, where CKE is planning to open 300 new restaurants this decade.

CKE restaurants have a 95 percent employee turnover in a year — not bad in this industry — and the health care benefits under CKE’s current “mini-med” plans are capped in a way that makes them illegal under Obamacare. So CKE will have to convert many full-time employees to part-timers to limit the growth of its burdens under Obamacare.

In an economic climate of increasing uncertainties, Puzder says, one certainty is that many businesses that now are marginally profitable will disappear when Obamacare causes that margin to disappear. A second certainty is that “employers everywhere will be looking to reduce labor content in their business models as Obamacare makes employees unambiguously more expensive.”

According to the U.S. Small Business Administration, by 2008 the cost of federal regulations had reached $1.75 trillion. That was 14 percent of national income unavailable for job-creating investments. And that was more than 11,000 regulations ago.

Seventy years ago, the local health department complained that Karcher’s hot dog cart had no restroom facilities. He got help from a nearby gas station. A state agency made him pay $15 for workers’ compensation insurance. Another agency said he owed more than the $326 cost of the cart in back sales taxes. For $100, a lawyer successfully argued that Karcher did not because his customers ate their hot dogs off the premises.

Time was, American businesses could surmount such regulatory officiousness. But government’s metabolic urge to boss people around has grown exponentially and today CKE’s California restaurants are governed by 57 categories of regulations. One compels employees and even managers to take breaks during the busiest hours, lest one of California’s 200,000 lawyers comes trolling for business at the expense of business.

Barack Obama has written that during his very brief sojourn in the private sector he felt like “a spy behind enemy lines.” Puzder knows what it feels like when gargantuan government is composed of multitudes of regulators who regard business as the enemy. And 22.9 million Americans who are unemployed, underemployed or too discouraged to look for employment know what it feels like to be collateral damage in the regulatory state’s war on business.

George Will is a columnist for Washington Post Writers Group. His email is georgewill@washpost.com.

Comments

rockchalk1977 2 years, 4 months ago

"Quarter-Billion Taxpayer Dollars Spent on Penis Pumps".

http://news.heartland.org/newspaper-article/2011/12/06/quarter-billion-taxpayer-dollars-spent-penis-pumps

Your tax dollars hard at work.... no pun intended.

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voevoda 2 years, 4 months ago

When I saw the headline, I thought that the column might discuss the rising cost of health insurance premiums to the businesses that provide this benefit to their workers. As the price keeps going up, businesses can less and less afford to create new jobs. Or the costs to our society of paying for postponed, essential, often emergency, medical care for the uninsured, which drains money from the public and the private sectors both. Those are issues that the Affordable Health Care Act intends to tackle--the steeply rising costs of medical care in general and the insurance sector in particular, and the large numbers of uninsured people who nonetheless must seek medical care.
George Will may think that he is making a compelling element against Obama's health care plan, but really, he is unwittingly making a compelling argument for a single payer health care plan--one that entirely detaches health insurance from employment

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Carol Bowen 2 years, 4 months ago

George Will is way off base on this. All of the complaints were about California laws and regulations, not Obamacare.

" One compels employees and even managers to take breaks during the busiest hours, lest one of California’s 200,000 lawyers comes trolling for business at the expense of business"

California is desperately trying to manage some of the most densely populated and most expensive areas in the U.S. The laws and regulations are probably needed.

Trumped up justification for opposing Obamacare should not be necessary. Stay focused, George.

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Richard Heckler 2 years, 4 months ago

It's the "middleman" aka medical insurance industry that keeps the costs high. Not necessarily the health care industry. In some cases it could be both.

The medical insurance industry does not provide health care. But they do provide a way to make a profit off the health needs of human beings. Hmmmmmmmm

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Richard Heckler 2 years, 4 months ago

The insurance industry does not want the uninsured nor senior citizens. Therefore we should not force those issues down their throats. They will only take out their madness on the currently insured by way of taking more from their wallets.

I do not see any need to address phasing out the medical insurance industry. Let that be a matter of choice. Yes absolutely allow those want it keep it.

What also should be a matter of choice however is IMPROVED Medicare Single Payer Insurance. Allow we IMPROVED Medicare Single Payer Insurance consumers the right to bring OUR tax dollars home to our respective communities. Yes to take care of us as it should be.

There are close to 70 million uninsured as we speak. Open up IMPROVED Medicare Single Payer insurance and bring them on. Their tax dollars alone would support a Medicare single payer system. Plus senior citizens would participate. Now there are plenty of tax dollars to support Improved Medicare Single Payer Insurance.

Then as a major cost cutting move mandate that all federal employees be moved to IMPROVED Medicare Single Payer insurance and bring them on board. Now taxpayers are saving money plus this further supports IMPROVED Medicare Single Payer insurance.

The 70 million or more uninsured are not associated with any medical insurance company and the industry is raking in profits. The industry does not want the uninsured or the senior citizen population. This is where Improved Medicare Single Payer Insurance steps up to the plate. This would in effect reduce costs to those connected to the medical insurance industry.

Moreover,Medicare tax dollars pay for critical elements of the health care system apart from direct care. Medicare Insurance funds much of the expensive equipment hospitals use along with all medical residencies.

Open the IMPROVED Medicare Single Payer Insurance door wide to all who want to switch. In America trillions of tax dollars are collected annually. So everybody in the USA is paying taxes somehow let’s not play pretend. Let the switch be strictly a volunteer move.

Once all are covered somehow the costs to all should decline.

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Agnostick 2 years, 4 months ago

Does anyone else see the irony in this company--home of the 2/3 lb. Monster Thickburger®--whining about health care costs?

http://www.hardees.com/menu

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lucky_guy 2 years, 4 months ago

I am not impressed.
When CKE’s health care advisers, citing Obamacare’s complexities, opacities and uncertainties, said it would add between $7.3 million and $35.1 million to the company’s $12 million health care costs in 2010, Puzder said: I need a number I can plan with. They guessed $18 million — twice what CKE spent last year building new restaurants. Obamacare must mean fewer restaurants. What does the CEO of Carl's make? 7.3 to 35.1 million for 70,000 worker is $500 each. or $42 per month per employee. Carls can afford it. Then these employees might get health care and stay around more than 1yr and Carls training and recruiting costs might not be so high.

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just_another_bozo_on_this_bus 2 years, 4 months ago

A single-payer healthcare plan is one of the best things that could be done for businesses, especially the self-employed and small to medium-sized businesses. It'd free them up to concentrate on what they're good at, rather than having to be de facto healthcare administrators.

But Obama's penchant for "compromise" meant that Obamacare is primarily based on warmed-over Republican plans and ideas, even though they sat on their hands while Democrats implemented it, while completely shutting out any sort of public option.

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Getaroom 2 years, 4 months ago

Ah, keep playing your "Fantasy Government". Until health care is removed from the claws of the free market capitalists, it will never be affordable. Obama, or no Obama.

If you want Big Government out of your lives, then get Big Corp and their Lobbyists out of your government. Obama, or no Obama.

Pick someone, vote for them and voila! All will be perfection made in your own image. So long as it does not look like Obama -right? Of course.

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worthlessljworldposter 2 years, 4 months ago

Health care stymies death, you Bow-Tied Satan. Greed stymies American job creation. And over-inflates health-care costs. Human beings who turn a blind eye to the plague of greed are....well.....many things but essentially the #1 focus of Occupy protesters. How about lower health care costs? What stands in the way? GREED.

PEOPLE FIRST. MONEY A DISTANT NTH. It's not a delusion. It's overcoming barbarism.

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jafs 2 years, 4 months ago

a 95% employee turnover in a year is "not bad"???

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mloburgio 2 years, 4 months ago

and the republican solution to health care is.......................................... if you get sick die fast!

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FalseHopeNoChange 2 years, 4 months ago

Obamacare Will Leave Many Uninsured A little-known provision of President Obama’s Patient Protection and Affordable Care Act will likely have several unforeseen — and unpleasant — consequences, according to a troubling new report. The provision would raise the cost of healthcare insurance for many low- or middle-income families and even make it completely unaffordable for them. Under Obamacare, companies with more than 49 employees must offer “affordable” health insurance to full-time workers or pay a penalty of up to $3,000 per employee. But affordable coverage can be for the employee only, not family members.

The Act requires employees to accept this insurance. And if a family member has this coverage, the rest of the family will not be eligible for a federal subsidy of the premium it must pay for a policy, according to Diana Furchtgott-Roth, contributing editor of RealClearMarkets. She points to a new National Bureau of Economic Research working paper from researchers at Cornell University and Indiana University showing that in 2014, when Obamacare will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state healthcare exchanges because one family member has employee-provided coverage. And those Americans who can therefore not afford coverage would remain uninsured and receive their care from emergency rooms and community centers, as they often do today. The provision, then, “has a number of consequences, none of them foreseen by the architects of the Act,” Furchtgott-Roth writes. Employees with dependents will prefer to work for companies that do not provide health insurance so that they can qualify for coverage through the healthcare exchange. For a four-person family at 133 percent of the poverty line earning $28,000 a year, premiums will be capped at 2 percent of income. That same family would have to pay 43 percent of its income for coverage without government subsidies, which makes coverage clearly unaffordable. One more consequence: The provision would discourage marriage. If one partner receives affordable healthcare insurance from an employer, the spouse would not be eligible for subsidized coverage. The couple could therefore remain unwed to avoid that problem. “Congress needs to address this problem,” the author concludes. “Even if the Supreme Court upholds the constitutionality of the individual mandate, the healthcare law will remain costly, inefficient, and in need of reform.”

(from a source)

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cowboy 2 years, 4 months ago

come on George , when was the last time you ate at one of these roach pits , they are 90 % part time employees with no health care benefits.

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cato_the_elder 2 years, 4 months ago

Excellent column. If Obamacare were ever fully implemented, many now working in the private sector would lose their jobs. Of course, that's no problemo for Obama and the Dems, who would simply pass legislation to invent new government jobs for them and futher increase the number of those working for government instead of working in private industry.

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