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| Economy |
| Franchisors warn Obamacare will halve profits |
| 2012-09-14 |
| The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare. Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. "They had their head in the sand," he told Secrets. That is until he pulled out his powerpoint showing how funding Obamacare will cut his--and likely their--profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine. Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides 30 with health insurance. Barr said he pays 81 percent of their Blue Cross Blue Shield policy, or $4,073 of $5,028 for individuals, more for families, for a total bill of $129,000 a year. Employees pay $995. Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, "I'm not paying $444,000." Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he'll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine. "Every business has a way to eliminate jobs," he said, "but that's not good for them or me." But that's not all. His experience tells him that most low-wage workers he would have to cover under Obamacare won't take it because their $995 share is too high, meaning those the program was set up for won't see any benefit. And those who do will because they have major health issues, likely resulting in higher premiums to him. |
| Posted by:Beavis |
| #5 Many companies have been cutting full timers to part time. Wall Mart is a good example. I'm not trying to pick on them but I know managers have been told to cut their full time help to part time or we will get somebody who will. That has been the case for over two to three years now. Don't have a help issue. Just subcontract all your staff needs. Using a temp type service. They simply sub contract as independent contractors working with a franchise agency. Most will cut help below the magic target number. Remember we don't need you, you need us. |
| Posted by: Dale 2012-09-14 20:05 |
| #4 Full time employee defined as 30+ per week instead of 35-40. People may be hired, but work 29.9 hours per week. Nobody will make enough money, income tax per pay period will drop, Fed sits around and wonders where the money is, taxes go up. What about partnerships, proprietorships, and the businesses income counting towards the individuals $250k, or do we wait to find out about that? Lunacy, everyone loses. |
| Posted by: swksvolFF 2012-09-14 17:40 |
| #3 They have to remember they didn't build their businesses. |
| Posted by: Bright Pebbles 2012-09-14 13:43 |
| #2 Does "Providing no insurance" mean they go on an Obama controlled insurance scheme? |
| Posted by: Bright Pebbles 2012-09-14 12:57 |
| #1 Meet reality gentlemen. |
| Posted by: DarthVader 2012-09-14 11:45 |