President Obama’s health-care plan was supposed to help uninsured minorities, but it’s actually hurting them. One restaurant chain after another is cutting full-time slots to avoid ObamaCare.
Earlier this week, the owner of Red Lobster and Olive Garden announced it’s shifting to more part-time staff to offset the cost of complying with the new employer health mandate. Minorities account for 42%, or more than 75,000, of Darden Restaurants’ work force.
The Orlando-based company, which also owns LongHorn Steakhouse, runs more than 2,000 restaurants generating some $8 billion in sales.
“Today we offer health care to all of our employees,” Darden spokesman Rich Jeffers said. But under ObamaCare, which requires comprehensive coverage at low deductibles, “we can’t offer that.”
Restaurants like Red Lobster operate on razor-thin profit margins and are more affected than other companies by increases in labor costs. Because part-time workers are not required to be covered under the law, many restaurant chains are cutting back hours for workers.
“Many in the industry are worried that our slim profits per employee will not be sufficient to cover the additional cost” of ObamaCare, said Jamie Richardson, spokesman for hamburger chain White Castle.
Earlier this year, White Castle and McDonald’s said they were looking at shrinking the number of workers they employ full-time to avoid the costlier government-imposed health benefits.
And IBD has learned that Spartanburg, S.C.-based Denny’s also plans to put more workers on part-time status ahead of the new employer mandate that takes effect Jan. 1, 2014.
Of all industries, ObamaCare hits the restaurant industry hardest. This a major concern because restaurants employ almost 10% of the nation’s workers — and a disproportionate share of minorities.
According to the Washington-based National Restaurant Association, restaurants hire more minority managers than any other industry. Many minority workers got their first job in some aspect of the restaurant industry.
Take Denny’s. Minorities make up 61% of the chain’s total workforce and 38% of its overall management.
In a newly released video, Obama is seen complaining in a 2007 speech to a largely black audience in Virginia that young blacks do not have enough job opportunities in America and that this was “a function of racism.”
Yet an unintended consequence of his government health care takeover is a shorter workweek for minority restaurant employees. Part-time work means many will have to juggle two jobs to make ends meet.
At the same time, ObamaCare is forcing many restaurants to put on hold expansion plans that could offer unemployed black teens entry-level positions. In September, a whopping 37% of blacks between the ages of 16 and 19 were out of work, the Labor Department says.
White Castle, which figures that its health plan costs could climb more than 20%, thanks to ObamaCare, says it has shelved store openings that could add as many as 500 new jobs across the country. White Castle employs almost 10,000 workers at 408 restaurants in 12 states.
Only 3,900 of the chain’s 5,200 full-time employees have health coverage now. Since providing all of them insurance under ObamaCare would kill the company’s margins, it says it will likely avoid the costs by shifting hours so that many full-timers will be classified as part-time.
A little more than half of all restaurant industry workers are now full-time, Labor data show, meaning they work 40 or more hours a week.
However, ObamaCare rules that anyone working more than 35 hours a week is considered full-time under the law and must be covered. Solution: Cut back hours to keep the majority of your workforce part-time.
Or repeal ObamaCare, as the National Restaurant Association is urging Congress to do. The lobby group proposes controlling health costs instead by letting businesses cross state lines to buy insurance and letting them have more flexibility in offering Health Savings Accounts, among other things.
Investor’s Business Daily
October 12, 2012
photo credit: Sunset Parkerpix via photopin cc