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At a recent meeting with a group of successful restaurant professionals, there were the predictable questions — like, “How do you obtain financing for your nth venture?” — but there was a surprising inquiry from a soft-spoken young chef who asked: “If Obamacare stays in place, will you reduce your staff's hours so that they are no longer full-time and thus you won’t have to cover them under your health plan?”
As the only business owner from Massachusetts, where a health care law that closely resembles the president’s Affordable Care Act has been in place for the last five years, I shared my experience (and tried to hide my shock). No, we did not reduce hours — nor did we even consider it. If someone strong is working for you, it seems counterintuitive to have them work less, even if it costs you a bit more.
My business has absorbed the costs associated with the new health mandate in the same way we absorb rising fuel surcharges or higher prices of flour. They cut into our profit, sure, but when I weigh the cost ... [against] knowing that my 24-year-old barista can’t afford coverage because he only makes $10 an hour, I willingly take the cut to my bottom line.
My business has absorbed the costs associated with the new health mandate in the same way we absorb rising fuel surcharges or higher prices of flour. They cut into our profit, sure, but when I weigh the cost of paying staff to cover for chronically sick employees who don’t see a doctor because they don’t have one, or the pressure of knowing that my 24-year-old barista can’t afford coverage because he only makes $10 an hour, I willingly take the cut to my bottom line.
Most of the country has yet to go through this and there is great concern among restaurant owners about how they would pay (only small businesses that employ over 50 people would be affected). I was dismayed to hear one owner say, “We might have to reduce our staff's hours to avoid paying this extra burden.” The panelist in question has 170 employees with only about a quarter of them on the company’s health insurance plan. I could see his horror as he mentally calculated his annual costs if he was required to provide insurance for all of his employees.
Naively, perhaps, I couldn’t believe that a thriving business would take those measures to reduce costs. But then a few days later I read that the Darden Restaurant Group (Olive Garden, Red Lobster, Capital Grille, among others) was test-running an almost-identical plan in select markets. They were cutting full-time staff to 30 hours per week in order to avoid paying health benefits.
The reality is that we live in the only major industrialized nation where health care is primarily provided by employers. Whether you believe that this is a good or bad system, a fair or unjust expectation for small business, the fact remains that the average person’s best bet for health insurance is through their employer.
I’ll never forget my surprise when I switched careers and started working in a restaurant after two years as a management consultant, where I took for granted benefits like health insurance and paid vacation. I was given the option of paying full premium for insurance, which I did, and which wiped out half — yes, 50 percent — of my paycheck. At such a hefty cost, they told me, I was one of the only employees to sign up for health coverage.
My staff, mostly young adults recently out of college, believes they are invincible. Most don’t want to spend any part of their hard-earned paycheck on the chance that they might someday get sick. And they most definitely don't want to if the premiums are half of their wages.
Even if I had no obligation to do so, I would still gladly split their insurance premium with them to make it more palatable — and in recognition of the fact that there isn't a better option. And of course, having insurance also increases their chances of staying healthy and not calling out sick.
I’ve had to pay more to insure my staff and I accept that. In addition to creating a healthier workforce, it’s important to establish fair expectations from employers. And in the final analysis, I would not consider profit made on the backs of uninsured workers well-earned.
This program aired on October 25, 2012. The audio for this program is not available.
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