John Mertz, Denny’s franchisee owner, and John Schnatter, Papa John’s CEO, are among those who intend to make customers and employees pay for requirements under the Affordable Care Act. Both lament that keeping employees healthy, boosting morale, lowering turnover, and reducing absenteeism due to illness hurts business. It’s peculiar logic considering the long-term cost savings to business, if an investment is made on the front end.
Opponents to the Affordable Care Act plan to lay off employees, reduce their hours to get around part of the law, and of course pass along costs to customers. Mertz, restaurant franchisee owner, has an unethical yet legal approach to fighting Obamacare. As reported by Janean Chun in the Huffington Post, he intends to list a 5 percent surcharge on customer bills. He told the Huffington Post, “… customers have two choices. They can either pay it and tip 15 or 20 percent, or if they really feel so inclined, [or] they can reduce the amount of tip they give to the server, who is the primary beneficiary of Obamacare" (emphasis added).
It’s not the best way to show employees you care and expect maximum productivity.
Papa John’s CEO John Schnatter believes he’ll have to raise the price of his pizzas by 10-14 cents and cut the hours of some employees to put them below the eligibility threshold for health care. According to Forbes writer Caleb Melby, however, the actual cost of the Affordable Care Act, based on revenue and operating expenses generated by the international pizza company, will be .4% to .7%. Under one percent.
If this calculation is accurate, Schnatter gives new meaning to cheap.
The fuss, shortsightedness, and inability to see the long-term savings is surprising. Joan C. Williams, founding director of the Center for WorkLife Law at the University of California, wrote turnover and absenteeism can cost an employer “30 percent to 75 percent of an hourly worker’s annual salary to replace.” There are many reasons for absenteeism, but health is one of them.
According to a 2008 Mercer study, the direct costs of non-union, hourly, unplanned, incidental and extended absences exceeded 2.8 percent. A 2005 study conducted by Circadian found that “(u)nscheduled absenteeism … conservatively cost(s) $3,600 per hourly employee per year.” These figures would include illness and family matters.
There’s another issue here. Greed. Assuming only for discussion purposes there is a slight reduction in profit, being part of the Affordable Care Act can save lives and improve the quality of life for many people. Is that so wrong? Isn’t it the ethical thing to do?
Paul Jesep is an attorney, policy analyst, and author of Lost Sense of Self & the Ethics Crisis: Learn to Live and Work Ethically.