Posted on 07/04/2010 11:03:57 PM PDT by KentTrappedInLiberalSeattle
The White Castle hamburger chain fears that a health insurance reform law adopted earlier this year will put its profits on a downward slide.
The Columbus-based family owned restaurant chain - known for serving small square hamburgers called "sliders" – says a single provision in the bill will eat up roughly 55 percent of its yearly net income after 2014.
Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance.
White Castle, which currently provides insurance to all of its full-time workers and picks up 70 to 89 percent of their premium costs, believes it will likely end up paying those penalties. The financial hit will make it hard for the company to maintain its 421 restaurants, let alone create new jobs, says company spokesman Jamie Richardson. White Castle employs more than 10,000 people nationwide, and more than 1,200 in Ohio.
Though advocates of the health insurance bill say its reforms will boost employment, House Republican Leader John Boehner of Ohio, a vocal foe of the changes, says White Castle's analysis shows how the law's "job-crushing" impact will be most severe in lower-income areas, where jobs like those at White Castle are most needed.
"The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce," Boehner said in a missive on White Castle's plight.
Boehner's predictions don't mesh with White House Council of Economic Advisors estimates that health care reform will create 320,000 jobs in upcoming years. The White House has said employees at larger companies aren't likely to notice any difference in their insurance coverage, and that changes in the bill will particularly help small businesses by driving down their premium costs and making it easier for them to insure workers.
"While opponents of reform have raised concerns that some of the provisions in the President's proposal will harm small businesses and their employees, the facts, figures, and discussion below show that the proposal will mean tax cuts, no new requirements, and numerous other benefits," said a blog posting from the group's chair, Christina Romer, and its senior economist, Mark Duggan.
That's not how the National Council of Chain Restaurants sees it. Restaurant group vice president Scott Vinson says the entire restaurant industry will have trouble dealing with costs the bill imposes in 2014, including a $2,000-per-worker penalty that companies with more than 50 employees must pay if their workers end up purchasing federally subsidized insurance rather than getting insurance from their employers.
"There is the expense of actually providing the insurance, then the expense of not providing insurance," says Vinson. "It will be expensive either way."
George Ebinger of New Jersey, who owns several International House of Pancakes restaurants, says the penalties for not insuring his 140 workers will cost roughly half as much as insuring them. He figures he will have to raise prices and possibly lay off workers to come up with the $220,000 he anticipates the penalties will cost.
"We are still figuring out how to deal with this," says Ebinger. "Ultimately, either businesses will close or consumers will pay more."
Problems will be felt throughout the retail industry, which employs many entry-level workers, says National Retail Federation vice president Neil Trautwein. He says employers will face tough choices when the mandates become effective in 2014.
"We do worry about this discouraging employment, particularly when employment hasn't taken off," says Trautwein.
But White House Office of Health Reform Director Nancy-Ann DeParle says 97 percent of the nation's companies won't pay any penalties under the new law.
"The principle underlying this bill is: if you don't offer coverage and you have workers who the taxpayers are supporting to get their coverage, than you must make a relatively small contribution," says DeParle. "I understand that they don't like it and believe it will cut into their profits, but it is a relatively small contribution to defray costs to taxpayers."
Steven Kreisberg of the 1.4 million-member American Federation of State, County and Municipal Employees union, questions White Castle's calculations. His union represents food service workers in Ohio public schools and other institutions.
He figures many of the White Castle workers who would end up paying a significant amount of their income for premiums would opt to buy less expensive coverage from a federal exchange.
"Let's not forget that since the worker is declining their coverage, they don't have to pay insurance for that worker," says Kreisberg, the union's health care policy director. "So they would be saving money at the same time as they are paying the penalty."
White Castle recognizes it won't continue paying health insurance bills for workers who buy insurance on the federal exchange, but Richardson says the company predicts its insurance costs would still rise because its healthiest young employees, who make the least money, would be most likely to transfer to the federal program. An exodus of healthy workers from the company's insurance plan would drive up costs for those who remain, the company forecasts.
White Castle, which began offering health insurance to workers in 1924, is also examining whether it would make financial sense for the company to eliminate health insurance coverage altogether and have all its employees buy insurance on the federal exchange, says Richardson.
"It would be incongruent with how we run our business, but we have to think that through," says Richardson. "No matter what, we will do what's best for our team members."
That should be buy them by the sacks....I can down 10 white castles, hubby 10 and each of the kids when they were pre teens could do 7 easily..(5 kids). Took 3 sacks to feed us....lol
Poor quality has caused several locations to close. Kystals were once all over South Carolina in the late 80s but that expansion only lasted a few years and retracted back to early 80s levels. About two years ago they opened 3 new locations in Greenville SC and were looking at opening more in the area. As of this year there is now only one in Greenville and the others seem to put on indefinite hold.
I always like to look at these places websites to see new openings announced but get the same answer, nowhere near where I live.
they must be lying to embarrass the Democrats
/s
Any federal version of health care is unconstitutional since Article 1 Section 8 of the Constitution does not specifically list regulating health care as an enumerated power! The people are not bound by an unconstitutional act! White Castle and employees must defy this usurpation of the Constitution!
I believe the bureaucrats know exactly what will happen. Whether it is their plan to fundamentally change America or just lining their own pockets, they just don't care.
The old joke is the holes are where the shot the horse.
When I first moved down south I went to Krystals hoping they would be the replacement for WH. I was disappointed. Every so often I go up north and have a regular food round in NY. White C, Bagels, chinese in NYC and the fantastic overpriced lobster bisque at a place near my house.
I haven’t been to a White Castle since the early 70’s. We used to call them button burgers.
If White Castles close stoners will turn on Obama.
In the 1940’s, I was a kid growing up in New Orleans. There was a Krystal on Royal Street, just off Canal St. After going to a movie at the Orpheum or the Saenger, to the Krystal for several of them at seven cents each. Had to fight a mob to get in. Then on the S. Claiborne streetcar to go home - that also cost seven cents.
Memories of days gone by...
White Castle should threaten to lock-out or close down for an indefinite period of time, or shut down their hours to a bare minimum by shuffling management to proximity stores at restricted hours. (as many business should)
My mom grew up in Wichita in the 20’s, where the first WC was. But I think she was too poor to go even there.
I too have fond memories of the good ole days in South Alabama. I remember Krystal burger’s going for 5 cents in the mid fifties and getting into a movie theater cost you a bottle top from a Pepsi or a Co-cola. Only I remember trying to sneak my burgers into the theater, half the time I was caught, and had to eat them outside. The only condiment was a little mustard, to go with the pickle and onions. Man were they good!
Over the 300 word limit
What rarely seems discussed in this whole abomination is the cost attached to performing income verifications for every employee to determine what household income is.
Not only does the employee's income need to be verified (a certain number of them probably have more than one job), but the income of every employed member of the household has to be verified.
Aside from the actual dollar expense, the invasion of privacy is repugnant.
What a horrible mess these Marxists have created.
known for serving small square hamburgers called “sliders
AKA: Fart Burgers
About every 4 weeks or so I get the craving and go.
“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”
Groucho Marx
Are there still George Webb’s in Milwaukee?
Those sliders keep getting smaller and smaller.
Since all employers will experience rising costs, the competitive effect will be nil because prices will rise and eventually so will wages in a trickle up and unending inflationary spiral.
Regardless. The fundamentals are that the Government that orders/commands/dictates that people buy certain things...doesn’t itself have the money. The citizens, many do not have the money, nor the business have it, nor the customers.
The only short term option is to borrow. So, one or the other, citizens/serfs will have to, or business will have to or government will have to borrow each year.
Right now it seems the ever deluded and threat to us all government officials have yet to, if ever, accept this reality. Until the do, or are forced to, things will get worse, and at an accelerating pace.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.