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Business Owners Speak on Struggles with ObamaCare, Regulations

From their data, just how damaging the president has been to this economy becomes quite clear.

by
Patrick Richardson

Bio

August 18, 2011 - 8:56 am

As the president doubles down on regulation — from labor, to carbon, to health care “reform” — business owners are crying foul. Regulation and the costs associated with it are all but incalculable, and are killing the very job creation on which President Barack Obama says he is focused “like a laser.”

See CKE Restaurants: according to a release from the House Committee on Oversight and Government Reform’s “American Job Creators” initiative, CKE owns or franchises 3,182 restaurants under the Carl’s Jr. and Hardee’s brand names nationwide, employing more than 70,000. Each new restaurant generates roughly 25 new jobs and pumps more than $1 million into the surrounding community.

According to the release, to comply with just one of the hundreds of new regulations in the health insurance law CKE will be forced to spend approximately $1.5 million to replace all restaurant menus. That equals 17 percent of what the company invested in new restaurants in 2010.

Those are not the committee’s numbers: those numbers were provided by CKE’s CEO Andy Puzder. In a video sent out with the release, Pudzer said unknowns — in particular, health care — are stifling job growth:

 You generally try to come up with a five-year business plan. You have to know what your expenses are going to be and generally know what your revenue will be. People right now are very worried about taxes because the president keeps talking about raising taxes so it’s very difficult to model that in the forecast. The uncertainty in the businesses community arises from a number of factors: taxes, energy and primarily health care.

Health care is probably the most significant unknown at the moment. People are unsure about how much it will impact their business, but they will know it will be significant and it will be negative. It’s very hard to model the cost because the bill is so complex. The range [CKE’s economic forecasters] gave us on our health care costs increasing was between $7.3 and $35.1 million. We spent about $9 million last year building new restaurants. That would be totally wiped out.

Puzder said he was given a best guess of $18 million on increased health care costs, double what they spent creating new restaurants and new jobs last year.

Puzder recently testified in front of the Oversight Health Care Subcommittee that those increased costs would force them to stop building new restaurants and possibly let people go:

We use our revenue to pay our bills and expenses, to pay down our debt, and we reinvest what is left in our business. New unit construction will cease if we have to allocate the monies for that construction to the [president’s health insurance law], and building new restaurants is how we create jobs.

Puzder said they’d also have to look at automation within their stores:

We will automate positions such as the cashier. Right now they have those ordering kiosks like the ATM. We haven’t used those because we like the personal touch and they are a little expensive, but once you implement this health care bill, I think those kiosks are going to become much more desirable. So I will be reducing labor force and also automating positions.

It’s not just health care killing jobs: state and federal regulations can amount to as much as 50 cents on every dollar a business makes, according to Jennifer James of Build with Conscience in California. She said the cost of regulation per employee to them each year is about $20,000:

We would like to hire three or four more guys, easy. We pay $15-26 per hour for new laborers and generally hire inexperienced young workers and train them because the cost of experienced men is too high. We’re not able to take on extremely qualified people, so we train young kids in the trades.

She said between increased health care costs and the contractor fees, they simply can’t afford to hire. She said licensing fees in California are so high many contractors are simply not paying them and working under the table. James said the contractors state board fee is $400, and total licensing fees are $8,000 to $10,000 a year:

A lot of business goes to unlicensed contractors who have no license, no insurance, and no bonding.

James said the fees are so high and the number of agents to enforce the law so low that it is a better risk to operating without a license for many contractors.

Annette Logsdon from Watertite Deck Coatings, also in California, said taxes, fees, and health care are killing them as well. She said they grossed about $400,000 last year, but workers’ compensation was $21,600 for the year — nearly 6 percent of gross:

The federal government is killing us on payroll taxes. … That 2 percent break (for a new employee) if you want to call it that, is a joke.

She said after ObamaCare passed, California raised taxes across the board 12 percent.

Additionally, regulations are hitting them on the inventory side. All their raw material suppliers have raised prices because government regulations have driven up their costs:

It’s indirectly affecting us. … We can’t give raises or hire new people.

All of the business owners had basically one message: “get out of our way.” It’s clear that the more regulation the government heaps on business, the fewer jobs will be created.

Patrick Richardson has been a journalist for almost 15 years and an inveterate geek all his life. He blogs regularly at www.otherwheregazette.com, which aims to be like another SF magazine, just not so serious.
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