# White Castle gross cut in half by Obamacare? **URL:** \ **Category:** Great Debates\ **Created:** [June 13, 2010, 10:49pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055 "2010-06-13T22:49:33Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![No\_Wikipedia\_Cites](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@No\_Wikipedia\_Cites](https://boards.straightdope.com/u/No_Wikipedia_Cites)\ **Post date:** [June 13, 2010, 10:49pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/1 "2010-06-13T22:49:33Z")
June 21 issue of _National Review_, says that “The victualer specializing in diminutive hamburgers reports that the punitive feature of Obamacare will cut its income–in half. Very likely, that lost income will be recouped in part through cutting labor costs, meaning fewer jobs and lower wages for White Castle employees.” How true is this? Is this typical of businesses with lots of low-wage employees? Why does it affect White Castle so much? Explain. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [June 13, 2010, 11:14pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/2 "2010-06-13T23:14:22Z")
I’ve just started to look at this, and it’s all because of a press release from John Boehner(R-OH) about the White Castle chain, based in Ohio. [Here’s](http://www.npr.org/blogs/health/2010/05/19/126971796/white-castle-calls-health-law-a-budget-bomber) a quick link from an NPR post which would kinda dispute the figures. I’ll look for more. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [June 13, 2010, 11:20pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/3 "2010-06-13T23:20:35Z")
White Castle apparently is claiming that its profits would be cut in half–not its “gross” or its “income.” ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [June 13, 2010, 11:29pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/4 "2010-06-13T23:29:23Z")
From **samclem** ’s link: > [@](#): > > Indeed, if employees turn down employers’ offers of health coverage to get new government subsidies, companies will have to pay the $3,000 penalty to help cover the cost of the taxpayer-funded subsidies. […] > > But, Boehner’s press release doesn’t point out White Castle would no longer be paying for health insurance for those workers. The average premium for families that get insurance from their employers was more than $12,000 in 2007. > > For White Castle to lose money because of the provision, it would have to spend less than $3,000 on health benefits for each employee. Richardson declined to discuss the details of health expenses because the firm is private, he said, but all full-time employees are offered insurance. Total spending on benefits was $55 million last year. > > Paul Van de Water, of the Center on Budget and Policy Priorities, said it was hard to see how the White Castle’s gloomy calculation could add up. But, he acknowledged: "Fast food restaurants may have to raise the price of the hamburgers by a few cents to pay for health insurance for their workers.” ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [June 14, 2010, 3:16am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/5 "2010-06-14T03:16:33Z")
Not that NPR wouldn’t give a fair and balanced (;)) assessment, but just in an effort to provide another drive by link from the other side of the fence (plus, it was the second link on Google right under the NPR one), [here](http://blog.heritage.org/2010/05/17/side-effects-fewer-flippin-hamburgers-at-white-castle/) is what the Heritage Foundation has to say on the subject: > [@](#): > > Numbers crunchers there looked at how Obamacare provisions would affect the company’s bottom line. Of particular interest were provisions that hit employers with a $3,000 per employee penalty—even if they offer health insurance—for workers whose household income is low enough and they get subsidized health coverage through a government-run insurance exchange. > > Curiously, the penalty for hiring and offering coverage to a low-income worker is 50% higher than the Obamacare penalty ($2,000 per employee) for NOT offering coverage. > > The net effect of this weird policy is to discourage businesses from hiring workers from low-income households—those who need jobs most. According to White Castle’s Jamie Richardson, Obamacare “makes it difficult to justify growing where jobs are needed most—in lower income areas.” No idea which side is right (I suspect that both are spinning things for effect), but my guess is that WC will have to raise their prices (no doubt only ‘by a few cents to pay for health insurance for their workers’…though ‘a few cents’ could be a dime, or it could be a couple of bucks, depending on your use of ‘few’)…and I doubt they will be the only ones. I don’t know if that’s necessarily a bad thing, all things considered…just something people will have to accept, that prices on more than just some mini-hamburgers might go up. A ‘few cents’ here, a ‘few cents’ there, here a cent, there a cent, everywhere a cent cent… -XT ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [June 14, 2010, 3:33am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/6 "2010-06-14T03:33:50Z")
> [@xtisme](#): > > No idea which side is right (I suspect that both are spinning things for effect) AFAICT, the two quoted excerpts aren’t necessarily contradictory. Both seem to agree that the health care reform requirements could end up costing employers money, and neither seems to support the claim that the costs would actually amount to 50% of profits. In any case, it doesn’t surprise me at all that some companies may have to raise prices somewhat to cover the costs of the new requirements for employee insurance. Remember, one of the goals of HCR was to reduce the number of workers who don’t have health insurance at all: that is, to have a system that successfully insures more people. Well, insuring more people intrinsically costs more than insuring fewer people. We might have avoided some of these costs with the lower overheads in a single-payer plan, but that wasn’t going to happen due to political feasibility issues, so we’ll make the best of the compromise we’ve got. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [June 14, 2010, 3:37am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/7 "2010-06-14T03:37:25Z")
[QUOTE=Kimstu] We might have avoided some of these costs with the lower overheads in a single-payer plan, but that wasn’t going to happen due to political feasibility issues, so we’ll make the best of the compromise we’ve got. [/QUOTE] We will have to make do with a compromise, no doubt about that. > [@](#): > > AFAICT, the two quoted excerpts aren’t necessarily contradictory. Both seem to agree that the health care reform requirements could end up costing employers money, and neither seems to support the claim that the costs would actually amount to 50% of profits. No, they don’t seem to be contradictory, just spinning the story differently. I seriously doubt that WC will take a 50% hit to their profit (possibly no hit at all, if they increase prices and reduce costs). I really just offered that quote tongue in cheek, to be honest -XT ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [June 14, 2010, 10:03am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/8 "2010-06-14T10:03:43Z")
So they have to pay $3000-(cost of old policy) per year, right? What does the average employer contribution to insurance premiums run? I’m guessing some significant chunk of $3000, so if that were the case we’re talking about a few extra hundred bucks per employee per year. Are they running on such thin margins that that cuts their profits in half? I suspect they’re spinning the numbers by not including that “-(cost of old policy)” part ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [June 14, 2010, 12:00pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/9 "2010-06-14T12:00:35Z")
“John Boehner(R-OH)” I thought John Boehner was a Texan…are there two of them? As to the premise of the debate here, I say “So what?” All the competing burger joints are going to face the same circumstances, a level playing field if you will. The entire fast food industry has engaged in a race to the bottom in terms of treatment of their labor force, and if “Obamacare” throws a wrench in that, then that is just one more positive outcome. And if prices overall rise so much that Americans patronize fast food places less, then you only need look at our fat asses to see that this is yet another benefit of the legislation. ---
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [June 14, 2010, 1:56pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/10 "2010-06-14T13:56:40Z")
> [@Kimstu](#): > > …and neither seems to support the claim that the costs would actually amount to 50% of profits. But the profit of the chain has not been presented here, so we have no idea. If WC made a profit of $10,000 last year, and that was cut in half by covering all their employees with health insurance, I’d say that’s a pretty good deal for everyone. ---
**Author:** ![No\_Wikipedia\_Cites](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@No\_Wikipedia\_Cites](https://boards.straightdope.com/u/No_Wikipedia_Cites)\ **Post date:** [June 14, 2010, 2:51pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/11 "2010-06-14T14:51:29Z")
Does this mean the fast food joints of the country will start hiring suburban high school kids, since they probably are on their parents’ health care? ---
**Author:** ![Ruby\_Slippers](https://avatars.discourse-cdn.com/v4/letter/r/94ad74/32.png) [@Ruby\_Slippers](https://boards.straightdope.com/u/Ruby_Slippers)\ **Post date:** [June 14, 2010, 3:34pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/12 "2010-06-14T15:34:45Z")
> [@Kevbo](#): > > “John Boehner(R-OH)” > > I thought John Boehner was a Texan…are there two of them? I have the misfortune to reside in John Boehner’s congressional district – the 8th District of Ohio. One is quite bad enough. ---
**Author:** ![BlinkingDuck](https://avatars.discourse-cdn.com/v4/letter/b/eada6e/32.png) [@BlinkingDuck](https://boards.straightdope.com/u/BlinkingDuck)\ **Post date:** [June 14, 2010, 3:49pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/13 "2010-06-14T15:49:04Z")
Cut their employees wages…scoff Minimum wage laws are in effect, right? Hard to cut a minimum wage workers wages… I’d also be interested in what their ‘health insurance’ plan is for these workers. I’d be shocked if their rank and file workers could even afford it. Maybe they could offshore to India? ---
**Author:** ![BlinkingDuck](https://avatars.discourse-cdn.com/v4/letter/b/eada6e/32.png) [@BlinkingDuck](https://boards.straightdope.com/u/BlinkingDuck)\ **Post date:** [June 14, 2010, 3:53pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/14 "2010-06-14T15:53:22Z")
> [@SenorBeef](#): > > So they have to pay $3000-(cost of old policy) per year, right? What does the average employer contribution to insurance premiums run? I’m guessing some significant chunk of $3000, so if that were the case we’re talking about a few extra hundred bucks per employee per year. Are they running on such thin margins that that cuts their profits in half? > > I suspect they’re spinning the numbers by not including that “-(cost of old policy)” part Cost of old policy for rank and file workers was probably … zero. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 14, 2010, 4:13pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/15 "2010-06-14T16:13:55Z")
> [@BlinkingDuck](#): > > Cost of old policy for rank and file workers was probably … zero. I doubt it. I have excellent benefits, and the cost to me for health insurance is definitely non-zero. Now, it is true that the cost of offering coverage is 50% higher than the cost of not offering coverage. But the workers get coverage. And workers without coverage are no longer a burden to emergency rooms and hospitals. The costs of health care are being transferred back to where they belong. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 14, 2010, 4:49pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/16 "2010-06-14T16:49:56Z")
I like the fact that when they contemplate wage cuts they think first of the minimum wage workers and not the execs. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [June 14, 2010, 5:06pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/17 "2010-06-14T17:06:09Z")
> [@Voyager](#): > > I doubt it. I have excellent benefits, and the cost to me for health insurance is definitely non-zero. But you **have** coverage. If the coverage White Castle offers employees costs White Castle $5000 per year, but most employees don’t take the coverage because they can’t afford their share of the premium, then White Castle’s cost is zero for those employees and they are the ones who are likely to be eligible for the government subsidies, causing White Castle to pay the penalty. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [June 14, 2010, 5:35pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/18 "2010-06-14T17:35:48Z")
The bigger picture is that Boehner is right about the hidden costs of HCR, directly paid by others but ultimately passed along to consumers, employees and state taxpayers. These were largely ignored in favor of the focus on the direct net costs to the federal government. Also about the fact that that the legislation will have an enormous indirect impact on many people - piously ignored by Obama who repeatedly declared that “no one will be impacted …” referring to the direct legal impact only. That said, “percentage of profits” is a completely bogus statistic. A lot of companies are not profitable altogether - does that mean that the costs of HCR - a negative percentage of profits - is itself a profit? Even some companies that are profitable are barely so. Profit is the difference between two big numbers - revenue and expenses - and it’s a very volatile number. In sum, the costs are what they are, and how they relate to profits of a specific company is not a good measure of anything. > [@](#): > > Curiously, the penalty for hiring and offering coverage to a low-income worker is 50% higher than the Obamacare penalty ($2,000 per employee) for NOT offering coverage. This is an error. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2010, 5:54pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/19 "2010-06-14T17:54:15Z")
> [@BlinkingDuck](#): > > Maybe they could offshore to India? Or maybe they could make the food in Mexico. [This site](http://www.associatedcontent.com/article/785281/white_castle_burgers_review_frozen.html?cat=22) rates the frozen ones better than the food outlet. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [June 14, 2010, 6:14pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/20 "2010-06-14T18:14:05Z")
> [@Rand\_Rover](#): > > White Castle apparently is claiming that its profits would be cut in half–not its “gross” or its “income.” Income wold presumably be short for Net Income, which of course is synonomous with Net Profit (Loss). The word Income is usually not used when a person means Revenue. [Next page](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055.md?page=2)