The business model is that better paid employees have less turnover, which is expensive, make fewer mistakes, and produce a better customer experience. There is no Sam’s Club near me, so I can’t claim righteousness by shopping at Costco, but I do shop at the Safeway near us instead of the Lucky’s because the older, reasonably paid checkers, take responsibility when something goes wrong and know what the hell they are doing. There was some speculation that the department stores were hurting a few years back because they had cut back so much that the customer experience was not that much better than WalMart while prices were higher.
Except that dudes who aren’t covered by insurance are a major cost to us taxpayers now- in very costly visits to the County ER for a case of the snuffles.
I don’t doubt that the new health care plan will cost us some, of course it will.
One article from* six years ago* is “being beaten up”? Every big company gets a negative rip in the WSJ for something or other at least once.
A bit over $1500 per month is the contribution from my employer. We are getting a ‘raise’ this year of 10%, but 9% of that will go to increased costs (I’ve seen the numbers and we are actually lucky, though there is a lot of grumbling from the workers and peasants about getting basically no raise. From my perspective, the companies other alternative was to pass on the costs to each employee, meaning we’d get a raise, but increased health care costs, which would have ended up working out the a pay cut this year).
I’m not sure I’d characterize my own as ‘fantastic’ (despite the price), but it’s solid and covers all the fundamentals. The prescription plan is really good, and the vision is decent as well.
No, they probably won’t take ‘no hit at all’…I was just tossing that out as a possibility. Reducing costs and increasing the price MIGHT less whatever hit they do take on their bottom line, however. Since everyone is in the same boat, it’s possible that costs might raise across the board (or quality might decline as they reduce costs via substitution).
For those saying that they can’t cut payroll because of minimum wage laws, you are missing a couple points. First, they could basically freeze raises (which may cause a turn over of those low skilled workers who have been with the company long enough to NOT be making minimum wage anymore. Based on my second sons trajectory at a similar establishment, he is making about a buck fifty over minimum wage already, and has only been working at this place for a bit over a year). They could make other cuts to save money as well that aren’t directly related to pay scale (employee discounts and such, other benefits). They could look into further automation or outsourcing (several local fast food places here actually don’t use tellers anymore to take the orders, instead they have some kind of centralized teller system that is off site that takes the orders then puts it on the restaurants menu system to be filled).
These are just a couple ways off the top of my head…and I’m a network guy, not a business weenie who is in this industry.
-XT
What’s that? Obamacare makes White Castle half as gross? Color me skeptical.
This is just the beginning of the problems caused by this overhaul. “About one-third of employers subject to major requirements of the new health care law may face tax penalties because they offer health insurance that could be considered unaffordable to some employees” (NY Times). “many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government” (Fortune).
This is counter-intuitive. Health insurance is a benefit offered to attract and retain desirable employees. It is not in the corporation’s interest to drop health insurance and drive the employee to the insurance exchanges, because they are still competing for top employees with valuable skills. The employers who drop health insurance will end up with everybody else’s rejects.
Depends on several factors, including what the companies competition is doing. I know several companies are looking at this alternative, so it must not be as far fetched as you seem to think it is. The other alternative I’ve heard being debated is shifting more of the percentage onto the employees (i.e. if there is a 10% increase in costs, upping the employees costs X% of that 10%…my own company did this, in a way).
Depends on the company, and on what else they use to attract employees. It also depends on the demographics of their core employee base. Again, I know several companies who attract employees with salary or other perks instead of benefits, and there are many people (especially young people) who are attracted by the higher salaries and not detracted by lower or non-existent benefits. If I were 22 I’d probably be inclined to that way of thinking myself…and those kinds of companies would be looking to hire those kinds of people, instead of 50 something types who are more interested in full benefits packages.
The irony is that you are right, but that the kinds of companies who think the way you do ALREADY have good benefits, and are negatively impacted by Obama’s reforms.
-XT
But maybe only in a “that $1 burger now costs $1.04.” Not "Holy F**k. Our bottom line just got cut in half.
Yeah, most likely that’s the reality. Everyone spins things, and I seriously doubt WC is playing things straight either. In fact, this might be simply an excuse to raise their prices while pointing at Obama et al as the culprit. They may figure that this way any blame for the rise in prices will be on the gubberment.
(And FTR, I never liked White Castle burgers anyway, since I’m not a big fan of lots of onions on my hamburger. Blah!)
-XT
Thinking about it, and doing it are two different things. I have no doubt there are short-sighted companies who have not anticipated the unintended consequences of short-term thinking. They will reconsider when it bites them in the ass.
Then these companies have no reason to offer health insurance in the first place, and would probably not reap even short-term gains by dropping coverage.
I don’t follow you, re: the negative impact. If they already have good health benefits, what is the downside of the health care reform law?
No, it is quite intuitive if you don’t completely oversimplify the issue. The difference between employer-sponsored health insurance plan and a plan found on an exchange might not make a huge difference for employees, since large subsidies will be available in the future (“families of four earning between $22,000 and $88,000 would pay between 2% and 9.5% of their incomes on premiums; the federal government would pay the rest”) . Also, if one of these companies decided to drop health insurance and it worried about attracting top employees, it could simply use the savings to directly offer higher salaries to its employees. There are also costs saved by companies when they no longer have to administer things like enrollment and premium collection. The companies have to plan for the future and they cannot simply use their current costs, for example, they need to figure out what will be the additional costs caused by needing to cover dependents until they are 26. They also need to weigh likely large increases in their future health care costs (http://www.google.com/hostednews/ap/article/ALeqM5iYGrM9dbsYzwe2lBSsco3zqOfB3wD9GAQUC80).
Company A offers an employee a salary of $39,000 dollars.
Company B offers the same employee $30,000, plus a $9,000 health care plan.
In both cases, the employee compensation is identical. Both are perfectly legitimate choices as to how to offer compensation to employees. Both are equally fair.
Now along comes Obamacare, and says that Company A must provide health insurance to all its employees. But they’re already being compensated for the lack of health insurance. However, under the logic of the new health care plan, this doesn’t matter.
Do you think company A can afford to tell its employees that it’s cutting their salaries by $9,000 in order to give them health care? Not a chance. Wages are sticky, because people make commitments based on their salary. So the company has to pay $3,000 in penalties per employee. Company B, which started out offering its employees exactly the same amount of compensation, now has a competitive advantage.
This is a big distortion of the marketplace. It’s going to cause problems. Companies will be rewarded or punished based on nothing more than the way they chose to compensate employees. This will result in a misallocation of resources.
The second distortion comes from the highly uneven subsidy program - especially for low wage employees. Businesses who offer health care plans get a small subsidy, but low income people who buy health care through the exchanges get a whopping subsidy. Thus it will be in the interest of both low income employees and their employers to cancel the employee’s health care plan and let them buy health care through the exchanges. The employer can even offer the employee a raise or cash bonus for agreeing to drop health coverage, and come out ahead.
This will result in a wealth transfer to the lower income workers, some of whom may actually wind up having their paychecks subsidized by the government by thousands of dollars per year.
Again, this will punish and reward companies not on their merits, but by accident of what type of workforce they need. If a company needs a highly paid technical workforce, it has to keep paying health care. If the company has a low-paid, low skill workforce, it will indirectly receive thousands of dollars in subsidy per employee, indirectly through the employee having his or her health care subsidized.
All these distortions will screw up business valuations, cause capital to flow inefficiently, raise the prices of some goods and lower the prices of others somewhat arbitrarily.
We’ll hear many more stories like White Castle’s before this has shaken out. And right in the middle of a recession. Perfect timing.
As a future post pointed out - I was misunderstood.
WC’s health costs for each rank and file worker was probably zero…because they probably don’t offer it and, if they do, it is unaffordable to them. At minimum wage, $10 a month is probably unaffordable.
I am sick and tired of these shitass companies bitching and whining because they have to start paying more (not all) of the real costs of their employees. If you have workers and you don’t offer them affordable health insurance, you should be taken out in the street and shot.
What to keep in mind is that $3000 is not necessarily static. The government, in the future, could determine that it should be $6000. If you have shoved all your employees off on the government then you face a tough road.
And the fact that government can mess around with the size of the penalties arbitrarily adds to business uncertainty, especially when hiring new people. This would well be one of the reasons why private sector employment growth is so low right now. It’s hard to hire people when you can’t predict what they are going to cost you.
Which is why a one-payer UHC would help…right? Get Business out of health care providing.
The Heritage Foundation, your source of knowledge and posts on this board, actually proposed a health plan very very similar to Obamacare a few years ago. Don’t you think it’s a little bit hypocritical for Heritage/you to be criticising the same thing they were advocating a few years ago? And surely there must be a better talking point for you on their website than “healthcare costs are affecting hiring”? You don’t think hiring is lousy due to the fact we just went through the biggest financial meltdown in history and companies currently with massive excess capacity are waiting for demand to pick up before they hire anybody new? Surely the Heritage Foundation/you can do better than this?
In other words, it is a lie.
Assuming there are such “purveyors of food”. In general, major players in the same industry tend to have roughly comparable salary and benefit structures, for competitive reasons.
True.
My point was just that a) it will cost some and b) that the indirect costs were overlooked in discussions of the issue at the time it was being fought.
I once heard a quote from a senator (possibly Russell Long) about politicians’ preferred tax policies: “Don’t tax you, don’t tax me, tax the feller behind the tree”.
I don’t think the public at large appreciates the extent to which taxes on employers & Big Companies are effectively taxes on themselves, so it’s a lot easier for politicians to sell the latter by structuring them as the former.