Is Obamacare Forcing Fast-Food Companies To Decrease Workers’ Hours?

Fast-food workers find themselves between a rock and a hard place when it comes to hourly wages and health care.
By @MMichaelsMPN |
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    Seattle fast-food workers joined a nationwide, one-day strike on Thursday, demanding a pay increase to $15 per hour and the right to form a union without fear of intimidation or retaliation from the multi-billion dollar companies that employ them. (Photo/Good Jobs Seattle)

    Seattle fast-food workers are shown participating in a one-day strike on Thursday, demanding a pay increase to $15 per hour and the right to form a union without fear of intimidation or retaliation from the multi-billion dollar companies that employ them. Fast-food workers additionally face the threat of reduced hours as employers seek to avoid provisions of the Affordable Care Act. (Photo/Good Jobs Seattle)

    The explosion of protests across the fast food industry has sparked a national conversation on raising the minimum wage, a decision that could affect low-wage workers and at least 3.8 million Americans who, in violation of federal laws, currently earn $7.25 per hour or lower.

    Wages and unionization remain the central focus of the fast food Fight for 15 campaign, but many workers are also saying that the Affordable Care Act (ACA) employer mandate is forcing companies to shift more employees to part-time work in an effort to avoid future penalties and deny them health insurance benefits.

    “It’s horrible” said Luke Perfect, a Subway employee who recently had his hours decreased. “I’m barely scraping by with overtime.”

     

    The Affordable Care Act: Who does it impact?

    Here’s where the controversy lies. Under the Affordable Care Act (ACA), businesses with more than 50 employees will soon have to provide full-time workers with health care coverage or face a $2,000 fine per worker after the first 30 employees. Many companies are now claiming that their hands are tied, and cutting hours or laying off employees is the only way to remain profitable.

    “To tell somebody that you’ve got to decrease their hours because of a law passed in Washington is very frustrating to me,” said Loren Goodridge, who owns 21 Subway franchises, including a restaurant in Kennebunk. “I know the impact I’m having on some of my employees.”

    NBC news reports that Goodridge has taken the preemptive step to cut employee hours to 29 a week so he won’t incur penalties as a result of the provision in the new health care.

    It could be part of a trend that is developing across the nation. Rob Wilson, president of a temp agency called Employco, told National Public Radio (NPR) in April that he sees this decision regularly from employers in his field of work.

    “We’re seeing it quite a bit. Instead of saying, ‘I want one person for 40 hours a week,’ [employers are saying], ‘I’ll take two people for 20 hours or 25 hours a week.'”

    That assertion remains contested as some economists caution that it may be too soon to say whether this is a trend caused by the ACA.

    “I would be more persuaded once the law goes into effect and we find systematic evidence, instead of anecdotal evidence. They [employers] may be doing these things about a misapprehension of what is in the law. In terms of firms facing penalties, there have been no penalties imposed so far and the imposition of these penalties has been postponed for 12 months,” said Gary Burtless, an economist and senior fellow at the Brookings Institution in a statement to Mint Press News. “It’s just not a very plausible explanation.”

    The Obama administration decided to delay employer penalties for 12 months in July, allowing employers time to adjust to the new provision. A congressional report issued last month found that the delay is expected to cost the federal government at least $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014.

    “We may see some layoffs at firms that have let’s say 55 or 56 employees, but let’s say an employer shrinks employment from 55 to 49, they will probably have their remaining employees work more hours to keep below that benchmark. It’s not clear that there will be a trend of more part-time work, in some cases they may have more full-time employees,” Burtless said.

    The link between the ACA and a transition to part-time work remains contested, but what do workers have to say on the issue? Regardless of the effects of the ACA, low wage workers across the fast food industry are calling for $15 per hour and the right to form a union without intimidation. Many also decry the lack of full-time work and little to no health benefits.

    “I can’t afford to buy my kids shoes,” said Milwaukee Burger King employee Tessie Harrell, who receives food stamps and $150 each month from her mother to get by. “There’s no way I should be struggling to make ends meet.”

    The waves of fast food strikes dating back to 2012 grew to become the largest demonstration in the history of American fast food earlier this month when thousands of workers walked off the job in New York, Chicago, Milwaukee, St. Louis and several other cities.

    Now, with support from the Service Employees International Union (SEIU), the industry is expected to soon mobilize for an even larger show of strength in the ongoing struggle.

    Scott Courtney, an assistant to the SEIU president, told Salon that he expects “a big escalation” from fast food workers in “the next week or 10 days.” He added,” I think they’re thinking much bigger, and while the iron’s hot they ought to strike. No pun intended.”

    Most part-time fast food workers do not have company-sponsored health care, and like millions of other low wage employees, could see a reduction in hours as a result of the ACA.

    “I get paid $7.40 an hour. My annual salary varies depending upon how many hours I work, but I have not made over $15,000 ever annually. I do not receive benefits,” said Claudette Wilson who works two fast food jobs just to make ends meet.

    Opponents of the strikes, including the McDonald’s corporation, have suggested that employees get a second job. Many like Wilson already do that and still struggle to get by. Others have suggested that workers should leave altogether and find better work if they don’t like the conditions.

    The problem is that few options exist for a fast-food workforce that has more college grads and middle aged Americans than ever before. According to the U.S. Bureau of Labor Statistics, that about 42 percent of restaurant and fast-food employees over the age of 25 have at least some college education. The same study found that at least 753,000 hold a bachelor’s degree or higher.

     

    The case for universal healthcare

    As the fast food protests rage on, others look to a single payer, universal health care model found in dozens of other countries as a solution that can provide all Americans high quality care for a fraction of the cost.

    “I think it [universal health care] would be the most straightforward solution. The healthcare system with or without the ACA is astonishingly complicated and it adds greatly to the administrative costs for the health system in the U.S. It imposes heavy burdens on hospitals, doctors and insurance companies. It also results in patient difficulty in obtaining care or increased costs,” Burtless said.

    The U.S. pays about $2 trillion each year for health care, far exceeding other industrialized countries. According to one report by PBS, the U.S. pays more than double the average European country, but lags behind in most measures of citizen health, including average life expectancy and infant mortality.

    “No rich country on the planet spends as much as the U.S. does for the health care it receives. There is zero evidence that spending so much more has yielded any benefits whatsoever in terms of health outcomes. We are paying much much more than the rest of the world pays and we are not getting the same health outcomes. It’s a very dysfunctional system,” Burtless said.

    The political will for a single payer universal health care system doesn’t exist in Congress. Republicans have tried unsuccessfully to repeal or defund the ACA 40 times, but there is a small number who support expanding the ACA and creating a universal health care system that can simplify the complex and expensive system that the U.S. currently has.

    “We are sick and tired of private health insurance that is wasting $300 billion every single year on administrative efforts. They have all kinds of bureaucracies, they deny people claims that they are entitled to. Clearly the U.S. needs to join the rest of the industrialized world with a real national health care program that guarantees comprehensive health care to every man, woman and child, and we can save money as we do that,” said Senator Bernie Sanders (I-VT) during an interview.

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