ObamaCare May Be Bad News For Fast Food

A blog about business and economics.
Dec. 5 2011 8:23 AM

Carl's Jr And The Affordable Care Act

Carl's Jr. In Texas

Wikipedia photo

I spent some time yesterday puzzling over George Will's column "Choking on ObamaCare" whose point is supposed to be that the Affordable Care Act will be a job killer, but that actually winds up saying almost nothing about the Affordable Care Act's impact on the labor market. Will makes, instead, a number of excellent points about the contrast between the building permitting process in Texas and California and the unreasonable culture of litigation and regulatory compliance that oftentimes makes it inordinately difficult for a good faith business propretor to stay on the right side of the law. But in terms of the nominal subject of the article, he has not much to say besides this second-hand speculation from the CEO of Andy Puzder, CEo of the company that runs Hardee's and Carl's Jr.:

When CKE’s health-care advisers, citing Obamacare’s complexities, opacities and uncertainties, said that it would add between $7.3 million and $35.1 million to the company’s $12 million health-care costs in 2010, Puzder said: I need a number I can plan with. They guessed $18 million — twice what CKE spent last year building new restaurants. Obamacare must mean fewer restaurants.


That's the big argument. And of course one can't really refute it because there's no published study here, no methodology, not even an indication of what the non-ACA baseline is supposed to be. A more helpful approach would be to examine something like an actual study of the issue from the Congressional Budget Office which -- conveniently from Will's point of view -- supports the view that the ACA will have a net negative impact on employment. The CBO found two channels for this. One is that some older Americans may have adequate savings with which to retire, but due to their age or poor health conditions are unable to currently afford health insurance on the individual market. This motivates them to not retire. The Affordable Care Act, by eliminating the barriers to purchasing insurance on the individual market, may induce additional early retirements. The second is that the ACA will improve the economic condition of the near-poor with Medicaid expansion. This de facto will make the near poor richer, which should induce some near poor people to work fewer hours. Whether one really wants to complain that ObamaCare will make life easier for low-income families and the elderly or not is a matter of judgment, but it is true that one of the dirty little secrets of progressive politics is that improving vulnerable workers' lot in life may make them less likely to seek out long hours of arduous work.

The weird thing here is that I think Puzder has perfectly good reason to think the ACA will be bad for his business, but it has nothing to do with what Will quotes him complaining about. It's the menu labeling rule! One provision of the Affordable Care Act will require chain restaurants, to post signs saying how many calories their different offerings have. What impact this will actually have on consumer behavior is difficult to guess, but it's obvious that the intent of the provision is to get people to not eat at Hardee's so damn much. It would be a little irresponsible for the CEO of the company not to be whining about it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



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