Obamacare

ObamaCare Could Cost This Bakery Half Its Annual Profits—or Nearly Half Its Full Time Workforce

|

Photo credit: kevin dooley / Foter.com / CC BY

What sort of costs will ObamaCare impose on small business owners? A New York Times story on San Diego bakery Baked in the Sun offers a hint.

Under the law, employers with more than 50 employees must either offer qualifying health insurance to all full time employees or pay a fine of $2,000 per worker each year. Currently, Baked in the Sun does not offer health insurance to 90 of its 95 employees, which means that owners Rachel Shein and Steve Pilarski face a difficult choice: They can offer health insurance to their employees and figure out how to finance the additional cost; they can pay a fine for not offering health insurance; or they trim their full time workforce below 50 employees so that they can avoid both the cost of offering insurance and the cost of the penalty.

Baked in the Sun's owners estimate that the cost of offering insurance will run about $200 per employee per month, or about $216,000 per year to cover all 90 currently uninsured employees, of which the employer will pay half and the employee would pay the rest. Their annual revenues are $8 million, but because food service is extremely low margin, only about $200,000 of that is profit, meaning that financing the $108,000 employer half of the additional coverage could cost them half of their yearly profits.

Still, it's clearly a more attractive choice than paying the $2,000 per-worker annual fine, which would actually cost them more than offering the insurance. According to the article, even with an exemption for the first 30 employees, paying the penalty would still cost about $130,000 a year.

If they choose to offer the insurance, they have to find a way to pay for it. Instead of dipping into their profits, the Times notes that the owners could also hike their prices by an average of about 4 percent, passing the costs along to their buyers. But not only does that raise prices, it puts them at a competitive disadvantage with other bakers who employee less than 50 people—and who thus do not have to provide coverage or pay the penalty. "It's ironic that our success meant we could grow," Shein tells the Times, "and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don't have the financial burden of health insurance."

Which is probably why Shein says she's contemplating a more drastic possibility: cutting her bakery's full time workforce back to fewer than 50 employees in order to avoid ObamaCare's costs entirely. Doing that, she says, would mean outsourcing some jobs and eliminating others entirely, as well as converting some current employees to independent contractors. 

At the end of the article, Jody Hall, who owns a Seattle cupcake shop with 80 employees, recommends that Shein simply go ahead and offer the coverage and pay the price. Hall does not suggest how to finance the coverage, but she does suggest that it will probably be more affordable than Shein estimates, because not all employees will take the coverage. As evidence, Hall points to her own business, where she says only about half of employees take the coverage offered. But Hall does not account for the fact that starting next year, ObamaCare's individual mandate also goes into effect, meaning that employees who chose not to take coverage offered to them would have to pay a fine. 

But even if only half of Shein's employees take the coverage, that would cost her more than $50,000 annually, which would still mean either a large reduction in profits or a noticeable hike in prices.

In other words, no matter what choice Shein and her co-owner make, it won't be pleasant. They can cut a large percentage of their profits to pay for coverage, raise prices and potentially lose business, or radically restructure their workforce to avoid the law's fines and requirements. The White House once promised that the health care law would "reduce the current burdens on small firms and their workers." I suspect Shein, along with other small business owners facing similar choices, would describe its effects differently. 

Advertisement

NEXT: Mark Sanford Wins Most Votes in GOP Congressional Primary

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Right wing haters! Obamacare will work, if everyone just does their part to make it work. See, these part time workers will do their part by getting health insurance, and the owners will do their part by paying for it. That’s perfectly fair.

  2. As my local IT support always tells me – “it’s a feature, not a bug.”

  3. She is obviously just a greedy 1% and should be hung from the nearest lightpole after her oppressed workers revolt (as all good workers must against the hands of tyrannical management).

  4. So, basically, ObamaCare will kill small businesses, but not wee-small businesses. And large businesses will be fine.

    1. Yup. It’s Obama’s way of ensuring that our economy has the same vibrancy and panache of France’s.

    2. You know, if I didn’t absolutely know better, I would almost swear that ObamaCare was actually an illicit sext message from Obama to the insurance korporations he spends so much time bitching about to his liberal base.

      1. But he’d never do that! He’s pure of heart!

  5. converting some current employees to independent contractors.

    Why isn’t this the default way around Obamacare? “They don’t work for me! They are independent contractors. They work for themselves. This bakery is a small business that only employs 5 people.”

    1. I was just thinking that. I guarantee that isn’t as big a loophole as people think it is. And if it is that large, it won’t be for long.

      1. That will be the loophole. And it is going to suck. If you are a contractor, you don’t get any benefits. The workers will then be stuck in Obamacare hell paying for their own health insurance, getting no benefit from bulk purchasing that employers get and no tax break that you get via employee provided healthcare.

        Obamacare is going to make middle class America into part time and contract workers. It won’t affect high paying jobs. But the middle class is going to be destroyed by this.

        It is almost like the progtards want a society of a small group super rich entitled and everyone else poor and dependent on the government.

        1. Or, like Baked said, France.

          1. Which is increasingly huge Muslim dominated slums and a Disney land for rich people.

            1. Damn right! It’s nice to be rich.

        2. see the feature/bug comment by Drake above.

        3. we’re all 1099ers!!!

    2. The only thing that sucks about that is then those 90 employees have to pay more taxes.

      1. Not if they get paid in cash straight out of the register at the end of the day.

      2. But only the ones who voted for Obama deserve it.

    3. That’s not easy to do, as your “independent contractors” will be deemed employees if they have sufficient hallmarks of employment.

      1. That too. And to prevent that, you can’t give them things like job security and benefits.

      2. Are these “hallmarks of employment” codified someplace or are they completely open to the interpretation of Top. Men.?

        1. ProL is better qualified, but the rule is basically if looks like a duck and quacks like a duck, it’s probably a duck. I beleive most of it is case law.

          1. Wonderful. More make-work for lawyers and bureaucrats.

            1. Don’t blame us! Blame the voters.

          2. Team Obama has been “cracking down” on the contractor versus employee distinction since it opened shop. It will only intensify as ObamaCare ramps up.

        2. We have an independent contractor and have to do quirky things like not provide her with a computer when she’s in office lest she be a crypto employee, and she makes a point of working from home or a Starbucks a certain number of days a week, even when it’s more convenient to be in office.

        3. seems like forming two 48 person companies is the way to go. There have to accountants in France who specialize in turning one companies into two companies, right?

        4. Are these “hallmarks of employment” codified someplace or are they completely open to the interpretation of Top. Men.?

          Yes and yes. There is the infamous 20 factor test:

          http://www.uschambersmallbusin…..e/P07_1115

        5. Generally speaking if they are required to do their work at your place of business, on your schedule, under your direction, cannot work for a competitor, and are not temporary then they count as an employee and not a contractor.

          This is actually a big issue in the IT world today where a lot of companies actually have rules stating that you cannot be a contractor for more than 13 consecutive months so they can avoid the DOL coming in and declaring them to be employees retroactively.

        6. Recalling Torts from memory, if you supply them with equipment, give them instruction on how to do a job, or make the same requirements of them as you would your regular employees, the law will consider them employees no matter what you say.

      3. Just fire them every three months, like Microsoft does.

      4. Yeah, once the DoL decides to an audit you have insurance, unemployment and other employment tax issues.

    4. so we’re all strippers now?

      1. banana hammocks for everyone.

        1. Assless chaps! Assless chaps!

    5. “Why isn’t this the default way around Obamacare?”
      In CA, that alternative really isn’t available. Even bonafide contractors play hell proving it to the various bureaucrats.

    6. The IRS rules on contractors are actually pretty strict. You can’t just fire your employees and rehire them to do the same job as contractors.

    7. Then you get the employee/independent contractor class action lawsuits. Oh, and states like California can fine you $10,000 for each misclassifciation. The test for being an independent contractor as opposed to any employee is fairly strict and often plaintiff-friendly.

  6. Sometimes man you jsut gotta roll with it dude.

    http://www.PC-Privacy.tk

    1. What a great bakery pun, An0nb0t!

      1. Anonbot keeps making typos. I fear anonbot isn’t a bot at all, but someone who works from home on the internet making $15,347 per month. Just ask him how!

        1. and just how does obamacare benefit anonbot?

        2. What if he really is, and his typing skills just aren’t that good. He rakes in the dough and spends a significant portion of his day trying to spread the word because he loves humanity and wants to usher us all into a glorious and bright tomorrow.

      2. Courtesy, please!

        After all, I don’t confuse you for R@ndi@n…

  7. Who wants to bet that the owners voted for Obama?

    1. A small business owner in San Diego? I actually doubt it.

    2. the employees more likely.

  8. Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed! Human need, not corporate greed!

    (repeat until all thoughtcrime against Obama has been banished from your mind)

    1. Obozo’s certainly working on increasing human need.

  9. Kolacky and wreckers!

    1. I could go for a nice kolache right now.

  10. It is in California. So there is at least a good chance that most of the people losing their jobs voted for President Jackass.

    1. A bunch of progtards having their shitty political choices come back to bite them in the ass? Ah, sweet, sweet schadenfreude.

      1. They’ll blame it on whatever business is involved.

  11. But Hall does not account for the fact that starting next year, ObamaCare’s individual mandate also goes into effect, meaning that employees who chose not to take coverage offered to them would have to pay a fine.

    This is still stupid, but I assume Hall was thinking less about people who opt for no insurance and more about people who are already covered by the plan of a spouse or someone else.

  12. God the econ professor quoted in there is fucking denser than a neutron star:

    Jonathan Gruber, an economics professor at M.I.T. who advised the Obama administration on health care reform: “Rachel and Steve face a difficult decision, but it seems that the third option, to reorganize production and outsource functions to end up with fewer than 50 workers, will be too expensive to make much sense. Offering insurance won’t cost much more than the penalty, and in an industry where many of their competitors don’t offer insurance, they could advertise themselves as a better place to work.

    Bitch are you retarded? The point is that *neither* expense is exactly affordable. And besides, that competitive edge you claim they’ll have will fucking evaporate in 2014 when everyone has to cover employees.

    1. Bitch is most definitely retarded.

      1. But is a top man Nikki. He teaches at MIT. How dare someone like you question his wisdom.

        1. Because I have been reading his wisdom quoted in articles like this one for several years.

    2. How can someone be a professor of economics and be that stupid? It is a bakery. You are going to compete on price. And the work isn’t that difficult. So the difference between an average employee and the best employee won’t be that much. So the advantage of being the “best place to work” is pretty small.

      And how can you have a PHD in economics and not know that wages equal productivity? It is just fucking appalling how stupid our elites are.

      1. Comparing the penalty and the insurance was rich. “Jamming a ten-gauge needle in your eye will hurt less than jamming an eight-gauge one. The choice is obvious!”

        I support the reduction in staff idea if she can make it work. If the President can make a measly 85 billion dollar “cut” “painful”, then we can make it painful right back.

        1. That was particularly rich. They are a business. They print their own money apparently.

          1. They do make a lot of dough.

            1. Good one. 🙂

            2. Now you’ve got me rolling

              1. donut get me started on baking puns.

                at yeast I stopped with the one.

    3. Needs Stewie saying “Bitch, are you retarded?”

    4. Offering insurance won’t cost much more than the penalty, and in an industry where many of their competitors don’t offer insurance, they could advertise themselves as a better place to work.”

      I’m not buying their over-priced cinnamon rolls.

    5. well, i suppose when prices go up, demand for baked goods will drop*, so we’ll have to have some sort of presidential bakery commission to figure out what when wrong.

      *for the dc locals, I’ll do my part to keep Heidelberg going.

      1. Heidelberg kicks ass.

        1. sometimes i change my commute from 66 to 29 just to stop by.

    6. How ’bout MIT fire his ass and he can advertise himself as an ignoramus who’ll wash dishes.

    7. I think the idea, if you can call it that, is that they would have an advantage over companies under 50 employees who would not be offering insurance, and would not be required to do so. Of course, *I* would suggest that it should be their fucking decision whether or not that is a competitive advantage they need or desire.

      1. The only problem is that advantage is supposed to go away in 2014 because if you work for a small employer, you’re supposed to be on the exchanges meaning that health insurance isn’t a competitive advantage of *anybody* as of next year.

        1. True, and I know the rates are going to be all screwed up every which way, but wouldn’t being in an exchange still be more expensive than company-provided insurance?

        2. On a related note, I can’t wait to hear the confused screams of protest from all the young liberals who don’t understand why they have to pay a huge new penaltax next year.

  13. As Hillary Clinton once said on a similar question back in the 1990’s; ” I can’t be held responsible for every under-capitalized business in America”.

    1. Shouldn’t she just have said “I can’t be held responsible” and then stuck her tongue out and blown raspberries?

      1. That’s what she did on Benghazi.

        1. and every other shady dealing she had her claws in.

  14. ObamaCare Could Cost This Bakery Half Its Annual Profits

    Only HALF? Why not 99%?

    /tony mode

    1. Yeah, I mean, what are they bitching about! They’ll still have 200,000-108,000 = 92,000 dollars worth of profit. That’s still well above the mean income in this country. How much do they need?! /prog-tard douche

    2. ^^^exactly, if Obamacare isn’t costing them all their profits, it’s not yet working as intended.

  15. OR MAYBE THEY COULD HAVE DONATED TO OBAMA FOR AMERICA AND GOTTEN A WAIVER. The cheap bastards.

    1. Just like hispanics did?

      Oh wait…

  16. Oh there are comments. Nothing like a flood of ignorance to make a slow afternoon go faster. The top comment right now is this little gem

    athanas
    United Stated

    I agree completely with Jody Hall. Offer the insurance. I don’t know what the profit factor is for the company, but a happy and healthy employee is a productive employee. We should show more concern and compassion for our employees. They work hard to keep you in business and to fuel your profits. I don’t know much about the insurance business but perhap the provision of insurance to the employees could somehow be considered “profit sharing” which may make the payment “less costly”.

    1. And then there is this “sorry you have to die for the hive but too bad” one

      Dr. Bill
      Durham, NC

      Truly, I am sympathetic the owners of this company–they have taken risks, worked hard, and offer employment to many.

      I hope they can accept their choice for what it is–a chance for all Americans to be willing to sacrifice for the good of all, to engage in a social contract that says we work together.

      The most equitable way to do this, of course, is through a national healthcare system which our country cannot undertake politically at this time.

      I hope that these owners will be rewarded by their employees stories of being able to afford a doctor for the first time, not to mention the practical aspects of employees that enjoy better health.

      1. –a chance for all Americans to be willing to sacrifice for the good of all, to engage in a social contract that says we work together.

        Sounds better in the original German.

        1. You know who else sounded better in the original German?

          1. Eric Cartman’s mom?

          2. Arnold Schwartenegger before the dub in Hercules in New York?

        2. Wow. I want to strap that guy to a table, cut out his fucking organs, and right before I give him the sleeping gas, say:

          “I know you’re scared of dying. But it’s ok. Your organs are going to save the lives of at least five people. It’s the social contract of working together for everyone, and I know you feel very strongly about supporting that. Thank you Bill, for your sacrifice.”

        3. a chance for all Americans to be willing to sacrifice for the good of all, to engage in a social contract that says we work together.

          Watch him scream like a two-year old if anyone tries to cut into his Social Security.

      2. I hope Dr Bill dies in a yeast ball.

      3. I hope that these owners will be rewarded by their employees stories of being able to afford a doctor for the first time

        I hope that Dr. Bill starts working for free, since the stories from his patients are apparently just compensation for everyone else.

        1. I hope the owners can feed their children employees’ stories.

        2. You assume he’s a medical doctor. This being the New York Times, he’s more likely to have a PhD in education or sociology and call himself “Doctor” to let everyone know how superior his opinion is.

      4. He says this garbage as if the price of insurance won’t rise and the profits won’t continue to shrink until the bakery is out of business.

    2. That makes me want to see half of them fired all the more.

    3. I don’t know much about the insurance business but perhap the provision of insurance to the employees could somehow be considered “profit sharing” which may make the payment “less costly”.

      There’s a lot more someone doesn’t know about than just the insurance business.

      1. Does the phrase “social contract” annoy you even more now that you’ve read Huemer’s book? Because I just finished the part where he tears the concept apart, and the phrase makes me want to choke a bitch.

        1. what book?

            1. thanks. added to the list.

            2. why is that $30 kindle??

              1. For Amazon’s profits, DUH!!!

                The social contract says nothing about paying $30 for a book! $3, maaaaaybe.

                1. Go to a decent library like I did, you fools.

        2. Well, the phrase has made me want to a choke a bitch for a long time, so it’s more like I was that much more gratified reading that section. Yeah that was the part where I was like “okay I need to figure out how to have sex with a Kindle now.”

          1. I mean, I did before, but I really do now.

            1. I feel kind of bad now, like instead of bringing you joy I just brought you more pain.

              1. You act like those aren’t the same thing to him.

                1. Good point. I do feel better now.

          2. I had a law professor who used to love to infuriate lefties with a simple analogy. Suppose you live in a neighborhood and are a member of the HOA. And one day the HOA says that they have decided to repave the streets and you owe $1000 as your share. And you say, “but I don’t want the streets repaved”. And they say “some had that view and we debated it at the HOA meeting and your side lost, so pay up”. So you say no way. Then the next day they show up and start to tow your car to sell it to pay your debt. And when you try to stop them, they shoot you. Is that okay?

            The answer of course was “no”. Then he would ask them, “then why is it okay for the government to do just that?” And lots of stammering and “but the social contract” and such ensued.

            His point was not to advocate anarchy. But to say that maybe we ought not be so quick to use government coercion for things.

            1. PJ O’Rourke handled that:

              “Would you kill you mother to pave I-95?”

              That was his litmus test for government coercion.

              1. The other secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to someone’s head. Not paying taxes is against the law. If you don’t pay your taxes, you’ll be fined. If you don’t pay the fine, you’ll be jailed. If you try to escape from jail, you’ll be shot. Thus, I — in my role as citizen and voter — am going to shoot you — in your role as taxpayer and ripe suck — if you don’t pay your share of the national tab. Therefore, every time the government spends money on anything, you have to you ask yourself, “would I kill my kindly, gray-haired mother for this?” In the case of defense spending, the argument is simple: “Come on, Ma, everybody’s in this together. If those Canadian hordes come down over the border, we’ll all be dead meat. Pay up.” In the case of helping cripples, orphans, and blind people, the argument is almost as persuasive: “Mother, I know you don’t know these people from Adam, but we’ve got five thousand years of Judeo-Christian-Muslim- Buddhist-Hindu-Confucian-animist-jungle-God morality going here. Fork over the dough.” But day care doesn’t fly. “You’re paying for the next-door neighbor’s baby-sitter, or it’s curtains for you, Mom.”

    4. that’s it. we’re fucked.

    5. I don’t know much about the insurance business but

      Funny, neither does Obama.

    6. Fuck. And these people consider themselves educated, I imagine.

      1. These people are NYT readers and commentators. They consider themselves to be the most educated erudite people on earth. So much better than those red neck tea baggers in flyover country.

      2. None of the rest of them are any better.

        I know what I would do if I were the owner. I’d cut everyone’s hours down to 27 and then hire more part-timers to make up the difference.

        1. This one is about typical. They need to just get over it and fork over the cash. Greedy bastards like these are why we need Obamacare

          oan
          nyc

          Please offer your employees health insurance because it’s the right thing to do. Even though this example proves out it’s cheaper to offer the health insurance, the employer is balking! This is why Obama-care is needed; employers really don’t give a fig about their employees and will only do the right thing because the government forces them to do it. May I never eat a Baked in the Sun product!

          We are so doomed.

          1. I hope this bitch falls down the stairs:

            If you can’t afford to offer your employees healthcare then you’re not running a competitive, healthy business. Sure, sure – there are expenses involved, and those are real and difficult for small business to confront. But frankly, these costs should have been integrated into the business model from the beginning. ‘Efficiency’ is just code for screwing workers. There was never a ‘profitability’ imperative for corporate America to outsource all of its jobs overseas; it was just cheaper. It’s lazy and unethical that so many employers don’t offer healthcare, and it really is that simple.

            1. She can afford everything being more expensive, why can’t everyone else. We have produced an entire population of profoundly ignorant people/.

              1. You totally should have integrated the costs of being forced to provide insurance to your employees when you started a bakery at a time that you didn’t have to do that!

            2. I would wager that not a single such commentor has ever made a payroll. so much easier dictating how others’ money should be spent.

              1. There was never a ‘profitability’ imperative for corporate America to outsource all of its jobs overseas; it was just cheaper

                Dumbest thing I have ever read.

            3. 20 bucks says she’s never put a dollar in her pocket that wasn’t extracted from taxpayers first.

              1. No bet. Not even Zimbabwean dollars to US dollars.

                OTOH, one of the few compensations of the economy collapses is going to be seeing her get turned down for a job at Mickey Dee’s because she lacks customer service skills.

        2. Why hate on the employees?

          The presumption that they voted for Obama is just that – a presumption.

          They are going to get screwed just as bad as the owners.

          Given that bakery work is not a job that requires a lot of education or intellect, I would not be surprised if they voted for Obama. If my assumption that the workers are not highly educated or intelligent, their inability to understand that there are consequences is understandable.

          The NYT and the NYT commentariat have no such excuse for their ignorance.

          1. You are correct, it is an unfair presumption.

            But this is what government does to people – it turns us against one another.

          2. In fairness, a plurality probably didn’t vote at all. So at least they protested their non-choice as honorably as any libertarian who refused to vote on principle.

            1. This is one of those rare times where I think that people are getting what’s coming to them.

            2. “If you choose not to decide, you still have made a choice.”

              — Styx

              1. Sacrilege!

                That’s Rush, not Styx!

                1. It’s Tulpa, you really shouldn’t expect better.

                2. “Don’t sit on the plexiglass toilet
                  Said the mama to her son
                  Wipe the butt clean with the paper
                  Make it nice for everyone”

                  –Styx

          3. maybe the workers will get screwed, but how many voted for Obama blissfully unaware that the possibility existed because Obamacare?

            Being uninformed is a choice. There was no shortage of information about what this law might cause or reams of evidence about what similar measures have already done.

            1. Granted that being unskilled and uneducated is at least partly one’s own choice.

              However, the employees have far more excuse for their ignorance than the fools at the NYT.

    7. Dumb cunt should have just stopped at I don’t know much.

    8. “I don’t know what the profit factor is for the company, but a happy and healthy employee is a productive employee.”

      And when the profits hit zero, so do the employees!

  17. So you start one or two small new companies (janitorial service and accounting perhaps). You move half your employees to the new business and subcontract the new businesses to do all the work that is not directly related to backing bread.

    1. “backing bread”

      Now THAT’s kinky.

  18. Going to see a lot of companies with 49 employees — like in France.

    1. they had better start now, because the employee FTE calculations kick in this year.

  19. No, but seriously, hire 180 part-time workers.

    1. I believe the law counts full time equivalents (at least I have a dim memory of that) So 50 FTEs however you want to get there.

      1. the details. http://www.shrm.org/hrdiscipli…..-rule.aspx

      2. Yes, 180- workers each putting in 20 hours per week = 90 FTE’s and you are over the limit.

    2. I mentioned this to you a while back but I think the thread was dead or something because you never responded, and of course I don’t have the link handy to the story where I read about this, but I did read a month or so ago that the way the law counts your employees is just as full-time equivalents, such that if you did hire 180 part-time workers, toted up their hours, divided by 40, and end up with more than 50 FTEs, you’re still on the hook for the overall penalty. Not sure how it’s calculated at that point and it might still be cheaper, but PT is not a solution from my understanding.

      1. Wait, then how is Wal*Mart doing this very thing? There have to be more than 50 FTEs at any given Wal*Mart.

        1. I have no idea.

          1. I think — think — it’s because they’re employees qualify for Medicaid. so they can dump them on to that and not the exchanges.

        2. “The Obama Campaign would like to thank Walmart for it’s generous donation to reelection of President Obama.”

    3. Or legally split the company and sell off half of it. Or, if your lawyer can do it, split it into two companies below 50 employees and retain ownership of both.

      Like Jerry said – we are all going to be 49ers.

      1. Pay the fine out of spite and kick your workers onto the nonexistent exchanges.

      2. I recall hearing that the IRS would count this as one business. Some Franchise owner in Florida is saying he has to sell some of his restaurants to get under 50 FTE equivalents. Sorry I don’t have the article.

        1. Drake’s first idea would still work, though obviously it’s ridiculous to have a law forcing that kind of business decision. Economies of scale are a good thing, but apparently BO only thinks they’re good for big banks.

  20. divide the company in half: Dough in the Sun and Baked in the Sun.

    1. That probably won’t work either unless they’re extremely distinct. The DoL will just count them as one total company.

      1. Sell one to your wife?

        1. Not “arms length”.

      2. then just move across the border. NAFTA FTW.

        1. Expropriation!

          Seriously, kick your employees onto the exchange. The more we do it the faster it collapses.

  21. Hmm, who is it that benefits from regulations and laws that effectively bar small companies from growing?

    Oh I know, Big companies, those same guys who contribute large campaign contributions.

    1. Not to mention, big companies donate enough to get waivers.

    2. Let them eat Wonder Bread.

      1. “Let them eat Wonder Bread.”
        Non-union Wonder Bread!

  22. . “It’s ironic that our success meant we could grow,” Shein tells the Times, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.”

    It’s not ironic at all. The feds punish growing business in tons of ways. This is but one tiny corner of the whole mess.

    1. Obviously OC sucks, but why can’t they just spin off 45 of their employees into a second independent bakery, with the new owner paying them for the capital they take in the process?

      If it’s impossible to run a bakery with less than 50 employees, then they are not at a competitive disadvantage if they raise prices.

      1. sure, they could, but the costs would be equal or more. two rents. two utility bills. two billing systems. and likely more mangers to run the whole thing.

  23. Small businesses like mine who have been offering health care will be better off when all businesses are paying into the system because the cost increases will slow down.

    says the lady selling $3 cupcakes.

  24. Most of the brands of bread in your supermarket now are all from the US subsidiary of Grupo Bimbo of Mexico. Baking bread is just one of those jobs Americans won’t do, apparently. Flowers is the other player (Sunbeam) and they just bought most of the brands from the bankrupt Hostess bakeries – but they’re a smaller player.

    I’ll bet dollars to donuts if people try the “get under 50” ploy, they’ll just lower the number to 40. Lots of non-core functions will be outsourced or replaced with automation.

  25. $200 a month for health insurance?! Is that really close to what people are paying in other states? I’m in MA, and my plan is almost $600 a month for a single person.

    1. $400 plus another $100 into an HSA (which i am about to lose) for a single employer policy in MD

  26. Instead of dipping into their profits, the Times notes that the owners could also hike their prices by an average of about 4 percent, passing the costs along to their buyers.

    Ugh! Another one passes along the fallacy of the businessmen merely passing on costs to customers.

    Never in the history of commerce have businessmen passed on costs to customers. Producers/sellers can put on offer for purchase and sale products at higher prices in past, hoping the sum of sales at the newer prices exceeds their newer cost of production (Axiom of Profit) while the sum of sales is at the mercy of winning bidders for what is on offer (Law of Prices).

    No producer/seller anywhere passes costs to buyers, anywhere. Producers/sellers hope to gain a sum of winning bids whereby the sum at least equals their costs.
    If producers/sellers could pass costs as claimed, they would raise prices to whatever they feel like it, indefinitely. Buyers would be forced to pay.

    What would happen if all businessmen passed costs as you claim? Soon buyers would run out of buying power. Not everything on offer would sell.

    Prices get set by winning bidders in the face of supply. That’s the Law of Price. It is the only law that rules the whole of economics. To disavow this is to say economics isn’t real.

    All producers/sellers get constrained by the Axiom of Profit ? sum of sales must at least equal? cost of production or ruin happens quickly. The sum of sales derives from the Law of Prices.

  27. well… i would submit a fourth option for Mrs. Stein and her partner. they could close their doors, leave 50+ people without jobs (much less insurance), and get jobs at other companies who can afford the costs. assuming they pay themselves a salary of $100,000/yr, a $100,000 hit to their actual profits leaves them making ~$150,000. i am sure the money they could make as bakery managers elsewhere is comparable, without the hassle.

Please to post comments

Comments are closed.