Monday, November 12, 2012

The cost of the election

Many millions of dollars were spent on the recent election by congressional and presidential candidates, but the real cost of the election may yet to be seen.  Almost immediately after the results were in some business owners were announcing lay-offs and reduced hours for their employees.  One mine owner announced over 150 employees would lose their jobs, and it is reported that 54 people have already been notified that they were being laid off due to the concerns of the President's view of the coal industry.  The CEO of Papa John reported this week that most franchise owners would reduce the hours of their employees as a result of Obamacare.  Only those working 30 or more hours a week are required to be covered by employer provided insurance.  The corporation that owns Olive Garden and Red Lobster restaurants announced similar reduced hours for their employees, and the owner of Applebee's is reported to have said their restaurants to cease hiring new employees.  Large corporations such as these make the headlines, but one has to believe that many small business owners are having similar thoughts.  Of course, the public is outraged and boycotts of these businesses are already being considered.

American people have become somewhat schizophrenic in recent years.  We love millionaires who play sports and will buy clothing with their names plastered all over them.  We love millionaires who star in movies and on television.  We love millionaires who sing.  We love millionaires who go to Washington and pass laws they don't understand that impact the entire nation.  But, we hate the millionaires who provide us with jobs.  These are the greedy ones that must be destroyed so "the playing field will be level for all people."  I simply don't understand this line of thinking.  Not once in my entire life has a poor person ever gave me a job that provided for my family.  I've never even had a person on the same economic level as me give me a job.  Crush the ability of a business to make a profit and the unemployment rate will go up even higher than it is already. 

Businesses, both large and small, must make a profit to survive and be able to provide jobs that benefit everyone.  The small business I owned went enough years without making a profit that it finally had to be closed putting all my employees out of a job.  For anyone in Congress and anyone else who never studied Economics 101, a business cannot survive if it is not allowed to make a profit!  Of course, we can complain that the salaries of those who operate such companies are out of control, but the ones who make that complaint have probably never owned a business.  Founders, owners, and CEOs of these businesses are the ones taking the risk.  Employees may lose their jobs when a business goes under, but the owner of a small business is often at risk of losing his or her home, life savings, and retirement accounts.  Why take that risk to earn the same salary you could earn working for someone else without any risk?

Only people who have owned a business can understand how mandated health care will affect the company's ability to earn a profit.  Others like some in Congress who said they would read the bill after it was passed don't have a clue how it will affect small businesses.  After all, this is the same kind of thinking that convinced Congress they knew how much water it took to flush a toilet!  They got that wrong, and many business owners believe they got this wrong as well.

People will argue that businesses will just pass on the cost of the insurance to their customers, but here is where that American schizophrenia kicks in again.  The public loves Papa John's $10.00 pizza.  What happens when the costs of that pizza goes up to reflect the real cost of mandated health care coverage?  People will be outraged at the "greed" of the company.  They will stop buying the pizza resulting in stores closing and more employees out of work.  Take that across the board and include more than just restaurants.  Begin to think of supermarkets, department stores, service providers, wholesalers, and other companies all facing the same challenge of trying to earn a profit with increased government interference.  How many costs can be passed on to the American consumer before the entire economy collapses?

Health care insurance is expensive, and we should not expect to see it become less expensive just because it is mandated for everyone to have it.  I've yet to see any government mandated program result in lower costs.  Small business owners are going to have to be very careful that their health care costs do not jeopardize their ability to remain profitable.

The need for health care reform is real.  Too many people have been without health care and have suffered as a result.  Could there have been a better solution than Obamacare?  We'll probably never know now since President Obama's re-election ensures that it will move forward.  My fear is that in the next five to ten years that the changes under Obamacare are enacted we will find that this election cost America much  more than just the money spent by the candidates.

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