The ACA’s 30-hour cutoff hurts American workers

On January 30, 2015, in Job Creation, by Andy Puzder

Earlier this week, I spoke with Kristine Frazao of Sinclair Broadcast Group about my recent testimony before the Senate HELP Committee on the Forty Hours is Full Time Act.

The ACA’s full time definition is having a negative impact on American workers and reform is needed. There comes a point when things are so expensive that it’s irrational for business. And, if something is irrational for a business, it’s ultimately not good for workers. Employees want more hours, they need more hours and businesses want to give them more hours, but the ACA’s 30-hour cutoff makes it economically inefficient for business to give them more hours.  It’s that simple.

To read a report on the interview, click here.

 

I’m often asked why more business people don’t speak up on various issues to inform the public about the chilling effect government policies can have on jobs and overall economic growth. “Why do we let the inexperienced dominate discussions that ultimately impact everyone else?” many will ask. Well, I have a good example of why this happens.

I recently wrote an article for the Wall Street Journal titled Shunning ObamaCare on how ObamaCare enrollment went at our company.  Basically, we had 6,900 eligible employees of whom 1,447 already had our company-sponsored compliant insurance.  That left 5,453 new people to whom we offered employer-sponsored, ObamaCare-compliant coverage.  A mere 420 enrolled.  Unless they had insurance from another source, the other 5,033 elected to pay the penalty. It turns out that ObamaCare isn’t as big an expense as we anticipated. Very few people signed up.

Based on that article, I was asked to testify before the Senate HELP Committee on the Forty Hours is Full Time Act.  I did so last Thursday, January 22nd.  The good news is that the Senate is actually holding hearings again.

Following the hearing, a “journalist” named Alec MacGillis wrote a piece in Slate criticizing the hearing and claiming that I said things I never said and made claims that I never made.  He concluded the story with a reference to how much he believes I earned in 2012. This is irrelevant to the subject at hand but somehow he felt it was important to mention. You can read his inaccurate account by clicking on his Failure to Launch musings.

I responded yesterday with an article in Real Clear Politics (RCP) to set the record straight:  What Hearing Did That Slate Reporter Attend?

If you have time to read my RCP article, you’ll see why most business people remain silent.

 

Yesterday, Neil Cavuto invited me to join his Fox News special report on President Obama’s 6th State of the Union (SOTU) address.  During the segment titled CKE Restaurants CEO: Country doesn’t want a 3rd term of Obama, I shared with Neil that if the President leans even more to the left, the American voters won’t want a third term of Obama.  Whether it’s Hillary Clinton or Elizabeth Warren, either one would represent another “Obama term.”   Neil and I also discussed how effective the Republican Congress can be given the President’s veto threats.  The President has a choice.  He can be conciliatory and gracious or defiant and petulant.  Unfortunately, this President has not learned how to negotiate. And, if the President is not willing to work with Congress, nothing will get done.

After the President’s speech, Senator Joni Ernst provided the SOTU rebuttal.  During her remarks, she once again mentioned her time at Hardee’s, stating, “To save for college, I worked the morning biscuit line at Hardees.” As I highlighted in a previous blog post, Joni’s comment points to the importance of entry-level jobs and the value these opportunities provide in helping people get on the ladder of success.  In this great country, your job and your life are what you make of them.  You can access the transcript and video of Senator Ernst’s rebuttal by clicking here.

 

 

On Wednesday, the Wall Street Journal published my op-ed titled, Shunning ObamaCareIn the piece, I  discuss the negative impact of the 30-hour work week under the ACA and the importance of returning the definition of full-time work to 40 hours a week.

Among the Affordable Care Act’s many economic and political disruptions, the law has unintentionally encouraged employers to convert full-time jobs into part-time jobs. ObamaCare mandates that employers offer health insurance to employees who work more than 30 hours a week, or pay a penalty up to $3,000 an employee. But employers have no such obligation for employees who work less than 30 hours a week, making part-time employment less costly. It’s a simple fact: Make something more expensive and people will use less of it; make something less expensive and they will use more of it. So naturally employee hours have been reduced, particularly in the retail segment, which has lowered wages and reduced consumer spending. This is a serious problem for workers and business.

Next week, I will elaborate further on the topic when I testify before the Senate Health, Education, Labor and Pensions (HELP) Committee.

To read the full WSJ article, click here.

 

Yesterday, I was interviewed by Fox Business News host Neil Cavuto to discuss what appears to be a correlation between gridlock in Washington D.C. and a positive effect on the market and the economy. Neil kicked off the segment, Washington gridlock good for U.S. stocks, economy, by citing previous pundit and media quotes about the lack of productivity in the 113th Congress.

Cavuto 12.30.14

The reality is this:  despite the concern for an alleged “lack of progress” in our  nation’s Capitol, we’re seeing GDP, job and stock market growth. I told Neil that when government does nothing, that’s generally better than when the government does something. The last three Congresses exhibit that. This Administration has experienced a number of significant challenges, but the midterm elections created certainty for the business community.  In turn, business is driving growth, oil prices are down and consumer spending is up.

Halfway thru the segment, Neil shared with me and his viewers a graph that shows how Congressional bills and the DOW stack up against each other.  The graph makes a very convincing case for less government interference.

Cavuto graph 12.30.14

Businesses do better when government isn’t interfering with them.  Here’s to less government in 2015.

Happy New Year to all.

 

 

 

On Thursday, I spoke with Joe Kernan at CNBC’s “Squawk Box” about another fast food industry first coming from Carl’s Jr.  The Carl’s Jr. All-Natural Burger is the first among major fast food companies to feature a grass-fed, free-range beef patty without added hormones, antibiotics or steroids.

During the interview, I said that my job was not to tell people what to eat, but to figure out what they want to eat and then serve it to them.  Research showed us that consumers, particularly millennials, want more natural products, so we’re giving them what they’ve asked for. We’re rolling out the All-Natural Burger at Carl’s Jr. in the west on December 17 and testing it in our Hardee’s markets right now.

Joe also asked me about the headwinds that the fast food industry is managing right now.  I mentioned part-time labor, commodity costs and Obamacare. To see my response and the full interview, click here.

Also Thursday, Katie Little from CNBC.com posted an interview about our company’s continued uptick in sales, growth and relevance to consumers.  Despite the media’s focus on McDonald’s, the rest of us in the fast food industry aren’t seeing the same problems. In fact, I think most of us in fast food are experiencing the benefits of lower gas prices, which is putting more cash in people’s pockets. To read the full article, click here.

 

Earlier this week, during an interview on Fox Business, Neil Cavuto and I discussed efforts by the White House to force businesses to pay overtime to management level employees. Neil started off the segment by making it clear that the next two years are going to be difficult ones for businesses under this Administration.  I concur.  The real problem with this President is his lack of understanding of how business works.  Efforts to turn managers into hourly employees is a great example of how this Administration fails to appreciate the most basic elements of running a business.

At our restaurants, we compensate our restaurant managers with a salary and a performance bonus whereas President Obama wants to turn managers into hourly employees that get overtime. This means that managers will be compensated for time spent as opposed to time well-spent. Unfortunately, the President’s move would hurt the very managers he intends to help by turning them into hourly employees, depriving them of the benefits that come from moving into management including an incentive bonus based on their personal performance. In March, I wrote about this issue in a Wall Street Journal op-ed titled Obama’s Overtime-Pay Boomerang.

This Administration’s policies are hurting employees and businesses.  We need to elect a president who understands the private sector. Personally, I think Mitt Romney is the man for the job.  I hope he runs.

 

Earlier today, I spoke with Adam Shapiro of Varney & Co. on Fox Business about the FDA’s recent move that requires chain restaurants, movie theaters and pizza parlors to post calorie counts on their menus. To understand the whole picture, it’s important to note that menu labeling became law in 2010 as part of Obamacare.  And, just like Obamacare, the new menu rule is an example of nanny state overregulation. It’s an ill-conceived plan that demonstrates this Administration’s failure to understand American consumers, American business and the marketplace.

Caloric menu labeling doesn’t change eating habits.  Research to date has found that placing caloric content on menus does not have an impact on people’s eating habits.  Following are just a few articles outlining some of that research:

The FDA’s new menu rule will be expensive for restaurants and expensive for consumers. There are better ways to provide information to consumers.  For example, at Carl’s Jr. and Hardee’s, we’ve had posters that list the caloric and fat content of our products in our restaurants for a number of years.  And, on our web site, consumers can check the fat and caloric content of our products with a nutritional calculator. For each of our products, we discloses serving size, calories, calories from fat, total fat, saturated fat, natural trans fat, artificial trans fat, cholesterol, sodium, total carbohydrates, dietary fibers, sugars and protein.  This format works for consumers and it works for business.  In fact, the appropriations committee that funds the FDA recommended that these types of posters could serve as adequate nutritional information inside restaurants.  Unfortunately, like the rest of Obamacare , the menu labeling law was put together hastily.

Another Obamacare loophole that’s bad for Americans. Before closing the interview, Shapiro asked my opinion about a new-found loophole in Obamacare.  According to this Washington Times article, “under the President’s new amnesty, businesses will have a $3,000-per-employee incentive to hire illegal immigrants over native-born workers because of a quirk of Obamacare.” If that’s the case, the math is astounding.  If American businesses hired just 2 million of the 5 million illegal immigrants affected by the President’s executive order, American business could save $6 billion.  The odds of any business not taking advantage of a $3,000-per-employee loophole is absurd.

Whether this is an intended or unintended consequence of the law, it proves once again, Obamacare is a poorly designed and poorly executed concept.  Obamacare has become the Edsel of the health care industry.

 

 

 

Last week, I posted my POV about President Obama’s executive order on immigration and its negative effect on true comprehensive reform and U.S. workers.  The article was a bit longer than my usual posts on this blog, but then, an unconstitutional executive mandate is a big issue. It demands our attention.  I am pleased and flattered that the editors at Real Clear Politics appreciated the piece and ran the blog post in full on their site.   Here’s the link:  Obama Does Not Want Immigration Reform.

 

On Friday, I spoke to Neil Cavuto on Fox Business News following President Obama’s announcement that he will allow nearly 5 million undocumented immigrants to stay in the country.  I’m a big supporter of immigration reform as these two articles demonstrate:

But, I’m also a believer in our Constitution which establishes the legal foundation upon which this great nation was built.  That’s why I can’t support the President making immigration reforms for political purposes via unilateral executive action.

Immigration reform requires legislative action, not an executive mandate. On that point, last week, numerous business executives, political leaders and I sent a letter to the Republican members of Congress imploring them to reform our broken immigration system. The letter encourages Congress to pass legislation that “discourages the rising tide of illegal immigration while fixing the unnecessary obstacles that send talented individuals elsewhere and make it harder for American companies to compete, grow and create jobs for American workers.”  The letter ran in the Washington Times as part of a 16-page supplement that also featured opinion-editorials by prominent Republicans in support of immigration reform. To read or download the full supplement, click here.  The Republican leadership supports immigration reform.  Why then did the President take this dangerous and unprecedented action?

The immigrant community should understand better than most the potential dangers of a President acting outside the parameters of his constitutional powers.  Either they or their parents came to this country for the same reason my grandparents did – a free society that offered economic opportunities.  The countries they came from often did not respect the rule of law, lacked a system designed to protect the people from tyranny, and were dominated by an oppressive class unrestrained by the rule of law.  By ignoring our Constitution and deciding that he had the right to legislate because Congress wouldn’t do what he wanted, President Obama acted like he was the ruler of one of these oppressive regimes, endangering our liberty and putting people in this country in jeopardy of losing respect for both the law and the system that produces those laws.  Let me be clear: we absolutely need immigration reform, but it’s wrong to take a cynical and political approach. It’s not about electoral payoffs; it’s about doing the right thing for people and families who have lived in the shadows far too long.

It’s not that the President was unaware of what he was doing or the limits on his legitimate authority. Prior to issuing this executive order, even President Obama stated that “The notion that I can just suspend deportations through executive order, that’s just not the case.” In President Obama’s own words:

He has specifically acknowledged that “[w]e’re a nation of laws, that’s part of our tradition,” and that “I’m not a dictator, I’m the President.” One has to wonder what changed. It certainly wasn’t our Constitution. Perhaps it was the electoral winds that recently changed.

There is great value in the legal system we have in place.  In fact it’s so valuable that people from all over the world have left and still desire to leave their homes and families to come here.  We shouldn’t support a president who endangers that system just because we like what he’s doing.  What if another President used Obama’s precedent to issue an executive order that, for example, stopped enforcement of certain civil rights laws?  Empowering the President to ignore or rewrite the law is an exceptionally dangerous two-edged sword.  We have three branches of government and a balance of power between them for a reason.  Working with the new Congress, President Obama could achieve comprehensive immigration reform.  We shouldn’t allow him to desert that long term goal for very dangerous short term benefits. I understand that Democrats want to reverse their political fortunes, but using undocumented immigrants as pawns is wrong. I want those immigrants to join us on the journey to a great American future and I want Congress and the President to work together to achieve real, lasting reform.

Unfortunately, the truth is, the President does not want the immigration issue to go away.  If the Administration and the Democrats can keep this issue unresolved and the debate alive, they believe it can get them votes. What Obama’s executive order did is, at best, transitory.  The next president could rescind it in 30 seconds.  If the Democrats wanted real and lasting immigration reform, they would have enacted it between 2008 and 2010 when they controlled all three branches of government.  If Obama wanted immigration reform, knowing that the incoming Republican congressional leadership also wants real reform, he wouldn’t have done the one thing Republican leaders unequivocally told him could destroy the possibility of comprehensive immigration reform.  The Democrats don’t want to resolve this issue.  They want it to look like they’re trying to resolve it.  As long as the immigrant community keeps voting for Democrats in the belief that they will resolve this issue, the issue will never be resolved.  Democrats’ words are pretty, but words must translate into legitimate, lasting and comprehensive actions. So far, they have not.

Republicans should not take the political bait. This is not a political battle; it’s a moral battle. They should legislate.  They should govern.  The Republican leadership wants to fix our broken immigration system.  It’s the right thing to do.  It’s the Democrats who need this issue to stay alive.  Which explains President Obama’s unilateral action that makes it look like he’s acting for the immigrant community when he’s really trying to kill the possibility of any real reform.  At the very least, his actions have empowered the wing of the Republican party that doesn’t trust him and doesn’t want real reform.  If we want real reform, the smartest thing we can do is support candidates who go beyond empty promises and deliver results. In the midterms, that’s exactly what America did.  We sent a message to this President more clearly than any midterm message sent to any President in our nation’s history:  “STOP. We want our government to work.”  Apparently, that message didn’t get through the fog of his political ambition.

The future of this nation, which has been a home for immigrants from all over the world, depends on our electing and supporting leaders responsive to our  needs, rather than those bent on expanding their political power.

To view my interview with Neil Cavuto, click here.