The Right Prescription

Papa John Was Right

Celebrating the anniversary of the 29-hour week.

By 11.7.13

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John Schnatter, founder and CEO of Papa John’s Pizza, criticized Obamacare twelve months too early.

It was a year ago today when the Naples Daily News reported Schnatter responding to a question about whether Obamacare would cause Papa John’s franchise owners to reduce their employees’ work hours, “That’s probably what’s going to happen. It’s common sense. That’s what I call lose-lose.”

Under Obamacare’s employer mandate companies with 50 or more full-time employees—“full time” defined as 30 hours a week or more—must provide their workers with health insurance or pay a hefty fine. Schnatter was pointing out that his franchise owners would have an incentive to reduce many employees to 29 hours or less so as to limit the number of full-time employees to less than 50.

Schnatter’s comments were the last straw for the left. A few months earlier Schnatter had publicly criticized Obamacare by saying it would add $5 million to $8 million in costs for his company. Now, with “The One” safely reelected and Obamacare on track to provide untold good things to the country, a wealthy Mitt Romney supporter like Schnatter needed to be publicly flogged lest he open his mouth again.

Both Bill Maher and Jon Stewart laid into Schnatter. A Salon columnist referred to him as an “idiot,” while Think Progress helpfully lectured Schnatter and other CEOs that being forced to provide health insurance would be beneficial to their businesses. And, of course, left-wing apoplexy wouldn’t be complete without the call for a boycott.

The most sanctimonious condemnation came from Forbes contributor Rick Ungar, who claimed that Schnatter was “an ideologue who would gladly put a metaphoric gun to the head of his employees, using them as pawns in the effort to sell his own political beliefs which, in the opinion of this writer, have no more substance nor taste than the pizzas he peddles.” Schnatter and some other restaurant owners were trying “to blackmail the people of the United States into doing [their] bidding.”

Yet as 2012 turned to 2013, something truly alarming happened: More and more business were following Papa John’s lead and putting a “metaphoric gun” to their employees’ heads. For example, a Taco Bell franchisee limited all employees, including full-time ones, to no more than 28 hours a week. Land’s End in Wisconsin reduced all part-time employees to 29 hours a week or less. About half of the full-time employees at AAA Parking saw their hours cut to part time.

Interestingly, very few of the businesses that announced cutbacks in 2013 due to Obamacare faced boycotts or scathing criticism from the left the way Papa John’s did. Perhaps there is only so much left-wing outrage to go around. Or perhaps leftists realized that constantly targeting businesses that cut back hours might have an unintended consequence. Do it often enough and people might start to realize the problem isn’t CEOs’ ideology or greed but Obamacare’s employer mandate.

And there are quite a few such businesses. My former colleague at Investor’s Business Daily, Jed Graham, has compiled a list of 363 employers that includes 75 private businesses that have reduced hours in response to Obamacare. Astoundingly the other 288 are government institutions such as school districts and state universities. Who knew there were so many blackmailers in public education?

There are more to come as the Obama Administration’s July decision to delay the employer mandate until 2015 undoubtedly caused many employers to postpone decisions on workers’ hours. The Michigan firm Directions In Research had limitedthe hours of its telephone interviewers to 29.5 a week. After the delay, it temporarily allowed employees to work 40 hours. As January 2015 approaches, expect Direction In Research to reduce hours again and many other employers to follow suit.

Had Schnatter waited to make his remarks until today, it would hardly have mattered, being just another story among thousands on how Obamacare isn’t working. Were Schnatter the really mischievous type he would now offer, say, a $5 discount on any pizza for any person who faxed his insurance cancellation notice in to a Papa John’s store. Alas, that won’t happen, as Schnatter walked back his remarks in late November. While Papa John’s brand suffered for a little while, it has more than recovered, if its recent profit numbers are any indication. Schnatter no doubt wants to avoid any future controversy.

Nevertheless, over 300 employers have demonstrated that Schnatter was right. Businesses will reduce their employees’ hours in response to Obamacare’s employer mandate. It’s common sense.

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About the Author

David Hogberg is a senior fellow at the National Center for Public Policy Research.  Follow David Hogberg on Twitter.