AEIdeas

The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (5 comments)

  1. Chris Andriesen

    Looks like the $179k was an error – they fixed it. Now $91k.

  2. Stephen

    Pizza owner guy is an idiot:
    1. Apparently the cost wasn’t too great for the buyer. If it was unaffordable, then no buyer would have been found.
    2. It is not certain that the employer mandate will stick around. It has already been delayed and there are calls to repeal it.
    3. He can put all his employees at 31 hours
    4. He can raise his pizza prices since competitors will presumably be facing a similar situation. Therefore, the costs are passed on to the consumers.
    5. You can pass on something like 40% of the expense to the employees. Put them all at mimium wage and then they will choose not to purchase coverage because they have so little take home pay to begin with.

    Looking at his age, I’m sure he was ready for retirement anyway and is just using this as an excuse for political purposes.

    1. Stephen, you seem to have this all figured out. It seems that the current owner knows so little about running a Pizza restaurant that one must wonder how he ever manages to get himself dressed in the morning.

      By the way, how is your business doing? With your extensive knowledge of economics and business as evidenced by your simple and concise solutions to the problems facing business owners these days, you must be very prosperous.

      1. morganovich

        as ron says, you are making all manner of bad assumptions.

        if the pizza guy knew this law was coming and did an analysis of the costs, then he knew he would make less money.

        perhaps the buyer was not aware of the extent to which this was true. or maybe the buyer things he can raise prices and the seller has tried it in the past and knows it won’t work.

        and he may already be rich enough that he simply does not feel it’s worth the work for the reduced profit and has moved on to seek other opportunities.

        just because you can make a profit at somehting does not make it worth your time and different people have different numbers that they deem worth it.

        i think it’s likely this was driven by obamacare, not cheap point scoring. i have seen lots of businesses respond in various ways.

        you presume he has pricing power, but he likely doesn’t.

        even if his competitors all raise prices too, so what? higher price means less demand from customers. they eat out less etc.

        this affects his living. sometimes increasing prices decreases revenue.

        is it really do difficult for you to grasp that is a law makes companies less profitable/more odious to run, that, at the margin, people will exit industries?

        it sounds to me like you are claiming to have all manner of knowledge that you do not and then tryign to attribute rational actions to political theater.

    2. He did not sell all the restaurants together, but separately. So new buyers can easily fall under the 50 employee level where the fines kick in by owning only 1 restaurant. If competitors raise prices, the new owners can raise them a little, still undercut the competitors, and pocket the extra profit.

      He says he netted $78,000 less than the fine would be, or $143,000. If he passed on 40% of the costs to the employees, that would leave him with all of $10,400 profit.

Comments are closed.

Sort By:

Refine Content:

Scholar

Additional Keywords:

Refine Results

or to save searches.

Open
Refine Content