Pizza, Health Care and the Minimum Wage

by Rev. Jim Conn on August 29, 2012

My grandchildren live on pizza. Oh, they eat other things that young children like, but whenever mom or dad work late or events intervene, the call goes out for pizza man to deliver.

I was thinking about this when I read a piece in The Week a while back about franchisers who will soon need to cover the cost of health insurance for their low-wage workers or pay a fine. The case study focused on a guy who owns a string of chicken and Mexican fast food stops and who employs 425 workers. Some of these people run the front counter. Some do the deep frying. Some sweep up. None, apparently, have any health insurance.

The owner complains that providing these workers health insurance will cost him $546,000 a year – a cost that he says his business plan simply cannot support. Really? I thought. Let’s break that down. Divide the cost by the number of workers and it comes to approximately $1285 per year per employee. Divide by 12 months and the cost is $107/month per employee.

If the employee earns the current minimum wage at the California level of $8 an hour, the worker receives about $16,320 a year before taxes, or about $1360 a month. To this, mandatory health insurance would add $107/month or $27/week. That’s an increase of about 68 cents an hour. And this is way too much for a franchise owner to pay?

Of course, California’s minimum wage is already 75 cents an hour more than the federal wage. San Francisco set a minimum of $10.24 an hour – considerably higher but consistent with about what minimum wage would be if it had just kept pace with inflation between 1969 and the present. Other states have also set rates higher than the federal level as well, so the numbers will shift from place to place. But in some areas employers are already paying more, and adding a few quarters an hour doesn’t seem like it should break the bank.

But think about this: A single person trying to live on minimum wage earns enough to pay for an apartment somewhere away from the beach in Los Angeles. That’s just rent, not food, transportation, or clothes, much less health care. A couple – both working minimum wage – lives on half of what it takes to have a middle class life here. A family of four? Two people working? This is not a sustainable life in our city. Yet, at least half a million families struggle in this circumstance. Here, now.

One argument says that requiring employers to come up with health insurance money will make them uncompetitive in a globalized economy. Well, maybe, but not many pizzas get delivered from, say, Honduras or Cambodia. The competition in the fast food business is local.

Another argument suggests that asking private owners in this country to provide health insurance is unfair because other countries have single-payer systems in which everyone picks up the tab, thus leveling the playing field. Well, that’s true, and Congress should have been hearing from those businesses when the insurance companies were writing themselves into a cushy corner of the national health care law.

Another recent news item announced that health care might increase the cost of a large pizza by 20 cents – or one percent of the current price. Certainly paying a dab more for the pizza is worth making sure workers have medical coverage. Surely those two dimes are cheaper than the costs we currently pay when an uninsured worker who gets hurt on the job ends up in the Emergency Room. In fact, it’s about the amount of change my six-year-old grandchild drops out of his pocket on his way to the beach.

Tags: health care • Minimum Wage

Anonymous

Jim, from the perspective from which you are writing, you are absolutely correct. From the perspective of the Pizza Store owner, and other small businesses, that $546,000 per year is money that comes out of the profits he has come to expect to be available to him each year. To put it in the terms of folks like you and me on pensions, it’s like us being told that to help others who don’t make as much pension as we do (because they didn’t work as many years, maybe), our pensions will be dropped by 35%. If that happened, we would be upset, feel that we were being robbed by folks who think they should make more when they didn’t put in more, etc., etc. Most business owners truly believe that their profit stream has been earned; that they have paid their workers all the law requires them to pay, that they have abided by all of the laws that regulate their businesses, etc. To them, this is stealing money out of their pockets because it will reduce their income.

The sad thing is that he won’t pay health insurance for these workers. The premiums you show him as paying is about the same as the tax penalty he will have to pay for NOT giving his workers health insurance. Because the cost of health insurance is higher than the tax penalty per worker, most businesses will opt to pay the tax penalty.

Even a poor plan, that has the beneficiary paying a $5,000 deductible and a $50 co-pay, for a single person, can cost an employer at least $2500 per year, if not more. When we set the tax penalty for not paying, depending upon income of the business owner, at lower than the cost of even a poor insurance plan, we are inviting a continuation of many people not getting health insurance. Before we yell at the business owner, we need to yell at Congress for setting such a low tax penalty.
James W. Donaldson

Jim Conn just keeps on telling the truth to corp power. He just keeps on pointing out how “the franchise corps” gobbalize the world in the same old bottom line: “profits before people”. Thanks. Jim Conn. You are truly a voice of reverence for life.
Gene Partlow

Jim and Tom
You’ve both pretty much confirmed the strong, inevitable conclusion
one gets from reading Eric Foner or, say, Howard Zinn’s A People’s
History of the United States 1492 – Present. Which is that at any
given period of our history, the laws. the media and religious
institutions have been carefully rigged to (1) hijack more and
more created wealth (read “value of labor”) for the currently
self-entitled elite and (2) be sure to create social and economic
levels (read “buffers”) between the very rich and everyone else,
so that the elite’s real scenarios are normally well-hidden, while
the rest of us are busy struggling against one another… the rest
of us historically being indians, slaves, poor whites, immigrants,
middle class, small business et al. A neat and ugly trick, which
backfires periodically, and with the social upheavals accelerated
by global climate changes and capitalism’s meltdown, will very
likely reach a cataclysm in our lifetimes.
Gene