Can’t Employers Just Pass On the Extra Costs Associated With ObamaCare?

OThe other day, I was talking to someone at Starbucks about ObamaCare and how it was going to hurt business expansion and prevent employers from hiring more people. I explained that it might even prevent our economy from coming out of recession. My acquaintance told me I didn’t know what I was talking about and I had been reading too much GOP dribble, and that ObamaCare would be great for America and it would be fairer for all Americans and all employees who need healthcare services. Well, I didn’t enjoy being called onto the carpet, and my views had nothing to do with politics, more about reality. But let’s talk about this shall we?

My acquaintance insisted that employers could merely pass on these extra costs associated with ObamaCare to their customers. I completely disagree with this assumption. First of all, before retirement I was in the car ash business. If we had to pay people more money, and provide more benefits to every employee, then we have to raise the price of our basic car washes to $10, and our deluxe car washes to 20 bucks. One thing I found in running these types of service businesses is that if you raise your price you have fewer customers. That is to say; there is a point at which people are no longer interested in partaking in your services.

Therefore, you may not be able to pass on the extra costs, and if you try people will stop buying your services, perhaps even wash their own car, therefore you have to close the business because you can’t make any money. He told me that if everyone had to charge more for everything, then people would eventually be willing to pay more for a car wash. He totally misses the point, but I appreciate his intellectual thought process and perspective. Unfortunately, it just happens to be wrong, that’s not the way it would work.

When you raise your prices too much people will hire a service which is part of the underground economy. One that doesn’t pay for healthcare insurance for their employees at all, or they will do it themselves. In that case no businesses can exist in certain various industries. He suggested that maybe that industry shouldn’t exist at all if people weren’t willing to pay the higher price. Maybe so, from his perspective, but those industries do exist today, and hire a tremendous number of people. In the car wash industry for instance there are over 50,000 full-service car washes in the United States. Each one of those has a large number of employees.

The same thing is true in the restaurant industry. Although they probably number in the 500,000 to 750,000 range or more and that’s a lot of employees. And if 10% of them go out of business. And each one of those restaurants has 30 people working there, well you do the math. Now then, I’ve only listed two industries here, but it will affect all of them. Please consider this. thank you