PPACA's effect on the restaurant industryBlog added by Emily Hutto on September 11, 2012
Emily Hutto

Emily Hutto

Denver , CO

Joined: June 18, 2012

My Company

My experience in the restaurant industry has proved all the stereotypes true: Servers and bartenders stay up late, eat unhealthy food, chain smoke, drink too much and don’t get enough sleep (because they’re working until all hours of the night, and waking up to do it all over again.) To make matters worse, most of them don’t have health insurance.

During the recent Restaurant Week in Washington D.C., the National Consumers League hit the streets to protest the low wages and lack of benefits in the service industry. An article on People’s World cites some of the facts that they distributed on flyers during their protest:
  • 88 percent of more than 4,300 restaurant workers surveyed by the union-backed Restaurant Opportunities Center (ROC) don’t have paid sick days. The result: Sick people are handling your food. In fact, 63 percent of surveyed restaurant workers said that at some point during the past year, they cooked or served food while they were sick.

  • Restaurant servers don't receive the federal minimum wage of $7.25 an hour — they get only $2.13, the federal "tipped minimum wage." That wage has been the same for 21 years. Tips are supposed to close the gap between the two minimum wages.

  • 90 percent of surveyed restaurant workers, including servers, bartenders and bussers, do not receive health insurance through their employers.

New mandates required by PPACA are causing even more financial unrest in the restaurant industry, as employers who are already unable or struggling to provide health insurance to their employees are now required by law to do so.

A July 2012 press release from the National Restaurant Association, restaurant.org, presents data from White Castle System, Inc., an NRA stakeholder, suggesting its current health care plan costs could climb by more than 20 percent in 2014 due to the requirements of PPACA. “The company will be subject to the employer mandate that requires businesses with 50 or more full-time-equivalent employees to offer full-time employees and their dependents health care coverage that is ‘affordable’ and of ‘minimum value,’ or face potential penalties.”

The press release continues to explain the NRA’s support of a
PPACA repeal, stating, “[White Castle] also would be covered by PPACA’s auto-enrollment mandate, which requires employers with more than 200 full-time employees to automatically enroll full-time employees in a company health plan. The law also includes extensive reporting requirements that could impose additional compliance costs.”

Another press release on restaurant.org from February reveals the job growth that the restaurant industry is experiencing, and predicts that the industry will continue to expand. Restaurants added jobs at a 1.9 percent rate, it says, and in 2012 the restaurant industry is expected to add jobs at a 2.3 percent rate. It suggests that challenges to this growth are food costs, building and maintaining sales volume and the economy.

It seems that PPACA can provide health care to a huge segment of hard-working Americans who are currently going without. But, if the measure withstands, how will restaurants afford health care for their workers, let alone pay them sufficient wages?

What do you think? Is PPACA good for the restaurant industry?
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