Friday, December 6, 2013
In 1941, Carl Karcher was a 24-year-old truck driver for a bakery. Impressed by the large numbers of buns he was delivering, he scrounged up $326 to buy a hot dog cart across from a Goodyear plant. And the war came.
So did millions of defense industry workers and their cars. And, soon, Southern California's contribution to American cuisine -- fast food. Including, eventually, hundreds of Carl's Jr. restaurants. Karcher died in 2008, but his legacy, CKE Restaurants, survives. It would thrive, says CEO Andy Puzder, but for government's campaign against job creation.
CKE, with more than 3,200 restaurants (Carl's Jr. and Hardee's), has created 70,000 jobs, 21,000 directly and 49,000 with franchisees. The growth of those numbers will be inhibited by -- among many government measures -- Obamacare.
When CKE's health care advisers, citing Obamacare's complexities and uncertainties, said it would add $7.3 million to $35.1 million to the company's $12 million health care costs in 2010, Puzder said: I need a number I can plan with. They guessed $18 million -- twice what CKE spent in 2010 building new restaurants. Obamacare must mean fewer restaurants.
And therefore fewer jobs. Each restaurant creates, on average, 25 jobs -- and as many as 3.5 times that number of jobs in the community. (CKE spends about $1 billion a year on food and paper products, $175 million on advertising, $33 million on maintenance, etc.)
Puzder laughs about the liberal theory that businesses are not investing because they want to "punish Obama." Rising health care costs are, he says, just one uncertainty inhibiting expansion.
Others are government policies raising fuel costs, which infect everything from air conditioning to the cost of supplies, and the threat that the National Labor Relations Board will use regulations to impose something like "card check" in place of secret-ballot unionization elections.
CKE has about 720 California restaurants, in which 84 percent of the managers are minorities, and 67 percent are women. CKE has, however, all but stopped building restaurants in this state because approvals for establishing them can take up to two years, compared to as little as six weeks in Texas, and the cost to build one is $100,000 more than in Texas, where CKE plans to open 300 new restaurants this decade.
CKE restaurants have a 95 percent employee turnover in a year -- not bad in this industry -- and the health care benefits under CKE's current "mini-med" plans are capped in a way that makes them illegal under Obamacare. So CKE will have to convert many full-time employees to part-timers to limit its burdens under Obamacare.
In an economic climate of increasing uncertainties, Puzder says, one certainty is that many businesses that now are marginally profitable will disappear when Obamacare causes that margin to disappear. A second certainty is that "employers everywhere will be looking to reduce labor content in their business models as Obamacare makes employees unambiguously more expensive."
According to the U.S. Small Business Administration, by 2008 the cost of federal regulations had reached $1.75 trillion. That was 14 percent of national income unavailable for job-creating investments. And that was more than 11,000 regulations ago.
Seventy years ago, the local health department complained that Karcher's hot dog cart had no restrooms. He got help from a nearby gas station. A state agency made him pay $15 for workers' compensation insurance. Another agency said he owed more than the $326 cost of the cart in back sales taxes. For $100, a lawyer successfully argued that Karcher did not because his customers ate their hot dogs off the premises.
Time was, American businesses could surmount such officiousness. But government's metabolic urge to boss people around has grown exponentially, and today CKE's California restaurants are governed by 57 categories of regulations.
Barack Obama has written that during his brief sojourn in the private sector he felt like "a spy behind enemy lines." Puzder knows what it feels like when government is composed of multitudes of regulators who regard business as the enemy. And 22.9 million Americans who are unemployed, underemployed or too discouraged to look for employment know what it feels like to be collateral damage in the regulatory state's war on business.
George Will is a columnist for The Washington Post. He can be contacted at: