THE BLOG

Need a Reason to Cut Costs at Your Business? Blame Obamacare

02/26/2014 12:13 am ET | Updated Apr 27, 2014
  • Matthew Lynch, Ed.D. Author of The Call to Teach and editor of The Edvocate, www.theedadvocate.org

As children, we learn quickly that blaming other people for our problems doesn't really work. In the end, we are accountable for our own actions and must take responsibility for our own decisions.

Lately it seems like that lesson has been lost on some of the most powerful business leaders in the country. The new scapegoat for anything financially-damaging at a company of any size is to blame the Affordable Care Act, or "Obamacare" as it is affectionately and non-affectionately known.

I guess you could say the start of this trend was when Darden Restaurant CEO Clarence Otis blamed Obamacare for lower revenues than expected and made it the reason the company was cutting employee hours at its 2,000 restaurants like Olive Garden, Longhorn Steakhouse and Red Lobster. As a result, an "experiment" was put into place that would hire more part-time employees (at 30 hours per week or less) so that the company could skirt the ACA. Did I mention that Darden has $8.55 billion in sales each year and that income relies on its 185,000 workers -- most of which make less than minimum wage? In the end the test program was halted after negative public backlash against the company that bases its marketing on family gatherings and values.

Other companies have pulled the same stunts as Darden though. Papa John's, The Cheesecake Factory, some Wendy's and McDonald's franchises and Dunkin' Donuts have all expressed some outrage at being asked to help foot the bill for the basic right of healthcare for their workers.

Most recently, two big-name, non-service industry companies have hinted that the ACA is the reason for cost cutting measures like layoffs or reduction in benefits. In Tennessee, medical device company Smith & Nephew announced it would need to lay off 100 employees because of the 2.3 percent excise tax on its products that was imposed by the ACA. The tax went into effect on January 1 of this year -- yet the company announced last February that it planned to lay off 7 percent of its workforce in the coming year. Perhaps the company anticipated the toll the new excise tax would take -- but more likely it simply found an easy spot to place blame for the cost-cutting measures it was planning anyway.

AOL also found itself at the center of a media firestorm when CEO Tim Armstrong blamed a change in 401(k) retirement benefit matching on Obamacare. Under the changes, AOL employees who leave the company before December 31 of a particular year will forfeit the company match on retirement funds. According to Armstrong, Obamacare added an additional $7.1 million in costs -- though he was not specific about what those costs actually entailed -- and if the 401(k) match had not been changed, health insurance premiums would have risen for all employees. He followed up this poorly-articulated blame game with an even worse one: by blaming other retirement fund cuts on "distressed babies" that the company was forced to pay medical care for in 2013. Did I mention that AOL reported revenues of $2.3 billion last year -- and Armstrong brought home $12 million in 2012?

My point is this: Companies that are focused more on their bottom lines than the well-being of their employees will always find a way to cut costs and pass along the blame. Obamacare is just the latest reason to do so and provides an easy out for companies that do not want to admit that increasing revenue is their only true goal, and that employees are simply labor to make that happen. For the companies that have embraced the ACA changes as an acceptable cost of doing business, kudos. For the rest -- Americans see through your deflection and are smart enough to discover the true source of your cost-cutting measures: you.