According to a recent ADP National Employment Report, published monthly by the ADP Research Institute in collaboration with Moody’s Analytics, food service accounted for three out of four new franchise jobs.
Restaurants make up a big part of the franchise job market, employing about half of America’s 8 million franchise workers.
Bloomberg’s Patrick Clark points out that in a recent research note, SouthBay Research economist Andrew Zatlin speculated that the Affordable Care Act could be driving job growth in the leisure and hospitality sector as businesses seek to avoid new health-care costs.
Contrary to the assumption that Obamacare would stunt hiring because companies will attempt to reduce staff sizes below 50 full-time workers to avoid paying for health coverage or penalties, Obamacare excuses businesses from having to provide insurance if their average employee works less than 30 hours a week.
Spending on dining is slowing down, but leisure hiring is strong, said Zatlin. “It’s really easy to bring in another bartender or waiter and instead of one guy, have two guys working half as much.”
And Zatlin isn’t the first to suggest that restaurants are using part-time workers to avoid Obamacare requirements. Wendy’s reported as far back as January that they were cutting staff hours to avoid the law.
A Wendy’s fast-food franchise in Nebraska is cutting the hours of non-management employees so its owners won’t be required to pay health benefits.
Wendy’s spokesman Denny Lynch told the Huffington Post the decision was being made at the franchise level.
“Our franchisees are independent businesspeople, and they make the decisions regarding their restaurant teams,” he said. “As small-business employers, our franchisees are facing rising food and operating costs and many new government regulations.”
MSN’s Bruce Kennedy notes that several major restaurant chains have been very vocal in their criticism of Obamacare, such as Papa John’s Pizza, whose CEO John Schnatter said the Affordable Care Act would cost his company up to $8 million a year, which would force him to increase product costs and cut workers’ hours.
Other restaurant franchises are also looking at options ahead of Obamacare. John Rigos, owner of a Five Guys franchise in New York City, told CBS News the new regulations will affect hiring policies at his restaurants.
Rigos said he would have to reduce the staff to some degree and focus on building a smaller stronger team rather than being as aggressive in opening up new stores and creating new jobs.
“There’s 25,000 restaurants within the New York City market we’re competing against,” he notes, “so it’s not like we have surplus profits that we could just earmark a portion of them to go toward these types of initiatives.”
Earlier this month, the Obama Administration delayed the implementation of the employer mandate, or “shared-responsibility rules” by one year until 2015.