'That was my first reaction to the idea of having businesses -- especially small businesses -- fund the nation's health care. Then I ran the numbers for my company'
As a restaurant owner who loves the business, I'm getting tired of having our employees say to us, "It's time for me to go out and get a real job." Why aren't jobs in the restaurant business considered real jobs? Ask employees, and the most likely response will be "Health-insurance benefits."
Take Keith, a young man who walked into my restaurant a few years ago looking for a job as a waiter. Keith was a little rough around the edges at first, but after he had several months of training and experience, customers were requesting him. He learned the job of making people feel cared for and happy. His cheerful suggestions gave him a high average check per customer, while his efficiency got those tables turned for a third seating, with just the right timing to keep customers from feeling rushed.
Before long Keith became one of the top salespeople in a company grossing $3.6 million. He got good tips. Everyone was happy. And then the other day Keith showed me pictures of his young daughter and explained that a second child was on the way. I knew what was coming next, because I had heard it so often during my 22 years in the business: "Time for me to go out and get a real job." Keith is now headed for a big hotel chain where he can get full health-insurance benefits for his family, something we could never afford to offer.
My restaurant, the White Dog Cafe, in Philadelphia, employs 96 people, including the staff of our adjoining gift shop, the Black Cat. Like many small businesses, we're providing just what the economy needs. We employ lots of people; many are low-skilled and at entry level. But as in other restaurants, profit margins are slim, and the concept of providing health insurance for all just doesn't compute. It's not that we don't want to do so. We believe that all our staff should be covered, but under the current system we can afford to cover only 15 people.
When I heard that the Clinton health-care-reform plan mandated that all employers provide health insurance, my first reaction was, "Why us?" We're already burdened with the enormous task of collecting income and sales taxes, matching social security, and paying unemployment taxes and workers' compensation, let alone city, state, and federal business taxes and property taxes -- the list seems endless.
Then I thought of Keith and how most of our staff members are not covered by health insurance. Jeannie, one of our cooks, insures her two children under a welfare plan, but she does not qualify herself because she works. She is typical of the people not covered by health insurance: employees of small businesses who can't afford coverage for themselves and whose employers don't provide it. Eighty-eight percent of people with private insurance are covered through the workplace; the majority of those not covered live in families headed by working people like Jeannie and Keith.
It's no secret that most business organizations, including the National Restaurant Association, have come out against the Clinton plan. I've been hearing wild stories about how a pizza would cost $37 if the plan were passed and how the restaurant industry would be forced to lay off more than 800,000 workers. So I decided to take a closer look to find out exactly how the plan would affect the White Dog Cafe.
Through a formula that takes into consideration the number of employees in a business and the average wage earned, the proposed plan caps the amount a small business must pay at 3.5% to 7.9% of total payroll. We currently pay an average of around $30,000 in annual health insurance to cover 15 employees. Under the Clinton plan, in which our cap would be set at 3.5% of payroll, our costs would increase to around $60,000 to insure all 96 employees. The additional $30,000 expense could be covered by increasing our prices by less than 1%. Covering all 96 employees under the current system, even with a 20% employee contribution, would cost us $140,000. Opponents of the plan call it a new payroll tax; I call it a bargain. Here's an opportunity to insure all our employees at an affordable rate, something we cannot do under the present system. We increase our capacity to attract and maintain valuable employees. I can see some sense in big-business opposition to the plan, but how can small businesses not see the benefit?
Our office spends hours researching health-plan options, and we know that as a small business we cannot get the same rates that are available to large companies. Some sort of purchasing-alliance system would give us a competitive bargaining position and eliminate the hours we spend not only in researching plans but also in collecting employee contributions, both of which would be handled by the alliances. We currently offer two health-plan options to our employees; the proposed plan would offer three. Another thing our office hates to do is send checks for workers' compensation insurance, which cost us more than $50,000 last year, to provide medical coverage for a few minor cuts and burns. The Clinton plan suggests transferring the financial responsibility for all medical benefits, including those under workers' comp and auto insurance, to the new universal health system.
Under the current system, we cannot change insurers for a better plan, because one of our employees with a preexisting health condition would lose his coverage (something we're not willing to let happen). The Clinton plan prohibits insurance companies from refusing or dropping coverage because of poor health. That is an experience many employers with a small employee pool have run up against and one of the main reasons we all seem to be in agreement that universal coverage is the fair and practical solution. The argument is about who's going to pay, but the way I see it, we're all going to pay one way or the other -- either through the government with increased taxes or through the workplace with increased prices. Currently, we small-business people are paying for generous full-coverage health benefits for government workers through the taxes we pay, and we're paying for those same benefits for big-business employees through the consumer prices we pay. So why shouldn't our employees get the same coverage?
Small companies like mine would greatly benefit by offering health insurance to all employees, because it would make us more competitive with big business in the labor market. For so long, restaurant workers have been like second-class citizens in this economy. The fact of the matter is, unlike other industries, we small restaurants have never charged our customers what it really costs to run our businesses, which should include the cost of health insurance for all our workers. And the proposed plan presents an opportunity to provide full health-care coverage for all our employees at such a low cost that we would have to raise prices only slightly. All restaurants could make that increase without losing business; after all, we're not an industry that is losing its customers to Mexico.
Right now our worry is more about losing our best workers to big companies. I want to be able to call Keith up and say, "Come back to the White Dog. We have a real job for you."* * *
Judy Wicks is the co-owner of the White Dog Cafe, in Philadelphia.