Punishing Success, American Style
Do Won Chang emigrated to the United States from South Korea in 1981, about the same time I bought my first sheet metal shop. After three years of working at a California gas station, Chang figured out how to make money selling low-priced clothing to low-income consumers and bought his first store.
Since then, his Forever 21 retail clothing empire has grown to some 500 stores and 30,000 employees worldwide. Last year, the company posted $4 billion in sales.
But now Chang and thousands of other job creators who have realized the American Dream are being punished by the Affordable Care Act. First and foremost, they are forced to comply with unclear, onerous and expensive mandates. When obeying the law means making unpopular business decisions, they also endure organized and focused pressure tactics from Obamacare supporters. And then there are the threats.
In a recent memorandum to Forever 21 employees, management announced that many will be cut to 29.5 hours per week citing a budget and staffing review as the reason. Obamacare dictates that anyone who works at least 30 hours per week is a “full-time” employee. More than 50 of these full-timers means the company has to either offer health insurance to them or pay a $2,000 penalty per worker. For the 196 employees affected at Forever 21, the company must pay either $392,000 in penalties or more than $1 million to provide health insurance.
Those are tough bills to pay for any company that wants to stay open, pay its workers and keep growing.
Forever 21’s announcement affects only 1 percent of the company’s workforce. Yet when the employee memo was leaked to a gossip Web site, the company was flooded with virtual world vitriol. The company’s Facebook page incurred countless insults calling the owners “greedy scumbags.” Some gave advice, like “Don’t buy from these bloodsuckers. Liars.”
Those remarks, by the way, reach all the store’s nearly 8.5 million Facebook fans. It is safe to assume some of the teen fashion Mecca’s American fans are on the younger end of the voting-age spectrum, but most are too young to vote at all. The Facebook comments were not written by teens.
We saw the same tactics used on Mike Ruffer, who owns eight Five Guys Burger and Fries restaurants here in North Carolina. Earlier this year, he simply said that the law would force him to cancel expansion plans and that he may raise burger prices. Within hours, he suffered such an intense Internet and telephone campaign that we have not seen nor heard anything from Ruffer since.
The manufactured outcry Ruffer and other business leaders suffered was high-profile, national news. Perhaps as a result, a cautious Forever 21 clearly stated its decision was budget-based and “completely independent of the Affordable Care Act.”
It is understandable if Chang wanted to avoid turning a public relations molehill into a disastrous mountain. It is even more understandable when we recall the chilling words of Health and Human Services Secretary Kathleen Sebelius who, in 2010, threatened the insurance industry with “zero tolerance” for “falsely blaming premium increases” on the Affordable Care Act.
What the secretary means by “zero tolerance” is unclear. The quandary faced by entrepreneurs like Mike Ruffer and Do Wan Chang is abundantly clear: Talk about how the negative workforce effects of the new health care reform and suffer the wrath of the White House’s messengers. Or, make necessary changes without fanfare and blame and still suffer the wrath of a public that simply doesn’t understand meeting payroll, profitability and the cost of staying in business.
Forever 21 may feel compelled to stay silent, but CEOs and small business leaders at Job Creators Network do not. We understand how the Affordable Care Act attacks free enterprise: It kills jobs, deprives consumers of goods and services they want and smothers entrepreneurial spirit. Intimidation tactics that mute discourse make this worse and insult the spirit of this nation.
We need our policymakers and elected leaders to replace the ACA with measures that will encourage more Changs and Ruffers to pursue their American Dreams. Because their pursuit of prosperity means prosperity for us all.
Robert Luddy of Raleigh is the founder and president of CaptiveAire Systems Inc. and a member of the Job Creators Network Foundation