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We are Headed for 15 Percent Permanent Unemployment

At the Gap, at Old Navy, at other stores, the size labels in men’s slacks or jeans lie. Pants labeled as having a 36-in. waist actually measure to 39, 39-1/2, even 41. Why? Because men think they are thinner than they are. If a guy believes he’s a 36, but tries on pants labeled with that waist size and finds them too tight, he’s not likely not to buy at all. So pants manufacturers have learned to lie. They tell us what we want to hear. Mostly, we accept it as reality.


President Obama – our pants salesman-in-chief – is trying the same trick with the economy. A lot.  He is daily yammering about recovery, about seeing glimmers of hope, about all he has done and is doing to make the economy better, about the success of his stimulus spending spree. He is telling people the rain pouring on their heads is sunshine and hoping they’ll accept his fiction as their reality.


So, here is a very telling fact that I have not found reported in mainstream media, so this may even be breaking news.


Two fast food companies, the giant franchisor McDonalds, and the small 421-unit chain White Castle, have completed their own detailed analysis of ObamaCare and all the associated new costs aimed at them and their restaurant industry peers, and they have released their findings for us all to see. (Source: Nation’s Restaurant News Sept. 6, nrn.com) By White Castle’s estimates, ObamaCare will steal at least 55 percent of its net income. That’s 55 percent – more than half, for those in Congress who can’t do math. McDonalds’ estimate of losses coming to their franchise owners: 15 to 20 percent of profits, or about $50,000.00 per store.


If the president is under “41-inch waist is actually a 36” sort of delusion, that these small business owners and corporations will simply eat these gigantic losses, he is sadly, sadly mistaken. Fact is, businesses never pay taxes; they pass them on and take them out of somebody else’s hide.


So ObamaCare will:

(a) Raise prices to the greatest extent possible (a tax on the poor and the middle class), which will reduce frequency of patronage by customers and thus reduce sales volume (but preserve margin) and thus reduce quantity of employees needed and thus create new unemployment and under-employment (as full-time jobs convert to part-time jobs)

(b) Freeze or reduce wages

(c) Cause the closing of least profitable outlets and shrinkage of total number of units, killing off more jobs, and

(d) Discourage existent franchise operators from opening additional outlets and raise the bar for new operators entering the industry, stopping the creation of new jobs.


In short, hundreds of thousands of jobs are going away. And this job creation engine is about to stall out.


Most of the people to be evicted from these jobs have no replacement jobs to migrate to. For many, these are essential first-rung-on-the-ladder, starter jobs that lead upward within the food service industry or elsewhere. There are no comparable starter jobs elsewhere – certainly not in this quantity, spread evenly all across America in inner city, suburbs, small towns and rural areas. These are also jobs important to working parents, thanks to flexible scheduling. These are also jobs important to retirees and seniors. These are irreplaceable jobs about to be erased without pause by Obama, without comprehension by most complicit Congress members. Further, this industry has far-reaching impact, on huge numbers of vendors, on the communities in which they operate, on charities they support.


The destruction is not isolated either, but representative of the much broader, all-encompassing anti-business, anti-jobs atmosphere the president has created – whether deliberately or ignorantly – and seems in a hurry to make worse day by day.


Unlike the president or, I guess, the media, I am in touch with tens of thousands of small business owners and entrepreneurs. Virtually every single one of them is doing everything possible not to spend, not to invest, not to hire, and instead to cut back, cut jobs, cut workers’ hours, hoard capital. I will say it again: his is an anti-jobs transformation of the entire economy. Not just anti-business. Anti-jobs.


Appearing on Fox on Sept. 12, Obama’s new money man, Austan Goolsbee, insisted that the Obama priority of priorities has been and is to do everything possible to stimulate private sector job creation. It appears the restaurant industry would unanimously disagree.


Dan Kennedy is a serial entrepreneur, adviser to business owners, sought-after speaker and author of 14 books. His latest, “Make ‘Em Laugh & Take Their Money: A Few Thoughts on Using Humor as a Speaker or Writer or Sales Professional for Purposes of Persuasion,”  contains a selection of his BMI essays. More information about Dan can be found at www.NoBSBooks.com, and a free collection of his business resources including newsletters and webinars at www.DanKennedy.com.<?xml:namespace prefix = u2 />

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