Papa John's CEO is exaggerating when he tries to scare you on Obamacare's cost per pizza

Thu Nov 15, 2012 at 08:10 AM PST Laura Clawson Follow for Daily Kos Labor


Papa John's CEO John Schnatter has gotten a lot of press for his estimate that meeting Obamacare's requirements and insuring more than one in three of his employees would add 10 to 14 cents to the cost of each pizza, something he would of course pass directly to customers. That means that if you ate Papa John's three times a week every single week, you'd be paying up to an additional $21.84 a year (for the pizza; the costs to your health are another question altogether). But Forbes' Caleb Melby does the math and finds that Schnatter's claims may not be so accurate to begin with. Given Papa John's revenue and operating expenses, Schnatter's estimate that complying with the new law will cost $5 to $8 million per year would mean a .4 to .7 percent expense increase. For the sake of argument, let’s say that Papa John’s sells exactly half medium/half large specialty pizzas. Averaging the ranges for both sizes, then averaging that product yields a .86% price increase—well outside the range of what Schnatter says Obamacare will cost him. So how much would prices go up, under these 50/50 conditions, if they were to fairly reflect the increased cost of doing business onset by Obamacare? Roughly 3.4 to 4.6 cents a pie. Papa John's customers are already paying for Schnatter's $2.7 million compensation package, but he hasn't been so interested in breaking out the per-pizza cost on that. If he's right that $5 to $8 million for insuring more workers would mean 10 to 14 cents a pizza, I guess he personally accounts for about 5 cents per pizza; if Melby's estimate is right, Schnatter's costing customers a little less than 2 cents per pizza. But the fact that one guy's compensation package is more than half the low-end estimate for complying with the law and insuring more workers is bad enough. That that's the guy who gets to publicly exaggerate the cost of health care for his offensively underpaid workers and try to scare customers into thinking that insuring more people will mean they, personally, will be able to afford less shitty pizza, is an indictment of our economy and public economic discourse. As if there weren't enough indictments outstanding on those fronts. (Via We Party Patriots)