According to recent reports, Apple earned a profit per employee of over $400,000 last year. Profit per employee, or PPE, is factored by dividing net profit by total number of employees. This is a validated metric that highlights differences in business models and a company’s ability to absorb certain mandates. Many technology, pharmaceutical, financial services, and other sectors earn PPEs of over $100,000, while here in the U.S. restaurant, retail and other service industry businesses are lucky to manage a PPE of more than $2,500.
Under the health care law’s employer mandate, if a business is unable to offer its employees a health care coverage package of “essential benefits” it will have to pay a minimum penalty of $2,000 per employee. Many small businesses have already indicated they will not be able to afford to offer these plans. Others who fall under the 50-employee threshold for exemption have halted plans to grow their businesses and hire more workers simply to remain under this threshold. So, the restaurant and retail chain that earns a $2,500 or less PPE will have to pay a minimum penalty of $2,000 per employee.
This is simple math: This mandate will wipe out the slim profit earned by these service industry businesses. This will result in major job losses to service industry companies and force some employers to close their doors altogether. The employer mandate must be repealed or our service industry—small, local businesses that are part of their community’s fabric -- will suffer irreparable harm.
Rep. Tiberi, a six-term Member of Congress from Ohio’s 12th Congressional District, is the Chairman of Ways and Means Subcommittee on Select Revenue Measures. Rep. Boustany, a four-term Member of Congress from Louisiana’s 7th Congressional District, is the Chairman of the Ways and Means Subcommittee on Oversight.