Regal Cuts Worker Hours, Blames ObamaCare

America's largest theater chain has slashed the hours of thousands of workers to stay under the ObamaCare threshold.

America’s largest theater chain has slashed the hours of thousands of workers to stay under the ObamaCare threshold.

Fox News (“Nation’s biggest movie theater chain cuts workweek, blaming ObamaCare“):

The nation’s largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that ObamaCare requirements are to blame.

Regal Entertainment Group, which operates more than 500 theaters in 38 states, last month rolled back shifts for non-salaried workers to 30 hours per week, putting them under the threshold at which employers are required to provide health insurance. The Nashville-based company said in a letter to managers that the move was a direct result of ObamaCare.

“In addition, some managers have requested guidance on what they should tell those employees negatively impacted and, at your discretion, we suggest the following,” read the memo obtained by FoxNews.com. “To comply with the Affordable Care Act, Regal had to increase our health care budget to cover those newly deemed eligible based on the law’s definition of a full-time employee.”

“To manage this budget, all other employees will be scheduled in accord with business needs and in a manner that will not negatively impact our health care budget,” the message continues.

Regal, which had revenue of $2.8 billion in 2011, is the latest company to respond this way to the Affordable Health Care Act’s requirement that employees at companies of a certain size who work more than 30 hours per week be provided health coverage. Applebee’s and Olive Garden also scaled back the hours of workers. A handful of colleges have cut hours because of the law, including Palm Beach State College in Florida and New Jersey’s Kean University. Critics say the law is boomeranging on working folks.

[…]

The manager told FoxNews.com ObamaCare has had the unintended consequence of taking food off his table.

“Mandating businesses to offer health care under threat of debilitating fines does not fix a problem, it creates one,” he said. “It fosters a new business culture where 30 hours is now considered the maximum in order to avoid paying the high costs associated with this law.

 

I don’t have any great insights into the theater business but presume it’s rather low margin. Despite skyrocketing ticket and concession prices, they’re not making a lot of money on any individual customer. And they’re competing against all manner of in-home movie watching experiences; I seldom have an urge to see a film in the theater these days. So, it strikes me as plausible that they can’t easily afford to provide healthcare benefits for incredibly low skilled employees.

On the other hand, it’s hard to believe  that their employees weren’t already being “scheduled in accord with business needs.” They run 500-odd theaters; I can’t imagine that they don’t have those needs calibrated pretty tightly. Which means that, if thousands of people were working 40 hours a week, they needed thousands x 40 hours of staffing to run their business. So, they’re either cutting staffing below what they need to run their business or they’re hiring a bunch of new 29-hour employees to make up for these cuts. And that ain’t cheap: there are search costs, training costs, and turnover costs. One would imagine that 29-hour employees getting no benefits are less likely to stay employees than 40-hour employees with free healthcare baked into the deal.

FILED UNDER: Economics and Business, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Tsar Nicholas says:

    Hell, this is nothing. It’s not as if Regal can avoid Obamacare altogether. You should see what’s going on out there among companies in the 50-60 employee range. They’re firing people nearly indiscriminately to get under the 50-employee threshold to be subject in the first instance to Obamacare. That’s how much of a disaster that law is. And, yes, laws of unintended consequences are bitches.

    Getting back to Regal for a moment:

    So, they’re either cutting staffing below what they need to run their business or they’re hiring a bunch of new 29-hour employees to make up for these cuts.

    Not necessarily. You missed two other obvious options. They could be tasking their FLSA exempt workers with simply worker harder and longer. There are no marginal overtime costs, since they’re FLSA (and state counterpart laws) exempt. Burnout would be the major risk, but perhaps they’re giving them base salary hikes. Better to pay more salary to existing exempt workers than to deal with Obamacare’s staggering per-unit costs. They also could be cutting non-essential hours. It might simply take longer to get popcorn at the popcorn stand; because they only have one guy back there instead of two. That sort of thing. Regal is not dumb. The fact they’re doing everything in their power to lessen the ghastly impacts of Obamacare proves that to be the case.

  2. Tony W says:

    Better to blame Obamacare than, say, the need for maximum corporate profits.

  3. superdestroyer says:

    @Tony W:

    And what you be the proper level of profits for the movie theater industry versus any other industry. They have already found ways to limit the number of employees. Any properly run business would look at Obamacare and decide to make sure that no part time employee ever goes over 30 hours a week.

    I assume most retail, food, and hospitality business are taking the same course. The only difference is that some are admitting to it in public and some art not.

  4. Scott says:

    It gets back to breaking the link between healthcare and employment. I have never understood why employers want to be in the business of providing healthcare.

    But your point is correct. The employer has so many hours of work required to be performed and so Regal has chosen to spread it over more employees. Or decide they didn’t need those employees in the first place. Employees are going to respond by finding a different job or taking on a second job.

    Regal may find out later it is more efficient to provide healthcare rather than deal with the churn. Or it may not.

  5. JKB says:

    Other than the continuing poor quality of journalism we see everywhere, I’m not sure what the problem is.

    Managers wanted to know what to tell employees negatively affected by the changes. They were told to tell them:

    “To comply with the Affordable Care Act, Regal had to increase our health care budget to cover those newly deemed eligible based on the law’s definition of a full-time employee.” “To manage this budget, all other employees will be scheduled in accord with business needs and in a manner that will not negatively impact our health care budget,”

    So to comply with the ACA, they are upping their budget to pay for those employees getting the new coverage. Everyone else will be scheduled as needed as usual but now also so as to not become eligible for coverage under the law. Or translation, fewer hours for those who used to work over 30/week.

    These are low skilled positions that probably already have a lot of churn. As such, the massive increase in costs imposed by ACA coverage is probably very large compare to a bit more hiring. Not to mention, the hiring will level off and the churn may return to its usual level.

    The level of employees they have adding few hundred more over the whole operation probably isn’t going to significantly increase their worker’s comp premium or payroll operation costs compared to the costs imposed by Obamacare. I would expect full time (covered) employees to find that they are expected to work more overtime rather than the company bringing a new employee into the Obamacare pool.

  6. You know what? We don’t like paying the electricity bill either. Our theaters will now only be open for 2 hours each day so we don’t need to pay for electricity to operate them the rest of the time.

    I’m guessing these people complaining about having to provide healthcare to their workers were the same ones so adamantly opposed to a single payer government run healthcare system. Maybe now that idea isn’t looking so bad to them.

  7. legion says:

    The manager told FoxNews.com ObamaCare has had the unintended consequence of taking food off his table.

    It’s ridiculous statements like this that piss me off about this whole subject. I guarantee this manager makes 2x to 3x what his employees make – the ACA doesn’t take jack sh*t off his “plate”.
    @JKB:

    These are low skilled positions that probably already have a lot of churn.

    True, but here’s the thing: the only reason companies like this can get away with paying their workers as little as they do is because so many other things have been subsidized for them. Let’s face it: maintaining a healthy, functioning workforce is a core requirement for _any_ business. Business are now being forced to actually shoulder some part of that expense instead of pushing it off onto the employees or Medicare. If your company can’t make ends meet after that, then your business model is crap – it’s been supported by the social safety net for too long as it is. If your corporate profits drop a fraction because of this – tough sh*t. It’s a cost of doing business, and your profit level has been unsustainably high for too long. Businesses need to come back to reality.

  8. John Peabody says:

    I think the businesses _are_ coming to reality, hence the layoffs. It’s not their job to provide jobs, it’s their job to make a profit.

  9. “So, they’re either cutting staffing below what they need to run their business or they’re hiring a bunch of new 29-hour employees to make up for these cuts. And that ain’t cheap: there are search costs, training costs, and turnover costs.”

    If the costs of Obamacare, which are enduring costs, are greater than the short-term costs of what you name, then it does make sense from a business-financial angle. Regal will get through those costs in a few months at most. Obamacare’s costs are forever.

  10. @Tony W:
    Better to blame Obamacare than, say, the need for maximum corporate profits.

    In which you prove that you truly, genuinely do not understand what being in business is for.

  11. john personna says:

    It matters a great deal if the “theaters” in question are underused dual-plexes or crowded mega-plexes. The crowded megas have both lots of labor need and lots of cash flow. It would be shitty in the latter to schedule your workforce for dribs and drabs of part-time labor.

    On the other hand, yes a small theater has both less labor need and lower margins.

  12. legion says:

    @Donald Sensing:

    In which you prove that you truly, genuinely do not understand what being in business is for.

    And you prove you don’t understand the difference between the WSJ editorial page and the actual real world. “Business” is not solely for short-term profit-taking. You do have to take some level of societal impact into account.

    You can’t sell things to people who have no money.

    If your entire industry colludes to pay workers a sub-living-wage salary, and the only way your workers get by is through support from things like Medicare and food stamps, and then your party decides to dismantle the social safety net to give themselves lower tax rates, you have utterly failed at “business”. You have just destroyed the entire nation’s economy for short-term profits. That is not “business” – that is destructive parasitism.

  13. So, it strikes me as plausible that they can’t easily afford to provide healthcare benefits for incredibly low skilled employees.

    I shouldn’t spoil this…but truth is Regal and all these other chains are cutting employees and cutting hours because they have installed automated digital projectors in most theaters. They used to have people splicing prints, starting rounds, operating house lights.

    It’s not Obamacare. It’s the obsolescence of the projectionist position.

    On the flip side….these digital projectors require skilled technicians to maintain and repair them. Absolutely none of those guys are getting their hours cut due to Obamacare. No-skill popcorn poppers will accept being skimped on hours, but skilled pros will not.

  14. wr says:

    Well, at least we can sleep easy knowing that Regal’s CEO won’t be suffering on her $2.7 million salary. Pretty sure she gets health benefits, too.

  15. wr says:

    @Donald Sensing: “In which you prove that you truly, genuinely do not understand what being in business is for. ”

    This may come as a shock to you, but the notion that a business has a fiduciary duty to function as a corporate sociopath is actually fairly new, spread by those who are working to transfer all the nation’s wealth to the top 1 percent. Not too long ago, a business was expected to be part of a community and a good “corporate citizen.” But any notion or responsiblity to employees or society has been wiped out in favor of this new idea that the company’s only obligation is to its stockholders and chief executives.

    You can cheer on this sociopathy if you choose, but please don’t lecture us as if we’re children who don’t understand business. We not only understand business, we understand how business has worked even before the Reagan era.

  16. James Joyner says:

    @James Pearce (Formerly Known as Herb): I wasn’t suggesting that no one who works in a theater has valuable skills, merely that the vast majority of the workforce is essentially unskilled. I think those people ought to be able to get treatment when they’re sick. But I think it’s probably not economically viable for movie theaters to provide that coverage for them.

  17. Gustopher says:

    You have to wonder why the management at Regal thought it would be a good idea to wade into politics by announcing this. I know that I will likely be shifting to a different theater because of this, and a fair number of my friends will too — it’s not like there aren’t lots of other options.

    Are there people who say “Wow, Regal really screws over its workers, let’s go there!” To make up for this?

  18. @James Joyner:

    I wasn’t suggesting that no one who works in a theater has valuable skills

    Neither was I. But I work in the industry (on the exhibitor end) and I can tell you that the workforce has been undergoing a slow, steady transformation over the last few years that has nothing to do with Obamacare and everything to do with digital cinema.

    All the field techs and network techs and project managers who having been working on the digital transition these last few years, none of us are getting our hours cut. We still have our healthcare. We’re even paying a little more for it this year. Regal (and AMC and Cinemark and a bunch of other chains) are cutting some people’s hours because they need fewer people on staff to operate due to the digital transition.

    Obamacare didn’t kill Regal’s part time workers. Technology did.

  19. C. Clavin says:

    My bet is that…like almost every single one of these stories…if you look deeper you will find there is more to it than meets the eye.

  20. C. Clavin says:

    Also…if Regal cuts all their workers to 30 hours…Obamacare provides options for those people at full implementation…and we are still better off as a Nation than we were with the status quo.

  21. Gus says:

    @Gustopher: Yes, there will be such people.

  22. Anna in PDX says:

    They can choose to do this, and I can choose to start going to other theaters, or waiting for video.

  23. stinger says:

    Why is Obamacare suddenly getting the blame for greedy corporate management stiffing their employees? Back in the ’80s I worked for a major bookstore chain, and only the manager and assistant manager of our local store were allowed to work more than 29 hours a week, for the very same reason — the corporation didn’t want to pay benefits to the rest of us. This has been going on for a lot longer than ACA has been in (partial) effect.

  24. Jenos Idanian #13 says:

    @C. Clavin: My bet is that…like almost every single one of these stories…if you look deeper you will find there is more to it than meets the eye.

    Feel free to do your own homework and prove your point, Cliffy.

    Alternately, you could just own up to talking out your ass to promote your own beliefs.

  25. wr says:

    @Jenos Idanian #13: “Feel free to do your own homework and prove your point.Alternately, you could just own up to talking out your ass to promote your own beliefs.”

    Apparently Jay Tea has decided to type while staring in the mirror…

  26. Jenos Idanian #13 says:

    I’m trying to decide which I find more appalling.

    1) All these people acting all shocked and appalled and stunned each time another story like this comes out, when all the ObamaCare detractors noted, at the time, that this is exactly what would happen.

    2) All these people who seem to think they have a right to not only determine what a company can make as “fair” profits, versus “obscene” profits, but to get the government to enforce their prejudices.

    Look, you idiots. You wrote the rules, you passed the rules, now you’re bitching that people are actually reading the rules and following them. You’re saying “how dare they follow the letter of the law; we want them to obey what we meant by it!”

  27. Jenos Idanian #13 says:

    @Anna in PDX: They can choose to do this, and I can choose to start going to other theaters, or waiting for video.

    At which point, they’ll need even fewer workers. That’ll really help those folks out.

  28. stonetools says:

    Every time the government expands the safety net-minimum wage laws, union rights laws, 40 hour work week, workplace safety laws-conservatives say it will be the death of business, and businesses claim that they’ll have to lay off workers because of these newfangled “gumint regulations”. Every time they’re wrong.

    Here’s a clue-Germany has had universal health insurance since 1889, plus lots of worker safety laws, etc. Guess what, Germany’s economy is stronger than ours right now, and their unemployment rate is lower. How do conservatives explain that? They don’t-they change the subject.

  29. @Jenos Idanian #13:

    All these people acting all shocked and appalled and stunned each time another story like this comes out, when all the ObamaCare detractors noted, at the time, that this is exactly what would happen.

    Who’s acting shocked? No one. The only reason Obamacare detractors love these stories is because they serve as a kind of “Told ya so.” Which would be fine, but it won’t work in this case.

    This has NOTHING WHATSOEVER to do with Obamacare. It has to do with how the industry now operates. It’s not socialist government policies. It’s the damn free market in action!

  30. James Joyner says:

    @stonetools:

    Here’s a clue-Germany has had universal health insurance since 1889, plus lots of worker safety laws, etc. Guess what, Germany’s economy is stronger than ours right now, and their unemployment rate is lower.

    While Germany is an anomaly even in Western Europe because of its continued strong manufacturing position, I’d note that its theater owners don’t provide health benefits to those who put popcorn into big paper cups. The government does that.

  31. C. Clavin says:

    “…Look, you idiots. You wrote the rules, you passed the rules, now you’re bitching that people are actually reading the rules and following them…”

    Reading comprehension problems?

  32. Jenos Idanian #13 says:

    @James Pearce (Formerly Known as Herb): Who’s acting shocked? No one.

    It’s inherent in the definition of “news.” I don’t see many newspapers publishing headlines saying “Sun Rose Today.”

    And perhaps “shocked” is a bit strong. But come on, you’ve had several years to prepare for this to happen — why so angry that it finally arrived?

    Oh, and you better start working up your denunciations for the next company to make a similar announcement. Maybe you can whip up a macro, so all you have to do is hit F7 and type in the name of the company.

  33. Jenos Idanian #13 says:

    @C. Clavin: Reading comprehension problems?

    That’s what I’m thinking. It’s a definite possibility — the people who wrote ObamaCare didn’t actually understand what they had written, and didn’t think anyone would be smart enough to find the most economic way to stay within the letter of the law.

    I mean, hey, in New York they wrote a gun-control law that didn’t exclude the police. If I was a New York State legislator, I’d fight like hell against any attempt to correct that short of repealing the entire law.

  34. stonetools says:

    @James Joyner:

    While Germany is an anomaly even in Western Europe because of its continued strong manufacturing position, I’d note that its theater owners don’t provide health benefits to those who put popcorn into big paper cups. The government does that.

    Even if it’s as simple as that (and it’s not-employers contribute to health insurance in Germany too), the Fox News folks and conservative commenters here hate the idea of single payer health insurance even worse than Obamacare.

  35. MikeH says:

    @Donald Sensing:

    Funny…maybe it’s because I’m and old guy who has had a lot of jobs over the years, but I remember companies that I worked for that tried to balance profits with the welfare of their employees, that viewed their employees as something more than cost units. We have allowed this “profit in not the most important thing, it is the ONLY thing” attitude to permeate our business culture. Do you really think the country is better for that?

  36. @Jenos Idanian #13:

    I don’t see many newspapers publishing headlines saying “Sun Rose Today.”

    You also don’t see many newspaper publishing “Theater Chains Eliminating Projectionists After Converting to Digital Cinema” articles either, at least not in this day and age.

    And seriously, dude…..maybe I’m just cynical, but you’re taking a “guidance” letter from corporate (addressed to bottom-tier employees who are “negatively affected” by the move no less!) as the real reason?

    Here’s the deal: Regal is a big company. They have lots of employees. The accountants. The HR people. The IT Help Desk. The sales guys. The facilities manager. Project managers. Legal. Obamacare is mandated for all.

    And yet it’s only the theater staff who are getting their hours cut??? Why yes, I do believe that proves we shall blame Obamacare, not business decisions unrelated to policy……

  37. stonetools says:

    From the link:

    “If you want to have reduced work, lower wages and economic stagnation, this is a great way to do it, said Ed Haislmaier, senior research fellow at the Heritage Foundation.

    Read more: http://www.foxnews.com/us/2013/04/15/nation-biggest-movie-theater-chain-cuts-workweek-blaming-obamacare/#ixzz2Qkpf3WGu

    Heh, my irony meter just jumped off the charts. Do you know what Obamcare is based on? A 1990 Heritage Foundation proposal for universal health insurance that was later championed by Bob Dole and adopted by one Governor Willard M. Romney!
    These conservatives just don’t know their a$$ from their elbow. Here Jenos and others are objecting to the possible ill effects of the conservative version of universal health insurance.

  38. reid says:

    I guess it still boils down to “greed is good” for many people. Gecko wasn’t supposed to be a role model, was he?

  39. Jenos Idanian #13 says:

    @James Pearce (Formerly Known as Herb): Here’s the deal: Regal is a big company. They have lots of employees. The accountants. The HR people. The IT Help Desk. The sales guys. The facilities manager. Project managers. Legal. Obamacare is mandated for all.

    And yet it’s only the theater staff who are getting their hours cut??? Why yes, I do believe that proves we shall blame Obamacare, not business decisions unrelated to policy……

    I can see that. As noted, the theater staff are at the bottom of the chain, skills-wise. So they’re the most easily replaced or cut back.

    It’s pretty much the same in most companies. Supply and demand. The white-collar people have more leverage — rarer skills, specialized knowledge, legal requirements (HR people tend to be highly specialized in keeping the company out of very expensive kinds of trouble, for one), and the like to keep them gainfully employed. Go down the ladder far enough, and that’s where you can make cuts that won’t too adversely hit the bottom line.

    And those are the people that ObamaCare was supposed to help the most. Instead, they’re the ones most getting boned by it.

  40. MikeH says:

    @Jenos Idanian #13: Let me get this straight…the owners are finding a way to get around the law so they can continue to shaft their employees and its Obamacare’s fault? And people wonder why federal regulations are so damned complicated…it’s because companies have crews of lawyers dedicated to finding a way to get around them and each time they do, it adds another level of complexity to the law when the government reacts to that.

  41. @Jenos Idanian #13:

    So they’re the most easily replaced or cut back.

    You’re getting warmer. These guys were already getting replaced or cut back, and so are the couriers who delivered prints, the labs that processed them, and the archivists who stored them. The business is changing, man.

    Absent a projectionist, the theater needs someone to man the box office, to run the concession stand, and to sweep the floor. That’s about it. None of these were ever going to be very lucrative full-time positions. The applicants skew young, or they’re retired or disabled.

    And you’re trying to tell me that “the people that ObamaCare was supposed to help the most?” Do you even know anything about ObamaCare?

    I mean…..I get it. You oppose Obama. You think his healthcare policy is a joke. That’s fine. Millions of people agree with you.

    But I’m here to tell you that this move has other motives, and Obamacare plays no real part in it.

  42. C. Clavin says:

    Regal makes HUNDREDS OF BILLIONS in profits every year.
    The CEO got a 31% pay raise this year.
    They are free to do business any way they want.
    But this ain’t about Obamacare’s impact on their business.

  43. Just 'nutha ig'rant cracker says:

    @James Joyner: Not in Washington State. Most of the time, one has to be either unemployed or have dependent children and qualify for other government services to qualify for Medicaid.

  44. bbp55 says:

    @legion: @legion: You are showing how little you know of the theater industry.

    The VAST majority of the workforce are high school students. In a theater that has a staff of 50-60 employees there will be MAYBE 9 managers total, and only two or three of those will be on a salary. The rest are hourly. Most of them are college students, majoring in some sort of film production or acting or writing–something in the liberal arts vain. Occasionally you’ll get a business major.

    MOST OF THESE EMPLOYEES DON’T NEED OR WANT HEALTH CARE. Because of Obamacare the college students are still covered by mom and dad. So are the high schoolers. The adults that work there are either on salary and are getting benefits offered or they are working a second job part time for extra money–or free movies.

    See, NOT EVERY JOB IS A CAREER. Most of these full time hourly managers are mad because they don’t need insurance, yet their hours will be cut because Obamacare forces the company to pay for their coverage anyway because they “qualify.”

    But instead of talking about how muddled and broken this health care law is, we’re just going to participate in corporate bashing and class warfare. “Executives get paid millions! They get health care! The workers are not paid a living wage!” Well, they’re FRICKIN’ HIGH SCHOOL STUDENTS. Their job is not a skilled position. Instead of forcing businesses to pay for health care or raising the minimum wage for these no-skill jobs, why not spend a fraction of the money helping the fraction of the people relying on minimum wage jobs to survive learn a skill that can earn them a wage they can live on at a job that provides health care?

  45. C. Clavin says:

    Typo in my comment….billions should be millions.
    Doesn’t change my point.

  46. James Joyner says:

    @Just ‘nutha ig’rant cracker: I was referring to Germany providing universal coverage, thus removing the burden from employers of unskilled hourly workers. I made no mention of Medicaid.

  47. James Joyner says:

    @C. Clavin: Actually, the difference between millions and billions absolutely matters in this context. If they’re making billions in profits, then providing better benefits for employees is affordable. But mere millions of profit could be turned into operating at a loss.

  48. legion says:

    @bbp55:

    Because of Obamacare the college students are still covered by mom and dad. So are the high schoolers

    Then exactly how does that impact Regal’s expenses? If all of these people are already on other health plans, Regal doesn’t have to do jack for their medical benefits regardless of how many hours they work, right?

    My point is not about my in-depth knowledge of the theater industry – my point is that Regal, along with every other major employer crying “expenses!” about the ACA and shafting their employees, is flatly lying about their reasons for doing so.

  49. Jim M says:

    I don’t know if any of you have been to a movie theater lately but I went today and its $13.50 a seat during prime time for movies here and a large coke is $6.00 . Now tell me that the theaters are hurting. They have always made good money off of concessions, thats where the dollar theaters make their money. I understand businesses have to make profits but I agree that this only duty to the company and its stockholders is getting a little old. I personally would like to see single payer health care where its taken out of my taxes just like social security already does. Regardless you will pay it to your employer anyway.

  50. Kay T. says:

    @James Pearce (Formerly Known as Herb): The digital transition began more than a year ago and has hardly made an impact on the employee hours. We still need a projectionist/projection manager to ingest content, make the playlists and correct the issues that we run into with these digital projectors. . . . The rest of the employees that worked projection still got their hours in a different area of the building, until recently, that is. In one building we have tripled our employee number, hiring so quickly there is no time to train. These new employees aren’t getting 30 hours a week. No!! They are getting maybe one or two 6 hour shifts. The turn over rate is ridiculous as well. There is no point in learning anyone’s names.