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How Obamacare Hurts the Poor and Middle Class


A recent story about “Denny’s Restaurant” adding a 5% Obamacare tax to its menu items highlights the issue of the devastating effects of Obamacare. It also necessitates a simple explanation.

Every business calculates, and in the case of public companies, reports their revenue and profit margin. If one goes to finance.yahoo.com and types in the symbol for Walmart (WMT) in the “Get Quotes” text box, the basic financial information for the company will be shown. By clicking on the “Key Statistics” link on the left side menu, detailed financial information will be displayed.

Towards the middle of the page, one can see that Walmart makes a mere 3.53% on $461 billion in sales revenue. This might surprise those who attack Walmart for their success. But what this really means is that for every dollar in sales, Walmart makes less than 4 cents! Said another way, Walmart’s profits are less than 1/25th of its sales.

So what does this have to do with Obamacare? It means that every dollar Walmart has to pay for Obamacare potentially adds $25 distributed among the prices of the products it sells. While many wealthy people shop at Walmart, its primary customers are the middle class and the poor, the ones who will be hurt the most by these rising prices. Remember, there aren’t “rich people,” “middle class people” and “poor people” prices at Walmart.

Let’s repeat this exercise with Costco (COST). Their profit margin is EVEN LESS at 1.72%. This means that every dollar Costco has to pay for Obamacare potentially adds over $50 distributed among the prices of the products it sells! If Costco’s loss in profits is in the millions, that means consumers potentially pay in the 50 MILLIONS in the form of higher prices.

Most businesses frequented by the poor and middle class, like restaurants and other retail outlets, report profit margins that range from 2% to 5%, which means every dollar these companies pay for Obamacare will potentially raise the overall prices paid by the poor and middle class by $20 to $50 for each dollar in Obamacare cost.

Finally, this doesn’t even take into account the lost jobs, among middle class and poor, resulting from companies large and small reducing their work force or not hiring workers to avoid the Obamacare effects.

Author’s Note: Michael Malgeri is the creator of the “Johnny Profit” series of children’s books, which teaches young people that honest profit making is GOOD! He’s spent the last two years promoting H.RES.422, the Congressional Resolution that creates awareness of the superiority of Capitalism as an economic model. He calls it the “Rohrabacher Rule” in honor of Congressman Rohrabacher whom he admires for having the courage to submit it. Michael lives with his wife and children in Southern California. His website is Kids4biz.com


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