In Paris, Gov. Jerry Brown gave every indication that government will continue to force businesses to respond in certain ways. He called it using the “coercive power” of the state to do good—his definition of good, of course.
“You do have to have, at the end of the day, a regulation, a law,” the governor said. “Progress comes from well-designed regulatory objectives that business then follows.”
Many businesses will respond to that coercive power by passing on the obligation to the end-user—the consumer—who picks up the cost. Building over a period of time, more businesses are attempting to cover additional mandated labor costs by adding a line-item surcharge on bills. Here’s predicting the trend will grow and affect policy and political decisions.
Surcharges have been added on restaurant bills in a growing number of California restaurants and the trend will probably spread to other types of businesses.
A recent reported occurrence, but hardly the first, is a story earlier this month in the Orange County Register discussing Orange County restaurants adding a surcharge to cover increased health care costs for employees.
As of January 1, the Affordable Care Act begins for businesses that employ 50 to 99 people. At the same time, California increases the minimum wage a dollar. Individual cities are moving toward even greater increases in the minimum wage.
Businesses must deal with the labor cost increases. The choices for businesses often fall into one of a number of categories: Eat the cost increase, very few businesses can afford that route; increase the cost of goods or services to absorb the cost; cut employees or use part-time employees; or create a surcharge specifically pegged to the mandated cost increase.
Not so long ago a national gasoline brand took to listing at the pump all the taxes and fees applied to a gallon of gas.
Increased minimum wage costs or cost of compliance due to energy mandates or by various regulations also could find their way onto an invoice or a bill.
For businesses, such a catalogue of items might not be a bad thing. The bills would serve as information to consumers about the financial situations that face neighborhood businesses from government mandates. This information could build political support for changes in the laws the consumers feel are burdening the businesses while reaching into the consumers’ pocket.
Expect to see more surcharges at California business establishments.