Audit Notes: Papacare, Post problem, trade reporting

Forbes finds Papa John's Obamacare math doesn't add up

Papa John’s CEO John Schnatter has been carping for some time that Obamacare will add 10 to 14 cents to the price of a pizza.

That sounds like an argument for the health care law rather than against it (a dime extra on a $10 or $15 pizza to insure your pizza delivery guy?) but Papa John, from his 40,000 square foot Kentucky mansion, says this pittance is an outrage.

It turns out that even Schnatter’s 10 to 14 cents looks like a serious overestimate of how much insuring his employees will cost.

Forbes’s Caleb Melby has a nice post running the numbers on the pizza math. He comes up with a cost increase of 3.4 to 4.6 cents per pizza:

Last year, Papa John’s International captured $1.218 billion in revenue. Total operating expenses were $1.131 billion. So if Schnatter’s math is accurate (Obamacare will cost his company $5-8 million more annually), then new regulation translates into a .4% to .7% (yes, fractions of a percent) expense increase.

Ken Doctor and I are on the same page on the real problem at the Washington Post. It wasn’t Marcus Brauchli:

Things have been going from bad to worse at The Washington Post Company. Its cash cow, Kaplan, is in maddening decline, as federal government crackdowns on for-profit education continue to take a toll. So the major prop to the Post’s flagging publishing financials has been removed. Further, the Post continues to lag most of its peers, its downward fortunes generally a little worse. More cuts, including newsroom ones, are underway…

Beyond that, though, is the fact that the Post overall has lacked a forward-reaching business model strategy. It’s still a great newsroom, with national reputation and national ambitions, but a company that has focused on harvesting revenue on the regional D.C. area. It’s a great, affluent market, but the regional strategy, as now in place, can’t pay the bills of a national operation. (Good rundown on the Post’s woes by Erik Wemple.)

The deeper problems of the Post are business, not editorial ones. It must figure out what many of its peers have, that a digital circulation strategy is an essential part of the way forward. It must develop a way to make the mobile audience — as much as a third of newspaper audiences now — a key part of its monetization. It must learn to cross borders within its own building, including such things as applying its national Social Code social marketing business to its local market.

— The Post’s Wonkblog reports that “NAFTA raised pay here and abroad,” citing a report that found that the trade deal raised real wages in the U.S. by 0.17 percent over 12 years, which is some kind of raise!

Public Citizen isn’t having any of it, noting that most of the benefits went to the top:

Trade economists widely acknowledge that any U.S. income increases resulting from NAFTA-style trade deals will tend to disproportionately favor the wealthy while real wage reductions are likely to be the result for the rest of us. In standard trade theory, the Stolper-Samuelson effect predicts that open trade will create increased demand for U.S. capital-intensive goods and reduced demand for U.S. labor-intensive goods, thereby increasing income for capital owners (i.e. the wealthy) while reducing wages for workers…

Median real incomes in the U.S. have been falling for the last decade, while the income of the richest 1% has been continually climbing. Workers’ productivity has been steadily rising while labor’s share of income has been steadily falling. Why are workers getting paid less while doing more? Economists from institutions ranging from the Economic Policy Institute to the Federal Reserve have named NAFTA-style trade as a key answer (“increased globalization and trade openness,” in the words of Federal Reserve economists). So the income-related takeaway from NAFTA is not the deal’s miniscule impact on aggregate wages (whether negative or positive), but its large impact on income inequality.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,