March 26, 2023

Case Study: A Bakery Is Relieved to Have the Employer Mandate Delayed

Rachel Shein: Courtesy of Baked in the Sun Rachel Shein: “I think most of my young and healthy workers won’t buy any insurance.”

Case Study

What would you do with this business?

With President Obama pushing back an important start date for the Affordable Care Act, giving companies with 50 or more full-time employees an extra year before they are required to offer health insurance to their workers, we decided to check in with Rachel Shein and her wholesale bakery, Baked in the Sun.

In March, Ms. Shein and her bakery, based near San Diego, were featured in a case study that looked at what she would have to do to comply with the new health care law. With insurance companies still developing their offerings for businesses like hers, Ms Shein was delighted to learn that the employer mandate was being delayed. “I was thrilled when I heard we had the extra time to watch and wait,” she said.

At the time the case study was written, Ms. Shein had been quite concerned about the potential effects of the law’s implementation. “We saw it as a significant cost to our business, one we hadn’t built into our business model,” she said. Her participation in the case study led to appearances on several TV news programs, including on Fox Business and CNBC.

Initially, Ms. Shein estimated that she would have to pay $108,000 a year to include the 90 employees who are not currently covered by her company’s health insurance. Her insurance broker now believes that when the final rates are published for next year, the cost will be higher than that.

Ms. Shein, though, will have to pay for only those employees who sign up for the plan she offers, and so far, the plans she has seen have not seemed terribly attractive. One sample plan, she said, included a $4,500 deductible, which Ms. Shein said “is too high for low-wage workers, so my employees may be better off going to the state-run market for individuals, which seems to have more options and better prices.”

Insurance company offerings for businesses like hers are expected to evolve, Ms. Shein said, and she hopes better plans and choices become available, as they have on the individual exchange. Right now, Ms. Shein doesn’t know the final costs or how many of her employees will sign up, so she has not been able to  estimate her expenses with any confidence. “It’s still very messy,” she said.

The delay is an opportunity for both companies and employees, Ms. Shein said, because it gives business owners more time to shop around and workers can take the year to see what is available on the exchange before they decide if they will take company-offered insurance.

Ms. Shein is also interested to see if the managers who are covered by her company’s insurance plan find a better deal on the state-run market. She said she believed all workers should have health insurance, and she and her husband have wrestled with the problem for years. In her experience, she said, many of her employees are resistant to coverage that requires an employee contribution. “They are mostly young and healthy,” she said, also noting that the individual penalty for not carrying insurance is low, “and they would rather have a bit more in their paycheck than health insurance.”

For now, she plans to focus on running her baking company. “The recession has made us more efficient,” she said. “We’ve automated more and focused on the most profitable parts of the business. I can’t control the insurance rates, but I can make a great espresso mocha scone.”

This post has been revised to reflect the following correction:

Correction: July 17, 2013

A previous version of this post reported incorrectly that it was Congress that had delayed the employer mandate.

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DealBook: Regulators Extend Deadline for Xstrata’s Answer to Glencore

Simon Murray, Glencore's chairman.Michael Buholzer/ReutersSimon Murray, Glencore’s chairman.

British regulators have granted Xstrata extra time to respond to Glencore’s merger offer, as the mining giant weighs the sweetened bid.

Xstrata’s board will now have until Oct. 1 to make a decision, according to a regulatory disclosure on Friday. The previous deadline was Monday.

The two companies have faced a difficult path to a deal.

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Earlier this year, Glencore, which owns 34 percent of Xstrata, offered to buy the remaining stake. As part of the deal, Glencore agreed to exchange 2.8 of its shares for each Xstrata shares.

But Qatar Holding, the sovereign wealth fund of the Persian Gulf nation, as well as other major investors, balked at the price. The investors threatened to block the deal unless Glencore raised its bid.

While Glencore was initially resistant to adjusting the terms, the commodities trading company increased the price just hours before shareholders were set to vote. Glencore is now offering 3.05 of its shares for each Xstrata share.

Although Xstrata agreed to the previous deal, the board has been more reticent this time. After the new proposal was annouced, Xstrata indicated the price might be too low. It also raised concerns about the revised management structure, which gave Glencore executives more power.

Xstrata shares were down 3 percent in late London trading. Glencore was off 1.5 percent.

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Wal-Mart to Bring Back Layaway

Wal-Mart had scrapped layaway in 2006, saying that so many customers were using credit cards or gift cards that the program was obsolete. Now, though, consumers are demanding it, said Duncan Mac Naughton, chief merchandising officer for Wal-Mart’s United States stores.

“It just tells us the customer’s still struggling, as they tell us about their concerns with energy prices, housing prices, the job security, that 9.2 percent unemployment — it tells us that this is a fragile economy and the customer needs our help,” Mr. Mac Naughton said.

Layaway means that a store sets aside a product and requires customers to pay for it over time, usually charging a small service fee but no interest. With layaway, someone living paycheck to paycheck could potentially afford a more expensive item than otherwise, given the extra time to pay for it.

It was a common way to pay for expensive items through much of the 20th century. But as credit cards became popular, layaway dwindled and was mainly used by lower-income consumers who could not qualify for credit cards.

That has been changing in the last couple of years. As the recession hit and the recovery dragged on, some Wal-Mart competitors have offered layaway. Toys “R” Us started offering layaway on expensive items in 2009, while Sears brought back layaway in 2008 after a long hiatus. (Sears Holdings’ Kmart division has offered layaway for decades.)

The other retailers’ jump on layaway puts Wal-Mart into the unusual position of being a holiday season follower. Because of its size, it often sets the standards that other stores follow over the holidays, whether that is pricing on toys or its offer last year of free shipping on hundreds of online items.

Now, with nine consecutive quarters of declining same-store sales in the United States, and having said that improving those sales is a central focus, Wal-Mart is struggling to figure out how to get its consumers to spend. Executives have said throughout the year that shoppers are increasingly shunning credit and paying with cash, and are running out of money at the end of the month.

Wal-Mart’s revival of layaway indicates it does not expect consumers to feel flush anytime soon.

The layaway program will “alleviate the pressures they may have in their homes,” Mr. Mac Naughton said. “We think this is an opportunity for a cash-paying customer to create a payment program on their own time.”

Wal-Mart is limiting the program’s scope and time frame. Only toys and electronics may be paid for on layaway, starting Oct. 17 and ending Dec. 16. Each item must cost $15 or more, and the total layaway purchase must be $50 or more. There is a $5 service fee, and a 10 percent down payment is required.

Other retailers have similar conditions: Sears has a $5 service fee and a 20 percent down payment, while Toys “R” Us has a $10 service fee and 20 percent down payment.

On a site where shoppers can offer feedback to Wal-Mart, layaway has been one of the more popular suggestions.

A commenter by the name of PamS wrote that even when she set aside money for gifts, “the saved money usually gets used for some other unexpected bill or what not; whereas if I was able to do layaway I feel I could better budget and especially for special holidays.”

“I know for some the idea of layaway probably seems silly; but for those of us on very fixed and limited incomes, it does help,” she wrote.

Another commenter, SueH, had a similar view.

“I can’t get many things now either,” she wrote. “I don’t make enough money to pay all at one time. I can’t do extra for my grandkids. Please bring back layaway.”

Other shoppers said they were going to competitors because of their layaway programs. “You would think in this economy every store would have it! During Christmas I have to shop at Kmart cause of the layaway,” wrote a commenter under the name “wishing” on a West Virginia forum.

Mr. Mac Naughton also outlined other plans for the holiday season. Holiday merchandise will hit stores in mid-October, about two weeks earlier than usual, he said. And Wal-Mart will put a number of toys on sale for $15 starting Monday, including some Lego play sets and Princess Toddler dolls from Disney.

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Ping: A Gofer at Your Service, for a Price

Remarkably productive? Maybe. But I couldn’t have done it on my own.

Dozens of strangers were waiting to assist me as each task — and whim — arose. At first, I was queasy about pawning off my dirty work, but convenience soon trumped my discomfort. My army of aides arrived online and in person via a new wave of start-ups that include Fancy Hands, TaskRabbit, Zaarly, Ask Sunday and Agent Anything that tap into a network of people who have the time and skills necessary to run all sorts of errands.

Some of these networks, like FancyHands and Ask Sunday, are primarily virtual. They typically charge a flat monthly rate to fulfill a set number of requests, like finding an infant-friendly ski resort or untangling a phone bill, which are mostly completed on the Web and through e-mail or on the phone.

Others, like TaskRabbit, Zaarly and Agent Anything, are centered on connecting people locally. Those services let people post errands, for example returning a cable box or delivering a bottle of Champagne to a party, and how much they are willing to pay to have the jobs done.

I found this second category of service addictive: knowing that for the right price, I could indulge almost any desire, proved close to lethal over the course of the weekend. I considered hiring a driver to take me to the beach for an early morning swim and a skilled chef with extra time on her hands to make brunch for a few friends and me — and, at one point, I came close to arranging delivery of a pair of size 10 skates for a disco-themed birthday party I was planning to attend.

Maybe another time. That weekend, those tasks seemed too decadent. Of course, all my hyperproductivity came at a cost. Fancy Hands, which requires a subscription, starts at $25 a month. And errands on TaskRabbit vary in price, but average about $25 a task. In total, I spent close to $100 getting my deeds done.

Although most of these networks are in their early stages, several have already attracted venture capitalists. Zaarly and TaskRabbit recently raised $1 million each in financing.

Ted Roden, a former technologist for The New York Times, developed Fancy Hands in June 2009 not long after his wife gave birth to their first child. He said he needed help with day-to-day minutiae like scheduling baby sitters and resolving problems with his cable bill.

“I never intended it to be a product other than something for myself, but I needed to keep the assistants working, so I opened it up,” he said.

Fancy Hands is good for time-consuming, research-oriented Web queries like figuring out which restaurants along the Caribbean coast of Costa Rica are vegan-friendly or finding a grief counseling group within walking distance of your job, as I asked the service to do.

On the other hand, Leah Busque, the chief executive of TaskRabbit, which is based in San Francisco, says her service encourages people to connect with others in their own neighborhoods. Thousands of tasks are posted on the site each month, and 1,500 active helpers — or TaskRabbits — fulfill them, mainly in densely populated urban areas, she said.

“We call the concept service networking, rather than social networking,” she said. “We’re enabling people to share their free time and specialized skills and services with other people in their community.”

James Levine, whom I hired through TaskRabbit to organize my closet, said that he preferred tasks that revolved around organizational skills or devising personal routines, but would occasionally accept errands to fetch cat food or deliver a sandwich for neighbors in Chelsea.

“It’s not that I think doing a chore for $10 is worth it, but it makes sense for me to get to know my neighbors, considering what I do,” he said. In addition to helping cover his living expenses while he hunts for a full-time job, he hopes these assignments provide word-of-mouth support for a music podcast that he records in his apartment.

Customers of these services often say they reduce stress in their lives.

“For a nominal fee, I can free up my time and mental space,” said Whitney Hess, a design consultant in Manhattan. “I don’t have to think about it or make the time to do it.”

Ms. Hess said that in the last few weeks she outsourced tasks like finding reliable a car service to take her to the airport, transcribing interviews, having a necklace repaired, transferring compact discs onto a hard drive and selecting a bathroom scale.

“Once I got started, I was on a roll,” she said.

She considered hiring a full-time personal assistant, but said use of online networks seemed more economical.

“There’s always a fear with a full-time hire that you won’t have enough to fill up their whole time,” she said. “It could be a huge waste of money.”

Farming out personal tasks, like dinner invitations, intimate e-mails and such is daunting, she said. “There is a certain fear of opening up your personal and professional life to a stranger,” she said.

I found it unnerving to invite someone into my home to help unsnarl the chaos contained inside. But after spending several hours with Mr. Levine, who grappled with my overflowing closet, I began to see him as a welcome interloper, helping bridge the chasm between disaster and order in my life.

After he disappeared through my front door, I looked around at my newly ordered belongings and felt a flood of relief. Then, I cracked open my laptop to see what other help I might find to remove clutter from my life.

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