Job lock kills entrepreneurship

The ‘American Dream’: coming soon to America?

“It’s all about the health benefits.”

I personally have heard it dozens of times from friends and family, who make it painfully clear that they’re not banging on the door of Corporate America because they’re dying to work in a cubicle. They tell me they’re reluctantly looking for gigs in big business because that’s where they can get approved easily for health insurance – and where they can get it cheap.

We pointed out last fall that without health reform, the American dream will be a nightmare for entrepreneurs. It’s scary enough making the leap to a job without a steady paycheck; it’s even scarier when you face high premiums – or worse, the prospect of denial – on the private market.

This morning, Kristen Gerencher said it again: health reform could “pry open” job lock in the United States.

“We’re finding reasonably consistent evidence that people who are employed are delaying or not starting a business because of their fear of losing health insurance,” says economist Robert Farlie in Gerencher’s report.

How profound is the job lock? As Gerencher points out, “the U.S. has among the lowest share of employment in small businesses compared with its international peers.” And apparently, job lock has the potential to convince some folks that “the American Dream” may not actually be available in … um … America. Ouch.

How would reform help?

  1. Gerencher says reform legislation promises to provide tax credits to help small-business owners buy coverage for their worker.
  2. In a few years, the self-employed and most small businesses would be able to buy guaranteed coverage on new insurance exchanges.
  3. Self-employed people would benefit from a new requirement that health insurers take all applicants regardless of their pre-existing medical conditions.

For the self-employed, those promises relieve a huge psychological burden. Or, as Economist Jonathan Gruber notes, “What this bill is going to accomplish more than anything else is mental well-being.”

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