In the run-up of real estate and stock market prices, demand for labor in the construction, real estate, finance industry was high. With the drastic drop in real estate and stock market prices, the demand for loan officers, construction workers and investment bankers has dropped. Individuals who have been laid must find a new job. Those who are currently in dead-end jobs need to find positions in growing industries and cities. For instance, a construction worker who used to build McMansions in the suburbs should be looking to move to new area where jobs are available working on government infrastructure projects.
Nevertheless, many employees in dead-end jobs may decide to try to keep these jobs. Why? One reason workers keep jobs they do not like is that they do not want to lose health insurance coverage for their family. Moving to a new city can mean a temporary lapse of health insurance. Further, new employers often do provide health insurance for a few months.
The phenomenon that workers remain at sub-optimal jobs to maintain their health insurance is known as “job lock.” I wrote a brief literature review about job lock 3 years ago.
“…most Americans still get their health insurance from their jobs. This makes it hard for anyone with a sick child to quit and start a new firm. It also makes it harder to switch jobs, despite a law helping employees to stay in company plans for 18 months after they leave. Scott Adams of the University of Wisconsin-Milwaukee found that married men with no alternative source of insurance were 22% less likely to switch jobs than those who, for example, could get covered by their wife’s employer.
Tying health care to a job can tie people to jobs they hate. Gerry Stover, who now runs a doctors’ group in West Virginia, recalls a time when his wife was pregnant and he couldn’t get health insurance at a private firm. He became a prison guard. As a public employee, his family was covered. But the job was neither pleasant nor a good use of his talents.”
While employer-provided health insurance is a good place to pool individuals of different health risks, tying health insurance to your employer may impede labor mobility and slow economic growth.