Unbiased Analysis of Today's Healthcare Issues

Job Stretch

Written By: Jason Shafrin - Jul• 10•09

In this blog, I have frequently discussed the concept of Job Lock.  Job Lock occurs when you don’t leave a job that you wish to leave (either because it is low paying or you do not like the work) simply because you do not want to lose your health insurance.  Leaving your current job for one that is more lucrative may not be worthwhile if you lose health insurance.  Even if a new job’s potential salary is more than your salary+benefits at your old job, you may still not leave since the price of group health insurance is much less than the price of non-group health insurance, especially for those with pre-existing conditions.

Yesterday, Reuters reported on another phenonmenon: Job Stretch.  Take a look at the following excerpt from the article:

Real estate agent Lisa DeWaal serves coffee at a Starbucks outlet for four hours every morning before she goes to the office to start her “day job.”  The reason has little to do with the state of the housing market and everything to do with the one big perk that 20 hours a week at the coffee counter provides: affordable health insurance for her and her three children.

Job Stretch is a term (that I just invented) where individuals take a second (or third) job in order to get health insurance.  Taking a second job in and of itself is not evidence of Job Stretch; many people prefer additional income over additional leisure time. However, when high-skilled workers take low-skill jobs just for health insurance benefits, this is an example of a labor market inefficiency.  The inefficiency is caused by a system of health insurance provided at the employer level.

Now we have two labor market inefficiencies to worry about: Job Lock and Job Stretch.

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  1. […] However, taxes are charged according to health insurance demand or even in a lump sum fashion.  Instead, the rich will pay more in taxes than they will receive from government health insurance benefits and the poor will pay less in taxes than they will receive in health insurance benefits.  Further, since the proposed tax is only on those individuals earning $280,000 or more, the tax will almost certainly be distortionary in some manner.  Although this progressive tax will create some distortions, it could cure others.  For instance, government health insurance could help to reduce labor market inefficiencies caused by Job Lock and Job Stretch. […]

  2. Lynn M says:

    Interesting. You also have to wonder if working so much puts you at more risk of having to use health insurance for conditions brought on by stress, etc.

  3. […] More and more Americans worry that if you move, lose your job, or change your job, you’ll lose your health insurance too. [This is the problem of job lock and job stretch] […]

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