26th September 2009
Americans used to move to where the jobs were. But now home-ownership and health insurance freeze many of them to the spot.
A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs. He observed that, in Europe, nations with high rates of home-ownership, such as Spain, had much higher unemployment rates than those where more people rented, such as Switzerland. He found this effect was stronger than tax rates or employment law.
Areas with high home-ownership often have a strong “not-in-my-backyard” ethos, with residents objecting to new development. Homeowners commute farther than renters, which causes congestion and makes getting to work more time-consuming and costly for everyone. Mr Oswald urged governments to stop subsidising home-ownership. Few listened.
The other threat to mobility is health insurance. A company can buy health insurance for its employees with pre-tax dollars; an individual can buy it only with after-tax dollars. So although soaring premiums are prompting many firms to drop or restrict coverage, 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.
Many quasi-socialists (artists and writers, for example) support government-provided health care in response to this situation, even though few of them realize it — most just think they’re being ‘progressive’ and ‘compassionate’, but they’re really reacting to a system that disadvantages people in their situation. It’s almost impossible in the United States to obtain affordable health insurance except through one’s employer, and except where that employer is large enough to offer health insurance — in other words, an organization large enough to offer Real Jobs … but artists and writers don’t want Real Jobs, which they regard as soul-killers; they want to pursue their Art.
America still suffers under the system that grew up in response to the wage controls of World War II, which has only gotten worse as various political processes pile cruft on top of cruft in a vain attempt to fix a system that is inherently flawed. Unfortunately, the only way to fix it is to return the focus onto the individual, and you may have noticed that nobody seems to be interested in doing that.