Job Lock in the U.S. Workplace
Job lock, a phenomenon where employees stay in jobs they don’t like due to fear of losing their health insurance, is increasingly becoming a concern in the U.S. workplace. According to a study by the West Health-Gallup Center on Healthcare in America, nearly one in four (24%) American workers say they are ‘afraid’ of losing their health insurance, and this fear is keeping them in their jobs. This is an 8% rise from 2021, highlighting the growing concern of job lock in the U.S. workplace.
Workplace experts call this phenomenon ‘job lock,’ and it’s growing in the U.S. workplace. The study noted that the fear of losing health insurance is a major reason why employees stay in jobs they don’t like. Given the skyrocketing costs of health insurance, as employer-sponsored family health insurance premiums have increased by about 26% over the past five years, this fear is justifiable.
The Impact of Job Lock on Employees and Employers
Job lock directly impacts U.S. companies, too. Job lock alone runs about $137,000 per 100 employees per year in added productivity drag, on top of the costs from attrition, disengagement, and reputational damage. Ethan McCarty, founder and CEO of Integral, told Moneywise that the data comes from the Integral Index, an annual workforce study conducted with The Harris Poll. Across a 1,000-person company, that’s over a million dollars a year from job lock specifically, inside a broader disengagement cost that tops $5 million.
McCarty also noted that most employers aren’t measuring this because they’re measuring retention, not the reason behind it. Companies can make life easier for staffers by offering better employment enticements, like heftier salaries, more flexible working arrangements, and a health and wellness-oriented workplace culture. However, cheaper insurance won’t fix a health insurance-related job lock problem, and that alone isn’t a company’s fault, as businesses have little impact on healthcare coverage prices.
The Role of Employer-Sponsored Healthcare Plans
U.S. employer healthcare plans are often viewed as the best and most complete by employees, compared to other health care plans. They’re primarily built with lower deductibles, pharmacy benefits, and other supplementals like accident coverage, critical illness, and hospital indemnity. Thyrza Oliveira, a licensed health insurance agent in 31 states and founder of FindCoverage.net, told Moneywise that a client in Florida was paying over $3,600 per month for a family of five. The client was thinking about leaving her job and, while finally leaving the job because of the health insurance benefits alone, the process took a long time.
Oliveira also noted that experience and others convinced her that employees are scared of the individual market, as Affordable Care Act plan deductibles and out-of-pocket costs are getting higher and higher, and networks are getting narrower. We’re also seeing big companies leaving the marketplace, rules for subsidies changing, medical costs rising, and everyone has heard stories about denied claims.
Why Employees Stay in Toxic Jobs
Employees are used to their employer’s healthcare coverage, know how it works, and know it’s effective. Consequently, they’d rather stay in a toxic job and accept lower pay forever in exchange for the feeling of safety. This phenomenon is known as ‘golden handcuffs,’ and health insurance is the most powerful type of golden handcuffs in the U.S. labor market.
Blair, a physician and founder of Blair Wellness Group, told Moneywise that salary can be negotiated, and so can retirement, but a waiting period on a pre-existing condition can’t. Employees are trapped in a job by misinformation, and they’ve never actually priced their options.
Companies Must Do Better
Companies don’t have much choice but to do better. If someone’s only staying because they’re scared of what happens if they leave, you haven’t solved a retention problem; you’ve created a liability sitting inside of your workforce. The job is to build conditions people want to stay for. That’s a harder problem than a benefits package, but it’s the one that pays off.
Employees must start comparing COBRA expenses for any upcoming medical treatments, and not just the premiums. They should also schedule any exit around treatment milestones rather than calendar quarters and negotiate short-term consulting work to maintain benefits and to try out a new position.
As Oliveira noted, perhaps the biggest mistake is to assume a new job’s health care coverage is better than your current one. Chasing stronger health care plans is what makes people get stuck in a position where they won’t leave the job because of the benefits.
