Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship by Tania Babina :: SSRN

March 6, 2017

Using US Census employer-employee matched data, I show that employer financial distress accelerates the exit of employees to found start-ups. This effect is particularly evident when distressed firms are less able to enforce contracts restricting employee mobility into competing firms. Entrepreneurs exiting financially distressed employers earn higher wages prior to the exit and after founding start-ups, compared to entrepreneurs exiting non-distressed firms. Consistent with distressed firms losing higher-quality workers, their start-ups have higher average employment and payroll growth. The results suggest that the social costs of distress might be lower than the private costs to financially distressed firms.

Source: Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship by Tania Babina :: SSRN


Massachusetts Governor Hiking Taxes To Rescue Failed Health Reform

January 27, 2017

Governor Charlie Baker of Massachusetts has proposed a tax of $2,000 per worker on businesses which do not offer health coverage to employees who become dependent on Medicaid.

Source: Massachusetts Governor Hiking Taxes To Rescue Failed Health Reform


Massachusetts Governor to Pitch Health-Insurance Penalty for Employers – WSJ

January 25, 2017

The first state in the nation to require residents to carry health insurance is grappling with escalating Medicaid rolls, but a fix floated by Massachusetts’ Republican governor is drawing pushback from employers.

Gov. Charlie Baker will propose in his annual budget on Wednesday a $2,000 penalty per worker on businesses that don’t shoulder enough of the health-insurance cost. The governor is aiming to solve what he sees as a flaw in the national health law: Medicaid ends up being more appealing to low-income workers than insurance offered by employers, raising the costs for the state.

Source: Massachusetts Governor to Pitch Health-Insurance Penalty for Employers – WSJ


Update: Obamacare’s Impact on Small Business Wages and Employment – AAF

January 23, 2017

Research from the American Action Forum (AAF) finds regulations from the Affordable Care Act (ACA) are driving up health care premiums and are costing small business employees at least $19 billion in lost wages annually. These figures varied by state, but in 2015 the ACA cost year-round workers $2,095, $2,134, and $2,260 in Ohio, New York, and North Dakota, respectively. Premium increases, a prospect regulators predicted when issuing the first ACA regulations, also significantly diminished the number of business establishments and jobs nationwide. Across the country, small businesses (20-99 workers) lost 295,030 jobs, 10,130 business establishments, and $4.7 billion in total wage earnings. Florida lost 17,950 jobs; Ohio lost 19,000; Pennsylvania lost 15,680; and Texas lost 28,010 jobs due to higher sensitivity to rising health care premiums and the ACA.

Source: Update: Obamacare’s Impact on Small Business Wages and Employment – AAF


JRG Health Sector Analysis: Health Jobs Explode Versus Non-Health Jobs

January 6, 2017

Health jobs exploded in this morning’s jobs report, growing more than three times faster than non-health jobs (0.28 percent versus 0.09 percent). With 43,000 jobs added, health services accounted for over one quarter of 156,000 new nonfarm civilian jobs.

The disproportionately high share of job growth in health services is a deliberate outcome of Obamacare. While this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Source: JRG Health Sector Analysis: Health Jobs Explode Versus Non-Health Jobs


The Cadillac Tax and Its Potential to Transform How Americans Purchase Health Care Services by Richard L. Kaplan :: SSRN

December 23, 2016

This Article examines one of the most contentious provisions of the Affordable Care Act – namely, the 40% excise tax on high-value health insurance provided by employers. This levy, commonly denominated the “Cadillac” tax, is scheduled to take effect in 2020 but has already induced many employers to raise annual deductibles on the health insurance they provide to reduce the value of such insurance and thereby lower their exposure to this new tax. After analyzing the administrative guidance proposed since the Cadillac tax’s enactment, this Article considers how that tax’s effective encouragement of high-deductible health insurance plans has inadvertently made the Health Savings Accounts that President George W. Bush promoted 15 years earlier much more appealing.

Source: The Cadillac Tax and Its Potential to Transform How Americans Purchase Health Care Services by Richard L. Kaplan :: SSRN


The Kauffman Index 2016: Main Street Entrepreneurship National Trends by Robert W. Fairlie, Arnobio Morelix, Inara Tareque, Joshua Russell, E. J. Reedy :: SSRN

December 1, 2016

The Kauffman Index of Main Street Entrepreneurship is a comprehensive indicator of small business activity in the United States, integrating high-quality sources of timely information into one composite indicator. The Index captures business activity in all industries and is based on both a nationally representative sample size of roughly 900,000 responses each year and on the universe of all employer businesses in the United States on a dataset covering approximately five million businesses. The focus here is on business owners based on location, survival rates of firms, and established small businesses — employer firms older than five years and with fewer than fifty employees. As such, we examine both the business owners and the businesses they own.

Main Street entrepreneurship is an important aspect of the U.S. economy and society. Established small businesses make up almost 68 percent of all employer firms in the United States and are a source of local economic activity.

This report presents trends in Main Street entrepreneurship over the past two decades for the United States. Two separate reports look at these same trends in all fifty states and the forty largest U.S. metropolitan areas. Some Main Street Entrepreneurship Index components, when available, also are reported by demographic groups.

Source: The Kauffman Index 2016: Main Street Entrepreneurship National Trends by Robert W. Fairlie, Arnobio Morelix, Inara Tareque, Joshua Russell, E. J. Reedy :: SSRN