8/20/2005

USATODAY.com - Health insurance costs dog would-be entrepreneurs

Jeff Kushner seems perfectly poised to start a company helping families fight cybercrime, a business he's long dreamed of.

eff Kushner, center, figures it’ll cost $1,145 a month for insurance for his family.
Family photo

Demand for the advice he'll sell is soaring as consumers worry about online thieves swiping Social Security numbers and other private data. With start-up costs falling, Kushner, 46, can launch the business for less than $5,000 from his Houston home.

But Kushner, recently laid off from a tech job, is such a reluctant entrepreneur that he's only committing to self-employment for six months while he continues job hunting. Why? It's going to cost him $1,145 a month for health insurance for himself, his wife and two kids.

"A big shock," he says after hunting for better deals.

As health costs soar, more would-be entrepreneurs are reluctant to quit Corporate America and its blue-chip benefits to start businesses, entrepreneurship experts say. That raises alarms about the impact on innovation and job growth, when both are of growing importance to the U.S. economy.

"This is a real problem," says Carl Schramm, CEO of the Ewing Marion Kauffman Foundation in Kansas City, Mo., one of the USA's biggest entrepreneurship advocates.

These concerns come as self-employment rates continue a decades-long slump.

About 8.8% of non-farm, private-sector workers were self-employed last year. That was up slightly from 2002, when rates sank to a record low of 8.5%. Overall, however, rates have fallen in 30 of the last 50 years even as the workforce mushroomed, Labor Department data show.

That's worrisome because start-ups and other small firms have historically created most innovations and as much as 75% of new jobs. In Cincinnati, for example, health costs have slowed Wendy Hunt and her husband, Brian Germ, from starting a dog day care business that would employ up to 10 workers.

That may not sound like much. But multiplied across thousands of start-ups, these new jobs would replace many lost when mature companies such as Eastman Kodak and Hewlett-Packard are slashing payrolls.

USATODAY.com - Health insurance costs dog would-be entrepreneurs

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