I’m pretty sure that every time I sit down to watch broadcast television, I see a commercial for car insurance. Someone like me can only watch Flo, Mayhem, and the gecko so many times before it occurs to him: They sell car insurance; why not car-eer insurance?
I looked on the internet. A number of career advisors and coaches have – possibly independently – come up with the idea of career insurance over the past few years. But, as a former corporate attorney, I have to say their conceptions of “career insurance” are off. Every article I found proclaimed basically the same message: keep your skills sharp and current, maintain a strong network, put aside some money for a rainy day, and then you’ll be “insured” against a time where you lose your job or feel you must leave a bad one. But from an economic point of view, none of that is “insurance”.
Insurance, technically, is the transfer of risk, in exchange for payment. When you buy car insurance, for example, you’re paying a fee to transfer your risk of loss to the insurance company. If your neighbor saws a tree limb or drops an air conditioner and it falls onto your unoccupied car (which happens surprisingly often in TV-Ad-Land; presumably insurance companies don’t want potential customers to associate them with the gory outcomes of actual car accidents), then the insurance company pays the cost, because it has accepted the transferred risk.
If you retain a strong skill set, nurture a widespread network of contacts, and keep six months’ worth of salary in a savings account, you are not transferring risk to anyone else; you are merely accumulating a cushion of resources to help you weather a career loss on your own. That’s a smart idea, but it’s not really “insurance”. You could say it is a form of self-insurance, but even so, it’s not planning for the loss of a career, only the loss of a job.
Wouldn’t it be great if you could pay some entity a periodic fee, and transfer all your risk of a failed career to that entity? Then if, say, a technological advancement made your work obsolete (think Kodak, post-selfies), or if your conduct got you banned for life from your profession, or if you aged out of your window of opportunity (like a minor-league ball player approaching 40), or even if you just woke up one day and realized that you’d been doing brand marketing for 25 years when what you really wanted to do was paint in Tahiti . . . why, then, you’d just call up your insurer, explain that you just totaled your career, and ask them to compensate you for your loss. Wouldn’t that take a lot of pressure off of us, not to have to constantly worry about being wrong or being blindsided or just not being good enough? How many of us would find ourselves brave enough to strive for a truly exceptional outcome if we could be certain that there would be no downside?
But it doesn’t take long to pick out the flaws in that idea. There’s moral hazard – the danger that the knowledge that we don’t bear the losses ourselves will persuade some people to behave recklessly, since they need not fear any consequences. There’s cost – given the frequency with which people lose or abandon their careers, insurers are likely to charge quite a bit, more than most people would be willing to pay, in order for them to accept your risk. And there’s the question of valuation. For those whose careers was only a means to an end – financial stability, for instance – the calculation of the value of the lost career might be a fairly straightforward function of yearly salary. But what about those whose career is their passion? People who wouldn’t voluntarily relinquish their careers for any price, or who couldn’t accept any financial compensation to make up for the loss. No one could calculate what it would take to set things right for them.
And that, probably, is why there is no such thing as career insurance. It’s a paradox. The people who could put a monetary value on what they do, who could feel compensated by money for its loss, aren’t as invested in their work as a career. They might disproportionately abandon their work, running the costs up for the insurance companies and, ultimately, all the consumers. In contrast, the ones who are really committed to their careers, those who would fight to keep or pursue them, might not see the value in buying insurance in the first place, knowing that any future payoff would be inadequate. Insurers would end up with way too much risk, and premiums would be forced to skyrocket.
Ah, well. At least we can take something from this economic view of career risk. Self-insurance, in the form of developing an excess of resources, may be the best we can do, economically. But this reminds us, once again, that, for better or for worse, some of the value of a career can’t be equated to money – and that intentionally searching for that kind of value can be one route to fulfillment.