Six Charts Explain How Workers’ Compensation Is Deteriorating

Workers’ compensation is a state-based government program that has protected American workers for close to a century. Throughout the early part of U.S. history, injured workers were taken care of by the communities they were a part of: churches, worker’s benevolence associations, neighbors, or extended family. But when workplace deaths and injuries soared during the industrial revolution, government stepped in to help.

Today, workers who are injured on the job or become ill after long-term exposure to workplace hazards are able to collect workers’ compensation. This financial support helps them pay medical bills, offers compensation for lost wages, and provides income to help pay for their living expenses while they are out of work. This mandatory insurance system is designed to provide a safety net for people who suffer harm on the job. 

To pay for this program, employers contribute to a state program for the benefit of their employees. Each state sets the rate it charges employers, based on the risk level of a workplace. This rewards and encourages employers with safer workplaces since they pay a lower rate for their employees than workplaces with worse injury rates. States also set the benefit levels paid to injured workers, which vary dramatically across states. Additionally, there is no federal minimum level of benefits that a worker can count on in the event of an accident.

Recent reports paint a picture of a workers' compensation system that is failing to adequately protect workers.

Employers are paying less into the workers' compensation system than in years past, and the families of injured workers in many states are receiving less support.

For example, North Dakota employers were paying $2.39 into workers’ comp for every $100 in wages in 1988. By 2014, this amount had fallen to $0.88 – meaning employer contributions to workers' comp had dropped by more than 60 percent. Over the same period of time, North Dakota increased the standards it requires for workers to qualify for workers' comp benefits; as a result, the percentage of workers' claims that were denied increased by 25 percent. North Dakota has been increasingly relying on out-of-state doctors to resolve claim disputes—these doctors rule against the judgment of a patient’s personal doctor most of the time, further reducing benefits.

These six charts explain how workers’ compensation is being eroded today and why the system is increasingly unequal and inadequate.

1. Workers’ compensation is surprisingly unequal between states.

There are dramatic disparities between the workers’ compensation benefits injured and ill workers are able to receive in different states, leaving many workers with unequal and inadequate compensation. In investigating the arm amputations of two men on either side of the Alabama-Georgia state line, NPR and ProPublica found a stark difference in the amount of workers’ compensation each worker was eligible to receive over their lifetime. One worker who lived and worked in Alabama received just $45,000 for the loss of his arm, slightly less than the $48,840 maximum lifetime benefit allowed under Alabama law. Less than 75 miles away in Georgia, another worker was awarded benefits that would last his lifetime, potentially totaling more than $740,000 after losing his arm in a similar industrial accident.

To see how a worker in your state would be compensated for the loss of a limb, try out this interactive tool from ProPublica.

Source: ProPublica

2. The amount employers pay into workers’ compensation programs is at historic lows.

Businesses are quick to complain that the cost of contributing to workers’ compensation programs are eating into their profits. But the premiums are at historic lows, despite increases in health care costs. In turn, states with stingier worker compensation programs have in recent years marketed themselves as business-friendly to companies looking to cut costs. 

See what employers in your state are paying in premiums to support workers’ comp.

Source: ProPublica

3. Workers’ comp is not burdening business.

Nationally, workers’ comp only accounts for 44 cents of the average $31.32 that private employers spend on each worker per hour. This means that the program makes up roughly 1.4 percent of the cost of compensating employees.

4. The costs of workplace injuries and illness have shifted to workers.

Recent changes in workers’ comp at the state level have made it more difficult for injured or ill workers to receive the full benefits they would otherwise be entitled to. In turn, workers’ comp now makes up only about 20 percent of the cost of reported injuries or illnesses. Workers and their families bear at least half of the cost of their injuries, although the real number is likely higher as many injuries go unreported.

Failing to cover the full cost of injuries or illness on the job disproportionately hurts low-income workers. Lower-wage workers are also the least able to absorb the costs of an injury. Because families are unable to shoulder these costs, taxpayers are being asked to take on a greater share of the costs of workplace injuries and illness through public assistance programs like Social Security Disability Insurance.

Source: Occupational Safety and Health Administration

5. Not all workers are covered by workers’ compensation.

Regulations vary by state, but generally contract workers, temps, and self-employed workers do not qualify for workers’ compensation. Thirteen states also exempt businesses with very small numbers of employees from having to provide workers’ comp benefits. This means these individuals are largely unprotected in the event they are injured or fall ill on the job.

At last count, independent contractors or contingent workers made up 30 percent of the workforce, equal to 42.6 million people. The portion of Americans characterized as freelancers is expected to surpass 40 percent of the workforce by 2020, leaving tens of millions of American workers without access to workers’ comp. Many workers are mischaracterized as independent contractors by their employers in order to reduce labor costs. This practice deprives workers of benefits and puts them outside of many legal protections in order to increase profit margins.


6. The U.S. can do a better job of protecting workers.

The United States has fallen behind other industrialized countries in its efforts to reduce workplace deaths and injury. While the United States has historically been a global leader in workplace safety, budget cuts for the agencies regulating workplace safety, coupled with relaxed standards and more industry self-regulation, have led to U.S. workers facing greater risks than their counterparts in other nations. Countries like the United Kingdom have prioritized workplace safety and worker fatality rates have fallen at a faster rate than in the United States, where fatalities have fallen but less quickly.

The chart below compares the frequency in which workers were killed on the job in the United States, the United Kingdom, and Germany in 2011, the most recent year for which standard European data is available.

Note: The most recent standardized data for European countries is available for 2011 through Eurostat. Road traffic accidents are not included in these rates. The 2011 total rate of fatal injury to workers in the United States is utilized (which is 3.5 per 100,000 workers).  However, because 23.5 percent of total 2011 fatal accidents were roadway accidents in the United States, we estimate a rate consistent with the Eurostat calculations to be 2.68.

To improve, we need a minimum federal standard for workers’ comp benefits.

It is time for Congress to step in and impose a national floor to support workers’ comp benefits. Regardless of where a worker lives, pressure from big industry, and the political tides of the day, every worker who is injured or becomes ill on the job should be guaranteed a basic minimum level of compensation. Only strong federal standards will stop competition between the states to lower employer premiums in ways that undermine workers comp’s mission of providing for injured and ill workers.

We should restore federal monitoring of states’ workers’ comp programs.

Even before discussions of establishing a federal minimum, decision makers and the public deserve a clearer picture of workers’ comp policies in the states. In response to budget cuts, the Department of Labor stopped monitoring state workers’ comp programs in 2004, abruptly halting decades of data collection that kept tabs on the benefits injured and ill workers could receive. Cancelling this data collection was an unfortunate decision. Just over a decade later, workers’ comp laws at the state level have dramatically worsened as a result of spending cuts and pressure from industry.

Options to standardize the patchwork collection of workers’ comp policies across the country should address the new challenges presented by the increasing reliance of firms on part-time and contract workers. All workers – not just traditionally-defined, full-time employees – should be protected in the event of a workplace injury or illness.

Prioritize prevention by restoring Occupational Safety and Health Administration (OSHA) funding to create safer workplaces.

Ultimately, reducing workplace accidents, injuries, and illnesses will require additional investment. To do this, both federal OSHA and state OSHAs must be given the resources to do their jobs. Adequately funding OSHA could alleviate the demand for workers’ comp by preventing workplace injuries and illnesses more effectively.


For Further Reading:

Can We Get Serious about Train Safety? Technology Could Reduce 40 Percent of Rail AccidentsThe Fine Print, 3/24/2015

Progressives Present Alternative Budget: A Raise for AmericaThe Fine Print, 3/19/2015

Think Corporate Tax Cuts Create Jobs? Think Again.The Fine Print, 2/25/2015

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This article is totally skewed and does not paint the whole picture. There have always been different reasons for the differentiation in the cost of living for states. And workers comp has nothing to do with it. The reasons for the decrease in pay is because of all the federal regulations and costs business have to pay. Entire industries are being reduced to nothing. Look at Brazil and that is where the US will be in the future unless there is LESS government, LESS regulation and LESS costs. Taxes WON'T help! We need to get American business back and this is NOT the approach. In polls from 2010, 62% of voters would prefer fewer government services with lower taxes. Nearly a third (29%) disagrees and would rather have a bigger government with higher taxes. Ten percent (10%) are not sure. This illustrates that America is essentially a nation that wants limited-government. They don’t want massive new government programs with massive new taxes to pay them, and the fact that such things keep getting foisted upon them is the reason why most Americans are so cynical about politics in general. It's not Left vs Right, its Tyranny vs LIBERTY
good artilcle chad hatten
Actually this article is only scratching the surface of embarrassment and horrific tragedy the GRAND BARGAIN has become. I find it some what hypocritical that those that always use smaller government and the tax argument to deny the honest and hard working citizens protection from the devastation a work place injury can inflict upon a worker and their families. I wonder if the LIBERTY touting individual above wants to live under a Corporate Tyranny State where profits trump even the most basic of our rights and treasured humanity. Workers Comp is not a tax, it was a bargain hammered out between big business and labor that was supposed to strike a balance between workers care and needs when injured on the job, and big business desire to be protected from the enormous civil liability and business risk the courts offered injured parties when cases could be presented before a jury of their peers. This so called GRAND BARGAIN has been under attack from the insurance industry and big business interest and their well funded lobbying wings (chamber of commerce as an example) in state legislatures for many decades (those are both Democrat and Republican controlled legislatures may I add). We have now reached a breaking point where injured workers are being cast into object poverty without benefits or proper access to reasonable medical care that could lead to cure and relief from the direct effects of their work place caused injures. Thus, now many of those honest and hard working former tax payers who just wanted their honest chance at the American dream and it's promise are now forever unemployed and living on the government coffers for mere sustenance. So if you wish to bring up the question of TAXES...who do you think is paying for the care of seriously injured workers and their family's; when their employers and insurance companies are not? That's right LIBERTY poster; the tax payers of America. I believe you should do some reading on how cost shifting really works, and how the insurance industry and big business are getting filthy rich on your tax payer dime. You might need rethink your whole Liberty, smaller government, no oversight, and less taxes argument; because that is just not the problem or issue being debated here..
great article
anan 2, write a book,
The power in this country has shifted because the concept of a Republic empowering the people to elect their citizens representatives to work for them has failed. Today lobbyists hired by vested interests have taken over the Republic .The vested interests with huge bank accounts rule the political system. For example, a shoplifter steals a jar of pickles from Walmart . That person is arrested and put in jail charged with stealing. Do you agree with this? Well, J.P. Morgan Chase just entered a deal with the U.S. Attorney to pay the United States and several states $12 billion for stealing through fraudulent mortgage loans . This bank and several others paid the money after agreeing that they stole the money and had committed theft. Yet, no Banker was charged with any crime. Do you think the Presidential Candidates sold the Office of the U.S. Attorney with an understanding that the financial services industry would be exempt from individual prosecution and the banks could just write a check? That appear to be what has happened. The Balance of Power has shifted against the worker and the struggle begins with putting Crooked Wall Street Bankers in Prison. . l
HOW JEB TREATS WORKING PEOPLE WHEN DOING RIGHT BY THEM INTERFERES WITH BUSINESS INTERESTS JEB is an interesting character. On the one hand he professes to be interested in the plight of the ordinary citizen and on the other, as Governor, he sought to please the varied business interests that have contributed to his past and current campaigns. Business interests became superior to the health and welfare of Florida workers during his governorship. The story begins on March 25, 1911. 146 garment workers perished in a fire at the Triangle Factory in New York City, most of them young Jewish and Italian immigrant girls. The factory was clearly unsafe, with locked exit doors and blocked passage ways and a few buckets of water to fight a fire. The public outrage over this fire sparked the development of both workplace safety laws and workers’ compensation laws. Both safety and workers’ compensation have traveled hand in hand until JEB took over as Governor of Florida. In 1935 Florida enacted its workers’ compensation and workplace safety law. They were one and the same. Chapter 440, Florida Statutes. The act set up a fund called the Administration Trust Fund, to gather the money necessary to administer the law, ie: pay the costs of administration and pay the costs of safety enforcement. The money in the fund was a percentage of the premiums paid by employers to their workers’ compensation insurers, a premium tax. In other words, employers funded the workers’ compensation adjudicatory system and the safety portion of the law. Fast forward to JEB’s governorship, 1999 to 2007. He allowed the Florida Workplace Safety & Health Act to be repealed in 2000. Florida became the only state with a repealed workplace safety act. In validating the New York workers’ compensation law in 1917, the United States Supreme Court said it expected that there would be other laws providing for accident prevention. There were such laws in Florida from 1935 up to 2000. In 2003 JEB presided over a legislature that eviscerated the benefits paid to injured workers and made the process and the proof necessary to obtain benefits much more difficult, if not impossible, for injured workers. For example, a new definition of ‘accident’ was placed in the law. One has to have an accident to get benefits. The new definition says: “An injury or disease caused by exposure to a toxic substance, including but not limited to, Fungus or Mold, is not an injury by accident arising out of the employment unless there is clear and convincing evidence establishing that the exposure to the specific substance involved, at the levels to which the employee was exposed, can cause the injury or disease sustained by the employee”, s.440.02(1) (2003). If a firefighter is exposed to smoke and thereafter sustains a serious skin condition, that individual could not possibly prove an injury by accident! “What about OSHA?” Good question. OSHA does not cover employments where less than 10 employees are working. That is the majority of Florida businesses. OSHA does not cover employees of the state and local governments, like Firefighters, Bus Drivers and School Board employees. Those workers have NO safety protection at work. Not from mold, asbestos, fungus, chemicals, etc. Those employees covered by OSHA should not exhibit a sigh of relief. In 2011 the U.S. Department of Labor reported that it would take current OSHA employees 230 years to inspect each covered Florida workplace, one time! Since 2000 employers no longer have to pay the cost of a safety program. If the business has less than 10 employees, there is no fear whatsoever of an OSHA inspection. If over 10 employees, the odds of an inspection are virtually nil. Government can ignore unsafe operations because there is little incentive to make the job safe since benefit levels for injured workers are so low. The 2003 amendments eliminated the most important and costly benefit of a workers’ compensation scheme, permanent partial disability- payment for partial loss of wage earning capacity. In December a single mother of two young children was crushed to death by the Miami-Dade County bus she was assigned to operate. The cause was an inoperable safety device. An expose by the press revealed that over 90% of county busses had inoperable or missing safety devices. Those two young orphans will have to make do with a total of $150,000.00 in death benefits which will be paid out over approximately 4.5 years. Then nothing! On June 16, 2015, the Miami Daily Business Review reported that the legislature had approved preliminary funds to start building a new Fourth District Court of Appeal Courthouse building because the old building is so ravaged by Mold that it cannot be remediated, “Lawmakers Pledge Money for New 4th DCA Courthouse”. A few years ago Federal Magistrate Judge Theodore Klein died from mold exposure in the Miami Federal Courthouse. The next Triangle Factory could be in Hialeah or Orlando or anywhere else in Florida. Will it take the loss of 146 or more young lives to bring the Republicans to their senses? Or will it take another deadly and destructive blast like the West fertilizer plant in Texas? Florida employers remain immune from negligence lawsuits as part of the exclusive remedy that is workers’ compensation but these same employers are not required by Florida law to make any effort, or spend any money, nor do anything to prevent death or injury to their employees. Thank you JEB. JEB presided over the most callous reduction in benefits for injured workers in Florida history and the gutting of workplace safety, especially for government employees and employees of small businesses. Just think of how much more damage he could do as president. Businesses flock to Florida to avoid the high cost of workers’ compensation insurance in other states and to avoid safety rules in other states. The little guy be damned. Mark L. Zientz Proof of all of the above facts available upon request.