Workers’ comp rate holiday proposed
OLYMPIA – Gov. Chris Gregoire and legislative leaders are proposing a six-month “rate holiday” in workers’ compensation premiums for the second half of 2007, a move that would save companies and workers an estimated $315 million.
The change would come on top of an estimated $89 million in savings next year due to already-approved lower premiums for unemployment and workers’ compensation rates. Total savings: $404 million.
“That’s money we hope will be reinvested in business and reinvested in the economy,” Gregoire said at a morning press conference at the state Capitol. Hearings on the plan will be held this month, including one in Spokane at 10 a.m. Dec. 14 in the Ridpath Hotel. The Legislature is expected to vote on the proposal in the next session.
Under the plan, a builder with about 25 full-time workers would save roughly $22,000. A farmer with the same number of workers would save about $5,300. Many workers would also see slightly higher paychecks.
It wouldn’t be a permanent rate cut, however. Gregoire said the rates will be re-examined next year to see whether they should be restored at the end of 2007.
“Going into it, everyone needs to understand that it’s just that: a holiday,” she said.
The workers’ compensation system covers medical care and income for workers hurt or killed on the job.
Since industries pay risk-based fees, the biggest savings next year would be in the riskiest jobs. Loggers, crop dusters, temporary hazardous waste cleaners, sports team members and dancers would typically see savings ranging from $1,400 to $2,400 each next year. Movers would save about $400 each, as would livestock handlers. Tow-truck drivers would save nearly $500.
The bad news: For the state’s roughly 600,000 low-risk professional and retail workers – sales clerks, doctors, bookkeepers, lawyers – the savings would amount to about the cost of two lattes a month. Two small lattes, that is.
And there’s another caveat: Some companies pay the worker’s share of the premium. Those workers – since they’re not paying anything now – won’t see any change in their checks next year.
Business groups said Monday that they weren’t surprised by the plan, which Gregoire first floated in an agency press release more than a month ago. But the savings will help, they said.
“It’s a welcome break,” said Carolyn Logue, Washington director for the National Federation of Independent Business.
She noted, however, that the holiday applies only to part of the worker’s compensation premium that businesses pay.
“They’re still going to have a bill,” she said.
How can the state afford this? According to Department of Labor and Industries spokesman Robert Nelson, the workers’ compensation fund has about $1.1 billion more than actuaries expect to spend for future medical care and payments.
The reasons: the surging stock market, for one. The fund’s investments have done unexpectedly well recently. Also, Gregoire said, the labor department has gotten better at controlling the system’s medical costs.
Third, jobs have gotten safer. Injuries and job-related deaths have declined dramatically in recent years, saving the system money.
“You anticipate that things are going to stay the same, and they just haven’t,” said Nelson. Some industries, he said, have seen injuries and deaths cut in half over the past 15 years, he said.
“Any time you can reduce rates, it does two things,” said Don Brunell, president of the Association of Washington Business. “It shows you’ve got a strong economy and you’re doing a better job of managing your risk.”
Logue said the state needs to come up with a long-term solution that keeps the money in the pockets of companies and workers, instead of refunding it later.
“They have to reduce that surplus. They have way too much money,” she said.