Would you sell a hand for a hundred grand if it were vital to your career?
Under workers’ compensation, which covers damage to your body and future lost wages, losing the use of a hand is valued at $37,400 in Alabama and $738,967 in Nevada. In Washington, it’s worth $106,440, and in Idaho, $102,317. The average for all states is $144,930, according to an investigative report by ProPublica and National Public Radio.
How about a leg? On average, one of those goes for $153,221, but just $118,226 in Washington, and a measly $75,790 in Idaho. How about an eye? Would you sell one for $42,576 (Washington) or $66,316 (Idaho)?
Lobbyists and interest groups visit legislatures every year to hold forth on reforms needed to make workers’ comp business-friendly. But, according to the ProPublica/NPR investigation, the real victims are workers and the American taxpayers.
“They call them reforms,” said U.S. Sen. Bob Casey, D-Pa., adding, “That’s a real insult to workers.”
Like wages, pensions and health care benefits, workers’ comp has fallen victim to the labor market’s race to the bottom. The issue for businesses isn’t that the situation has improved for them over the past quarter century. It’s that they can cut a better deal elsewhere if states won’t give in to their demands.
“That was always the No. 1 issue,” said state Sen. Brian Bingman, Republican president pro tem of the Oklahoma Senate. “Your workers’ comp rates are way too high.”
Since 2003, 33 states have reduced benefits or made them harder to qualify for. Some states have cut off benefits before workers recover.
As a result, workers’ comp insurance rates for employers are at a 25-year low. In 1988, the national average was $3.42 per $100 of workers’ wages. Last year it was $1.85. In Washington, the burden has dropped from $3.81 to $2. In Idaho, from $3.42 to $1.85.
Employers disregard the big picture and hone in on the differences among states, and legislators go along. But this merely shifts costs from the private sector to the public sector. A leaky workers-comp basin causes more injured Americans to spill over to the Social Security disability system and government health care programs. Then conservatives in Congress complain of increased federal spending.
ProPublica/NPR also found fraud in workers’ comp, mostly on the employer side, such as misclassifying workers and undercounting payroll for lower insurance rates. Plus, insurers and employers have teamed up to take away more medical decisions from injured workers and doctors. Under a 2011 Montana reform, insurers can choose workers’ doctors and change them at any time. In 2013, Georgia ended lifetime benefits, cutting them off after eight years for most cases. So workers with artificial hips and joints have to pay the full cost of replacements.
The reach of workers’ comp is further diminished when you consider another development: the hiring of “self-employed” workers, who aren’t eligible for benefits. This has become commonplace in construction, a high-injury career. Many workers aren’t aware of the label’s significance until they’re seriously hurt. Then they face financial ruin.
Comparatively speaking, Washington has a humane workers’ comp system. But in the name of business-friendly, some states have become worker-mean. We should not, in good conscience, challenge them to a race to the bottom.
Death spiral. Workers’ comp erosion is like the tax break issue. Relocating businesses play one state against another. One wins, one loses. Research shows there’s no net gain for the U.S. economy, but it does lower government revenue. In turn, the safety net for struggling Americans is shredded.
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