The National Academy of Social Insurance (NASI) 2018 Workers’ Compensation Benefits, Costs and Coverage report, underscores a trend: The US economic recovery has spurred growth in employment and also a corresponding increase in employees covered by workers’ compensation as benefit costs continue to decline.
In general workers’ compensation benefits as a share of payroll declined in 2016, which is a continuation of a five-year trend. Employer costs as a share of payroll fell for the third straight year in a row. Workers’ compensation benefits fell from $0.86 per $100 of payroll in 2015 to $0.83 in 2016, a 3.5 percent decrease and the lowest level in almost 30 years.
In fact, in 36 states, benefits as a share of payroll declined. Michigan and Oklahoma saw the biggest decreases of all, as benefits as a share of payroll decreased by at least 10 percent. Fifteen states saw increases and Wyoming and Iowa saw increases of more than 5 percent.
Workers’ compensation costs for employers fell from $1.44 per $100 of payroll in 2015 to $1.30 per $100 in 2016, which was a 2.3 percent decrease. The District of Columbia saw the largest decrease, at 24 percent, and Texas saw costs fall by 14.3 percent. Fourteen states saw increases, New York saw the largest increase of 4.6 percent, according to the report, Workers’ Compensation: Benefits, Coverage, and Costs.
“While workers’ compensation benefits and costs as a share of payroll has gradually declined at the national level in the past few years, the story is more nuanced at the state level,” said Christopher McLaren, Senior Researcher at the National Academy of Social Insurance and co-author of the report.
“Rising employment is exerting upward pressure on total benefits and costs, but many states have implemented significant changes to their workers’ compensation benefit systems in recent years, including efforts to improve the return to work outcomes of injured workers, that are driving benefits and costs down.”
Marjorie Baldwin, professor at Arizona State University adds, “Part of the story behind the decline in benefits and costs as a share of payroll is that workplaces are getting safer. Both the incidence and severity of work-related injuries have declined steadily since 1990. In fact, according to the Department of Labor, the proportion of workers, who experienced injuries that resulted in days away from work reached a 25-year low in 2015.”
In 2015, total wages covered by workers’ compensation exceeded $7 trillion for the first time, increasing by nearly 19 percent between 2011 and 2015. Overall, in 2015, workers’ compensation coverage extended to an estimated 86.3 percent of all jobs in the employed workforce, comprising more than 135 million workers.
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