"This
is the first year since 1992 that benefits grew faster than
wages and the first year since 1993 that employer costs rose
faster than wages"
Benefits
Grow Faster Than Wages for the First Time
Since 1992
Benefits paid to
workers and employers' costs for workers'
compensation rose slightly faster than wages
in 2001, according to a new report released
today by the National Academy of Social
Insurance.
This is the first year since 1992 that
benefits grew faster than wages and the first
year since 1993 that employer costs rose
faster than wages. Workers' compensation pays
for medical care and cash benefits for workers
who are injured on the job or become ill due
to job-related causes. In providing health
care and cash benefits to disabled workers and
their families, workers' compensation is
second in size only to Social Security
disability insurance and Medicare.
Workers' compensation benefits and costs grew
faster than wages in 2001, in large part
because of the economic recession that began
in March 2001. The recession brought the
slowest growth in wages in more than a decade
and a decline in the number of covered
workers.
In 2001, wages grew by just 2.4 percent, while
total workers' compensation benefits grew by
3.5 percent – for a total of $49.4 billion.
Benefits per $100 of wages grew by one cent,
from $1.06 in 2000 to $1.07 in 2001. Benefits
were about 36 percent lower than their peak in
1992 when benefits were $1.68 per $100 of
wages (see Figure 1).
Employer costs, which reflect premiums charged
by insurers, rose by 8.0 percent in 2001 to
$63.9 billion. Employer costs per $100 of
wages rose by seven cents, from $1.32 in 2000
to $1.39 in 2001, but still remain below their
1993 level of $2.16 per $100 of wages.
Workers' compensation premiums are affected by
many factors, including the performance of
financial markets. Reduced investment returns
in 2001 contributed to higher premiums.
"The long-term decline in benefits and
costs relative to wages since 1992-93 is due,
in large part, to fewer reported accidents and
fewer claims for workers' compensation,"
John Burton, Jr., of Rutgers University and
chair of the NASI Panel that oversees the
study, explained. Workplace accidents that
result in lost work days declined from 3.0 to
1.7 per 100 full-time workers between 1992 and
2001, according to the U.S. Department of
Labor. Industry sources report similar
declines in workers' compensation claims.
"Other reasons for the decline include
more active management of medical care and
more efficient return-to-work programs and
other efforts to reduce costs," Burton
added. "At the same time, some are
concerned that initiatives to control costs,
discourage fraud, and tighten eligibility
requirements cause injured workers to be
denied benefits or discouraged from claiming
them," Burton concluded.
These trends are discussed in the NASI Brief,
Workers' Compensation and Older Workers, at
www.nasi.org.
