Sad to read Dan Walter’s item that California once again leads the nation in workers’ compensation costs. It was just a decade ago that the Small Business Action Committee carried the initiative supported by Governor Arnold Schwarzenegger that ultimately brought the warring sides of business and labor to agree to a legislative compromise that brought down the state’s workers’ comp costs.
That measure was adjusted a few years ago under Governor Jerry Brown to insure that injured workers were not deprived of just compensation for on-the-job injuries while still protecting employers’ expenses. Yet, here we are again facing a rising cost that could jeopardize job and economic growth.
The situation is not to the point that it was a decade ago – yet. According to the survey conducted by the Oregon Department of Consumer and Business Affairs, California worker’s comp costs are $3.48 per $100 of payroll. In 2003, the year before the compromise bill was passed, worker’s comp cost $4.81 per $100 of payroll with costs projected to rise to a staggering $6.50 per $100 of payroll by 2006.
The worker’s comp cost burden on business was a huge issue in the recall election that propelled Schwarzenegger into office. It was one of the prime reasons the California Chamber of Commerce chose to end a long-standing policy and endorse in a gubernatorial election, backing Schwarzenegger.
Growing worker’s comp costs brought representatives from other states government business offices flocking to California like vultures in hopes of poaching companies. Full page ads ran in business journals encouraging businesses to relocate, the ads emphasizing lower workers’ compensation costs in those states.
I recall a meeting in the outskirts of the town of Taft in Kern County in a makeshift building that certainly never hosted a political event before stuffed to the rafters with angry business people looking for relief from workers’ compensation costs that were undercutting their businesses.
Are we headed that way again?
The reforms advocated by Governor Brown were intended to get more money to injured workers. But a lot of the workers’ comp funds get sidetracked according to the Workers’ Compensation Action Network, which says that one-third of the money goes to litigation and other costs, not to workers.
Highest in the nation workers’ compensation costs is another measure of why it is so tough to run a business in the Golden State.
Stopping the increased costs must be a concern of the newly elected legislature. If workers’ comp costs climb to a point where they were during the workers’ comp war of ten years ago, another initiative may beckon. With the low turnout in the recent gubernatorial election the amount of signatures needed to qualify an initiative for the ballot has dropped. The necessary signatures to put a workers’ comp reform measure on the ballot would be easier to attain.