Calif. Nears Deal on Workers' Compensation Reform

Yahoo! News ^ | 3/12/04 | Jim Christie - Reuters

[NormsRevenge]

SAN FRANCISCO (Reuters) -

California Lawmakers and Gov. Arnold Schwarzenegger (news - web sites) are near a deal to reform a workers' compensation system whose high costs, critics claim, have been a drag on the local economy, the state's Assembly speaker said on Friday.

"I'd say we're 90 percent of the way there," Assembly Speaker Fabian Nunez told Reuters. "I don't see why we wouldn't have workers' comp reform by the end of the month."

Democrat Nunez's optimism comes amid a flurry of talks between lawmakers and the Republican governor on the state's insurer of last resort for workplace injuries. Both sides have described the negotiations as very positive.

On Thursday Schwarzenegger said he would be open to a deal if lawmakers find a way to cut 25 percent to 30 percent of the system's costs. Schwarzenegger had wanted to cut expenses by about 50 percent as he made reform a top priority.

California employers have charged that the system's costs are out of control. For every $100 of salary, they pay an average of $6.33 in workers' comp charges, compared with a national average of $2.46, according to the Small Business Action Committee.

The governor has said he would lead a statewide initiative to overhaul the system if he does not reach agreement with legislators.

However, he prefers a legislative deal to pass cost savings on to employers quickly, spokesman Vince Sollitto said. "We're focused on changing the system, which will drive savings ... It means not playing at the margins," he said.

A reform package would reduce the cost of doing business in California and boost job growth, said Joe Hurd, an economist with the UCLA Anderson Forecast.

"We have a state problem of employment, so if this reduces the cost of employment at the margin, this may allow employers to hire more or not lay off as many employees," Hurd said.

California reported on Friday that its jobless rate for February was unchanged from January at 6.2 percent, with payrolls growing by a meager net 8,800 jobs.

"High workers' comp premiums contribute to a jobless recovery," said David Blair, a municipal bond analyst with Nuveen Investment. "Meaningful workers' comp reform is critical for jobs growth and ultimately economic growth."

Anticipation of a reform deal picked up in recent days after the estimated cost of treating injured workers this year in California fell by $7 billion to $17.9 billion.

[NormsRevenge]

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[CurlyDave]

California employers have charged that the system's costs are out of control. For every $100 of salary, they pay an average of $6.33 in workers' comp charges, compared with a national average of $2.46, according to the Small Business Action Committee.

And just where did they get these figures?

Two years ago I needed to put a roof on a rental house and considered hiring & supervising casual labor to do the job. I wanted to stay legal so I called up the state and asked about workmen's compensation insurance. The answer I got was that it would cost $11 per hour. Since the laborers wanted $12 per hour this is $91.70 per $100 of labor.

I gave up on that idea and hired a roofer who charged about $25 per man hour for his crew.

[kylaka]

Workmens comp is charged at a rate per $100 of payroll, not per hour. In New Jersey, roofers, who have almost the highest rate of accidents per man hour worked, have $21 per hundred dollars of payroll, charged to the employer by private insurers, by way of premiums paid. In contrast, the average
office worker is insured at a rate of .85 per hundred dollars of payroll.

[truthkeeper]

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