Commission on Health and Safety and Workers' Compensation
Information Bulletin

February 13, 2002 Christine Baker
(415) 703-4220

CHSWC Announces Release of Report on the
Impact of Economic Conditions on Workers’ Compensation

SAN FRANCISCO -- The California Commission on Health and Safety and Workers’ Compensation (CHSWC) announced the release of a report on the role of economic conditions on the workers’ compensation program. The report is the latest in a series on workers’ compensation permanent disability developed by RAND under contract with CHSWC.

The report, Trends in Earnings Loss from Disabling Workplace Injuries in California: The Role of Economic Condition, by Robert T. Reville, Robert F. Schoeni, and Craig W. Martin confirms earlier findings that, despite some improvements in the mid-1990s, benefits in the state are lagging behind wages lost due to work injuries. For those injured workers who suffer from permanent partial disabilities, the replacement of lost wages over a 10-year period remains below one-half of earnings lost, which is well below the standard of two-thirds replacement invoked in evaluations of adequacy.

Key findings from the study include:

Ÿ The situation of disabled workers in California improved between 1991 and 1997. Their average benefits over five years after their injury increased as a percentage of their lost wages from 52 percent in 1991 to 58 percent by 1997. Although the improving economy had a slight effect on this increase, two other factors were more significant: the 1993 reforms to the state's workers' compensation system that raised benefits and the fact that employers recognized they could control the costs of workers' compensation by increasing their use of "return to work" policies and rehiring more disabled workers.

Ÿ Workers whose injuries were less severe showed the greatest gains in the replacement of lost wages during this period. They are also the easiest for employers to accommodate through return-to-work programs. In contrast, the most disabled claimants experienced no change in outcomes-and may have even lost ground-from 1991 to 1997.

Ÿ Although injured workers in the aggregate fared better in the mid-1990s, the study predicts that workers injured today are likely to be worse off than workers injured in the mid-1990s. Benefits have remained fixed in nominal terms since 1996, and have actually declined in real terms due to inflation.

CHSWC is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. CHSWC was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.


For any questions regarding this bulletin, please contact:
Commission on Health and Safety and Workers' Compensation (CHSWC)
455 Golden Gate Avenue, 10th Floor, San Francisco,  CA  94102
Email:     Phone:  (415) 703-4220    Fax:  (415) 703-4234     Contact Person:  Christine Baker