IR #00-06
Monday, April 17, 2000

Christine Baker
(415) 703-4220

Commission issues analysis of workers' comp costs

SAN FRANCISCO --The Commission on Health and Safety and Workers' Compensation (CHSWC) today announced its release of a report, "Workers' Compensation and the California Economy," which gives an analysis of workers' comp costs in the face of efforts to increase benefits.

Despite fears that benefit increases would negatively affect the California economy, the commission concludes current resources would provide adequate compensation to workers who lose their ability to compete in the labor market following on-the-job injury.

In its report, the commission finds the California economy is robust and is projected to continue that way. Economic growth in California is expected to continue exceeding that of the nation, reflecting faster population growth and the state's favorable mix of high-tech industries.

As cited in the report, the California industrial injury and illness rates declined significantly in all industries and sectors between 1988 and 1998, while California's economy was growing. This decline has been attributed to factors including shifts in the work force, greater emphasis on workplace safety, continued efforts to combat workers' compensation fraud, and changes in employer reporting patterns.

Costs of workers' compensation also declined during the past decade and the ratio of these costs to total payroll dropped significantly during the 1990s. Proposed increases to benefits do not seem to affect the ratio of benefits to total payroll, but such increases could affect some sectors more than others.

According to the report, workers' compensation benefits have not kept up with inflation. For example, the value of the permanent disability benefit after adjustment for inflation has declined to about 80 percent of its 1984 value. Consideration should be given to indexing benefits, reports the commission. Whenever a benefit increase goes into effect, the commission also recommends a study to measure the impact of benefit increase on wage loss of workers, days away from work, the benefit adequacy and equity.

More information on the commission report is available at

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