Commission on Health and Safety and Workers' Compensation
Information Bulletin

April 13, 2000 Christine Baker
(415) 703-4220

Commission Issues Report on Workers' Compensation and the California Economy

SAN FRANCISCO -- The Commission on Health and Safety and Workers' Compensation (CHSWC) has issued a report entitled "Workers’ Compensation and the California Economy".

The Commission noted that various proposals to increase workers’ compensation benefits submitted to the Legislature have raised concerns that such increases would have a negative impact on the California economy and on California employers and employees. The Commission report was developed to provide information and analyses of workers’ compensation costs in relation to the California economy.

The Commission concluded that the California economy, the largest and most diverse in the nation, 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. The resources appear to be there to provide adequate compensation to those workers who lose their ability to compete in the labor market.

California's industrial injuries and illness rates have declined significantly in all industries and sectors between 1988 and 1998 even though California’s economy was growing. This improvement has been ascribed to a number of factors including shifts in the workforce, greater emphasis on work-place safety, continued efforts to combat workers’ compensation fraud, and changes in employer reporting patterns.

The relative costs of workers’ compensation have declined during the past decade. The ratio of workers’ compensation costs to total payroll (and to other economic indicators such as the Gross State Product and Personal Income) has dropped significantly during the 1990s. Proposed increases to benefits do not seem to significantly impact the ratio of benefits to total payroll (and to GSP and PI), but such increases could affect certain sectors more than they might others.

However, 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% of its value in 1984. Consideration should be given to indexing benefits.

Whenever a benefit increase goes into effect, the Commission on Health and Safety and Workers’ Compensation should study the impact of benefit increase on wage loss of workers, time-out of work, the benefit adequacy and equity, costs and utilization. This should include an ongoing evaluation of the adequacy of workers’ compensation benefit levels and recommendations for adjustments as needed.

The Commission, created by the workers' compensation reform legislation of 1993, is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission 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.

Further information about the Commission and its activities may be obtained by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th Floor, San Francisco, California 94102, by calling (415) 703-4220, or by faxing a request to (415) 703-4234. Information is also available at