Over the last decade, Albany’s changes to the state Workers’ Compensation system have left disabled workers shortchanged but helped the insurance companies that underwrite the program realize huge profits, according to a white paper from the New School's Center for New York City Affairs.
“While legislative changes in 2007 and 2017 included some positive measures, for the most part changes significantly lessened the adequacy of worker benefits,” according to the report written by James Parrott and Nicholas Martin. “The unfortunate result is that the focus of workers’ compensation in New York has shifted from fairly compensating injured workers to minimizing employer costs.”
Profits Up 92%
As the actual dollar amount of worker benefits fell by 15 percent from 2014-17, insurance company profits rose 92 percent, according to the report.
Benefits paid to [indemnity benefits] or on behalf of workers [medical costs] were only 55 percent of Workers’ Comp premiums in 2017 and in that year, insurance profits exceeded $1 billion, the researchers found.
Albany’s efforts to keep the costs paid by employers low appeared to have worked, with payouts amounting to just 0.7 percent of total employee compensation.
According to the authors’ data, New York’s $150 minimum weekly benefit is less than half the $339 average for the five-closest neighboring states. “Despite the fact that New York has the highest statewide average weekly wage, its maximum benefit of $871 in 2018 ranked 29th among all states,” according to Mr. Parrott and Mr. Martin.
“Why do we see record profits for insurance companies and, at the same time, a steady decline in benefits for injured workers?” asked William Turley, president of the Injured Workers’ Bar Association. “I hope that this [report] will inspire our lawmakers to do more to protect the rights of the most vulnerable segment of our labor force.”
More than 200,000 workers are injured annually in New York State. In 75 percent of those cases, the lost work time was concentrated in low-wage industries.
The New School analysis came as New York State experienced a major spike in deaths on the job, particularly in construction, that are now at their highest level in 20 years. Meanwhile, across the country, on-the-job fatalities have remained flat.
Successful claimants get the maximum of two-thirds of their average wage in the year before their injury, and there is no adjustment for inflation.
“National experts recommend that the wage base be adjusted annually to reflect a worker’s earnings potential rather than the pre-injury wage,” according to the authors. “This would include periodic wage increases, and promotions workers usually receive over the course of their careers.”
Across the private sector, warehouses, nursing homes, food-manufacturing locations, hotels, and hospitals have the highest rates of lost-workday injuries, the researchers determined. The retail trade sector had the highest number of injuries that resulted in employees having to take off from work.
In the public sector, workers employed in law enforcement, nursing homes, hospitals and the public schools have a higher probability of experiencing a workplace injury.
“This report sounds the alarm that there is a need for a real look at workers’ compensation in New York following years of eroding benefits, high rates of workplace injuries and fatalities and skyrocketing Workers’ Comp insurance profits,” said Mr. Parrott.
“Getting injured on the job should not push a worker into poverty,” Charlene Obernauer, the executive director of the New York Committee on Safety and Health, said in a statement. “This report shows that the workers' compensation benefit structure is broken and needs to be overhauled for all of New York’s workers."
"Frances Perkins, who played such a pivotal role in establishing New York's leadership role in workers' compensation benefits a century ago, would be aghast at the situation this report describes," said Patricia Smith, a former New York State Labor Commissioner and currently senior counsel for the National Employment Law Project.
Hector Figueroa, president of 32BJ Service Employees International Union, said, “When workers are safe on the job and adequately compensated if an accident does happen, those workers' families and their entire communities are more stable. That should be the goal for New York.”
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