The Puzzling Geography of Workers' Compensation

In Pennsylvania, losing an eye on the job warrants as much as $261,525. In Alabama, it can only get you $27,280.

Kevin Lamarque/Reuters

This week, ProPublica and NPR released the results of a jointly reported investigation into workers’ compensation laws across the U.S. The headline: Many states have been passing laws in recent years that significantly cut benefits to injured workers, even though the costs of workers’ compensation to businesses are lower than they’ve been in decades.

This investigation, more than most, is a Frankenstein’s monster—grisly stories of injury and dismemberment mixed with dry, wonky policy detail. “An amputated arm can literally be worth two or three times as much on one side of a state line than the other,” the report says. “The maximum compensation for the loss of an eye is $27,280 in Alabama, but $261,525 in Pennsylvania.” Given the striking disparity in that last example, it’s probably not surprising that most states have been heading in the direction of Alabama, where the cost of workers’ compensation premiums is close to the national average.

Workers’ comp is not an alluring topic. For many of us, it’s almost pure policy abstraction—fine print buried somewhere in our employment papers. One worker quoted in the piece, an Oklahoma resident named John Coffell, said he didn’t realize his workers’ comp benefits had changed until after he injured his back. Even the Department of Labor has been paying less attention to the issue, as the report points out: The department used to track how states' workers’ comp protections tracked with national guidelines, “but stopped after budget cuts in 2004.”

But workers’ comp policy is one of those matters that doesn’t really seem to involve you until it does, as John Coffell found out. Because of a law that took effect in Oklahoma in 2014, the report says, Coffell’s “wages dropped so dramatically that he and his family were evicted from their home.”

To many of the folks who were paying attention to workers’ compensation policy in Oklahoma, the outcome of the recent law was viewed as a success. At the time the law was being considered, as the bill’s lead sponsor lamented in local news coverage, Oklahoma’s workers’ comp rates were almost twice as expensive as those in Arkansas. Within months of the bill’s passage, supporters of the measure were touting double-digit decreases in workers’ compensation costs in insurance-industry journals.

Workers' comp, the report reminds us, was a bargain between business and labor struck at the outset of the Industrial Age: “Workers gave up their right to sue their employers—even in cases of gross negligence—protecting businesses from lawsuit judgments that could bankrupt them.” And in return, “if they were injured on the job, their employers would pay their medical bills and enough of their wages to help them get by while they recovered.”

But that bargain has changed, dramatically yet quietly. “The cutbacks have been so drastic in some places,” the report says, “that they virtually guarantee injured workers will plummet into poverty.”

In the 70s, President Nixon convened a commission to examine states’ workers’ compensation laws and make recommendations for the minimum protections these laws should provide:

In 1972, the commission advised Congress to mandate 19 of these recommendations as minimum federal standards if states didn’t enact the provisions on their own. States quickly did. But over time the political winds shifted. A wave of cutbacks began in the 1990s, swelled in the mid-2000s and, after slowing during the recession, picked up again. ...

A ProPublica analysis of state laws done in consultation with [John Burton, the Republican economist and law professor who led Nixon’s commission] found that only seven states now follow at least 15 of the recommendations made during the Nixon administration. Four states comply with less than half of them.

The recent changes are “unprecedented in the history of workers’ comp,” Burton said in an interview. “I think we’re in a pretty vicious period right now of racing to the bottom."

To make policy matters interesting, wonks often tie them to subjects that draw a lot of attention, like income inequality. Shortly after ProPublica and NPR released their report, OSHA released its own look at how work-related injuries contribute to income inequality. (NPR’s Howard Berkes, one of the reporters working with ProPublica on the workers’ comp investigation, wrote up the key findings here.) So if you’re one of the folks who made Capital in the Twenty-First Century a bestseller, either of these reports might be #longread fodder for you.

Here again is the full ProPublica/NPR report. If you had no clue workers’ comp had been changing in big ways across the country, here’s a chance to catch up.