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Perez Slams Workers Comp System: “Federal Gov’t Has Basically Abdicated any Responsibility.”


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A new report from the Department of Labor describes the current state of workers’ compensation laws as a “race to the bottom.” The report, released earlier this month, suggests workers injured on the job are “at great risk of falling into poverty” because state compensation programs have become grossly inadequate. While it doesn’t offer any policy prescriptions, it does recommend some level of increased federal oversight, which has been absent from workers’ comp systems since the second Bush administration:

The Labor Department report details how states have changed their laws largely in an effort to reduce business costs as they compete for new corporate headquarters, factories and warehouses — a trend the report calls a “race to the bottom.”

It calls for policymakers to explore how to prevent the costs of workplace injuries and illnesses from being transferred to public programs, how to increase the sharing of injury data between insurers and public health researchers, and how to develop programs that help disabled workers return to the job.

The suggestion of increased federal oversight would be a significant reversal of course after a decade of leaving workers’ compensation policy completely up to the states. The DOL report even proposes the resurrection of a Nixon-era oversight commission:

The Labor Department calls for “exploration” of “the establishment of standards that would trigger increased federal oversight if workers’ compensation programs fail to meet those standards.”

The agency also suggests a fresh look at reestablishing a 1972 Nixon administration commission that recommended minimum benefits and urged Congress to act if states failed to comply.

Currently, workers bear the brunt of their own compensation costs. Relatively little is asked of the employer. Meanwhile, many states have seen fit to reduce both the size and duration of compensation package requirements:

Employers pay only a fraction of the overall costs of occupational injury and illness, the report concluded, giving employers “fewer incentives to eliminate workplace hazards and actually prevent injuries and illnesses from occurring.”

[…] Fully half of the cost of worker injuries is now borne by workers and their families, according to the report, which cited Occupational Safety and Health Administration data. Workers’ compensation now covers only 21 percent of the costs. Federal, state and local governments account for an additional 16 percent.

Labor Secretary Thomas Perez didn’t mince words in his assessment: “In this critical area of the social safety net, the federal government has basically abdicated any responsibility.”

“The current situation warrants a significant change in approach in order to address the inadequacies of the system,” the report says.

Read the full report.


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