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New OSHA Report Exposes the Glaring Insufficiency of Our Workers’ Compensation System


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A new report from the Occupational Safety and Health Administration (OSHA), Adding Inequality to Injury: The Costs of Failing to Protect Workers on the Job, places partial blame for the growing problem of income inequality on a faulty workers’ compensation system.  According to the Department of Labor (DOL), roughly 4 million serious injuries and illnesses are reported by employers each year. The actual number is likely much higher. 

Workers who suffer a serious injury earn an average of 15 percent less, or $31,000, in the decade after their injury.  Less than 40 percent of those eligible for workers compensation actually apply for it following their injury.  

As David Michaels, the head of the OSHA, told Dave Jamieson of The Huffington Post,

“These injuries force thousands of working families out of the middle class and block many low-wage workers from getting ahead.  The studies all show that the majority of workers who get hurt never get any workers compensation, and they have to pick up the cost themselves. The workers who do [get workers comp] are never fully compensated.”

While injuries are not the main cause of income inequality in America, they are a factor. Studying how the system functions against workers and in favor of employers sheds light on the way partisan legislation and botched policies affect the average American.  The report explains that state laws and court rulings which make it harder for workers to collect money are a primary cause of the failure of the worker compensation system.

Currently, those who do get through the system see only about 21 percent of their medical bills and lost wages recouped. Michaels also notes that misclassification and the prevalence of temporary workers in certain industries have put more workers in dangerous situations:

“When the worker is misclassified, they’ll never see workers compensation and they won’t get unemployment insurance. They really pay a very significant cost.  And if an employer isn’t concerned [with liabilities], they have very little incentive to prevent those injuries.”

Misclassification is a strong indicator of danger on a jobsite:

Misclassifying workers increases the likelihood of work injuries through two mechanisms. First, by misclassifying wage employees as independent contractors, employers do not have to worry about the OSHA requirement to provide a safe workplace, since the OSHA law does not cover the self-employed. Second, these employers avoid paying workers’ compensation insurance premiums (as well as unemployment insurance and other benefits and taxes). The misclassifying employer is no longer concerned about workers’ compensation premiums rising following a work injury, so is less likely to invest in safety. The result is increased risk of work injuries at workplaces where employees have been misclassified, and, when those injuries do occur, the injured workers, their families and the taxpayer bear the costs, subsidizing the employer’s hazardous operations. This misclassification hurts not only workers, but also employers who follow the law. These honest employers are put at a disadvantage, having to compete with scofflaws who ignore safety and health requirements, and shirk paying taxes, benefits and insurance premiums.

Naturally, the problem is exacerbated for low-wage workers and immigrants. Many immigrant workers are unaware of their rights and speak little English.  Job security can be threatened if injuries are properly reported.

The report suggests the best course of action is to boost efforts to prevent injuries in the first place:

Unless we as a society take steps to address these issues, many of these people will continue to find it difficult to enter or remain in the middle class, and safety net programs like SSDI will be strained providing benefits to all the beneficiaries entitled to receive them.

In summary, despite a more-than-40-year-old legal obligation to provide safe workplaces, the unwillingness of many employers to prevent millions of work injuries and illnesses each year, and the failure of the broken workers’ compensation system to ensure that workers do not bear the costs of their injuries and illnesses, are truly adding inequality to injury.


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