For Release — Monday, April 19, 2004
SURVEY: NEW YORK'S WORKERS' COMP
COSTS LIMIT GROWTH,
HIRING, AND INVESTMENTSAND DRIVE JOBS ELSEWHERE
ALBANYNew York State employers surveyed by The Business Council overwhelmingly say their workers' compensation costs have increased in the last five years, and these costs are limiting employers' opportunities to grow, hire new workers, and sustain other business investments.
In fact, more than a third of respondents to the survey said New York's workers' compensation costs are encouraging them to consider re-locating their business out of state. And about one in five respondents said these costs are forcing their businesses to either leave the state or expand elsewhere.
"New York's workers' comp costs have long been above average by every measure we have seen, and this survey confirms that this difference has very negative consequences for New York's prosperity," said Daniel B. Walsh. "Other states have enacted reforms to help contain costs, and we agree with Governor Pataki that it's time for New York to do the same."
The survey was sent to members of The Business Council and other employer associations in New York. There were 308 responses. A complete tally of responses and tallies of responses by region, company size, and industry.
In response to specific survey questions:
- Virtually all responding employers who compared New York's comp costs to costs in other states, 93 percent, said New York's costs are significantly (73 percent) or somewhat (20 percent) higher.
- Fifty-nine percent of respondents said workers' compensation costs limit their business growth and expansion. Among respondents with 200 or more employees, 68 percent of respondents said these costs limit growth and expansion.
- Fifty-two percent of respondents said these costs prevent them from hiring more workers.
- Fifty-eight percent of respondents said these costs require them to scale back other business investments to pay comp costs.
- Thirty-four percent of respondents said these costs are encouraging them to consider relocating the business out of state. Nearly four of 10 respondents with 200 or more employers said these costs encourage them to consider such a move.
- Nineteen percent said these costs are already forcing them to leave the state or expand elsewhere. More than one of four employers with 200 or more employees said these costs are having this effect.
- More than seven of 10 respondents said New York's workers' compensation costs in the last five years have either increased somewhat (36 percent) or increased significantly (36 percent). One responding employer said comp costs had gone down only because it had been forced to trim jobs-in large part because of high comp costs.
Momentum for workers' comp reform has been building statewide. For example, as of April 19, a Web-based "electronic advocacy" campaign has produced 7,972 letters from 1,679 individuals. These letters, which are faxed to lawmakers in Albany, express support for reform, thank the Governor for his reform proposal, and urge lawmakers to reject a bill that would increase benefits without enacting cost-cutting reforms. The Council is conducting this campaign with the Chamber Alliance of New York State, dozens of local and regional chambers, and other business associations around the state.
Governor Pataki announced his reform proposal at The Business Council's Small Business Day March 23 in Albany. He said his plan would cut employers' costs by 15 percent while raising maximum benefits by 25 percent. That reform package, which The Business Council is supporting, has been introduced in the Senate (S.6841-Rules). The bill would:
- Limit the duration of benefits in cases for which the level of benefits is not defined by statute. Currently, these cases in which benefits are not "scheduled" account for 13.6 percent of claims but more than 76.6 percent of overall costs.
- Reduce surcharges now imposed on employers' premiums, called assessments, by adjusting the calculation used to determine assessments. Currently, assessments are based on 150 percent of the previous year's disbursements from a special fund. The proposed change would lower that rate to 125 percent. The Business Council has strongly supported such a reduction in assessments.
The Council is also strongly supporting a bill (S.5320-Libous, A.8862-Schimminger) that would:
- Limit, to 10 years, the duration of benefits given to injured or sick workers in cases in which benefits are not prescribed by statutory schedules. The goal is to give workers both ample benefits and sufficient time to seek retraining to return to work.
- Provide for Social Security and pension offsets-that is, reductions in workers' compensation benefits applied when workers receive Social Security and/or pension benefits.
- Give injured workers only half of remaining scheduled benefits if they return to work before scheduled benefits expire.
- Implement meaningful objective medical guidelines to determine the degree of disability and the ability of workers receiving benefits.
And The Council is strongly opposing a bill (S.6135-Velella/A. 9736-John) that would raise benefits substantially without enacting any of the critical cost-cutting reforms. The Council's preliminary estimate is that this bill would worsen employers' cost burden by 25 percent or more.