Recession reduces workers comp reforms' wage replacement

While California's 2013 workers compensation reforms raised benefit levels for injured workers, the impact was tempered by increased wage losses for injured workers during and after the Great Recession, according to a Rand Corp. report.

The California Commission on Health and Safety and Workers' Compensation commissioned the Rand report and posted it online Thursday. The study took a look at workers comp wage replacement benefits under S.B. 899, a 2004 bill that reduced workers comp impairment ratings and benefits, and S.B. 863, which raised the minimum and maximum weekly wages used to calculate permanent partial disability benefits.

Rand found that S.B. 899 benefit levels replaced 64.3% of wages for workers injured in the pre-recession years of 2005 to 2007, 57.1% of wages for workers injured during the recession years of 2008 to 2009 and 52.4% of wages for workers injured in the post-recession years of 2010 to 2012.

If the S.B. 863 benefit and rating levels would have been applied to older claims, Rand found that the bill would have replaced 85.4% of wages for workers injured from 2005 to 2007, 74.3% of wages for workers injured from 2008 to 2009 and 66.4% of wages for workers injured from 2010 to 2012.

As “the economy recovered from the recession, the frequency of claims rose because workers who entered the system were less experienced and thus more likely to suffer work injuries,” the report reads. “While these figures include many cases that do not progress to permanent partial disability, the shifts in trends … strongly suggest that systematically different types of workers — with potentially different earnings prospects — may have been injured during and after the recession than were injured before the recession.”