Costs Outpaced 01 Wages
Workers compensation costs for employers grew at a faster pace than wages in 2001, mostly because the economic downturn discouraged rapid salary increases, according to a study released last month by the National Academy of Social Insurance, a Washington, D.C.-based non-profit research group.
According to the report on 2001 benefit and wage levels, 2001 was the first time that workers comp benefit levels rose more than wages since 1992.
In 2001, overall wages grew by 2.4 percent. On the other hand, total workers' comp benefits rose 3.5 percent to $49.4 billion. This translated into $1.07 worth of benefit for every $100 in wages, a one-cent increase compared to 2000.
Still this benefit-to-wage ratio is far lower than figures from the 1990s. The benefit-to-wage rate reached its peak in 1992, at $1.68 per $100 of wages.
Employers' workers comp costs, which reflect premiums charged by insurers, jumped by 8 percent to $63.9 billion in 2001. The employer costs-to-wage ratio was $1.39 per each $100 wages that year, compared to $1.32 in 2000. This rate is also far below the numbers from the 1990s. For instance, the study noted that, in 1993, the employer costs-to-wage rate was $2.16 per $100 of wages.
Despite the increase in employers' costs for workers' comp and benefits paid out to workers in 2001, the overall trend of the past decade can still be described as a “long-term decline,” the study said.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 11, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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