Dr. Richard Victor
Dr. Richard Victor, an economist who founded the Workers’ Compensation Research Institute (WCRI) 35 years ago, just presented a paper at the WCRI National Conference in Boston. He indicated that federal policies on immigration and health insurance promise to make worse the challenges the United States faces by an aging workforce and a widespread labor shortage. He noted that workers’ compensation claims could double and overall costs could expand by over 300% in the next dozen years, without any increase in benefits to workers. External forces could bring far more cases into the system because of a number of forces, including an aging workforce, labor shortage, slowdown in immigration, and more shifting to workers’ compensation claims that should be paid by group health insurance. Dr. Victor projected current claims out a dozen years to 2030 indicating that claims should actually be down to about ¾ of today’s numbers, but external factors will more than overtake that favorable percentage. Labor shortages caused by baby boomers retiring will increase injury rates. Research indicates that the older workforce will mean an increase in lost work days and more injuries and a real impact on labor shortage as more baby boomers retire. Dr. Victor indicated “These labor shortages, which will be longer and deeper than anything we have experienced, will lead to significant increase in workers’ compensation claims and longer durations of disability.” During a period of labor shortages, employers relax hiring standards and hire workers they would not have hired in a normal labor market, including workers who are less capable. The overall labor shortfall leads to more workers’ compensation claims.
The Immigration Factor:
Economists have seen immigration as a factor that mitigates against the impact of the labor shortage. The Trump Administration, changing federal immigration policy, will further tighten labor markets and prolong the duration of a labor shortage. Moreover, Trump’s “anti-immigration rhetoric” also discourages people to come to America. In health care, Victor noted that one in six health care workers is foreign-born including 27% of physicians and surgeons, 15% of nurses, and 22% of home health aide, each of which effects the workers’ compensation system.
A shortage of people with adequate health insurance is also a problem for workers’ compensation. Health insurance deductibles have risen from the hundreds to many thousands of dollars, and this new reality causes more workers to go without or delay getting medical care for an injury or illness. When they can no longer ignore their condition, many claim it as a work-related condition and seek workers’ compensation (he cited a Rand Research study indicating workers with high deductible or co-insurance plan postponed care in over one-third of cases of the most common kind of workers’ compensation claims – soft tissue injuries.” As the number of workers who lose their insurance grows (since the Trump Administration and Congress ended subsidies and other aspects of the Affordable Care Act) case shifting form health insurance to workers’ compensation could have a major effect, ballooning workers’ compensation claims by as much as 35% in the next dozen years.
Victor’s conclusion: “You end up with a 300% increase in workers’ compensation costs without increasing benefits to injured workers.”
Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore in Nebraska. Very interesting read for potential impact on Wisconsin workers and employers.
In theory, the changes to immigration policy proposed by President Trump shouldn’t impact workers compensation in Nebraska. Workers compensation laws are state laws and Nebraska, like most states, awards workers compensation benefits regardless of immigration status.
But theory is one things and reality is another.
Mike Elk of Payday Report recently ran an article detailing that workplace deaths among Latinos were the highest in 2015 than they had been since 2007. This spike was attributed in part to aggressive immigration enforcement by the Obama administration which immigrant advocates believed made workers afraid to speak out about working conditions over fear of deportation.
During the Obama administration tougher immigration policies were at least coupled with tougher and even innovative workplace safety enforcement by OSHA. In the Trump era, workplace safety enforcement is expected to be curtailed and new OSHA rules are poised to be rolled back.
Immigration and workers compensation is often thought of in the context of Mexicans and central Americans working in industries like meatpacking and construction. This is a misconception, the meatpacking industry in Nebraska and elsewhere employs an uncounted but significant number of Somali workers. Somalis are one of seven nationalities banned from entering the United States under President Trump’s order. Ironically Somalis were recruited heavily into meatpacking work after raids during the Bush administration lead to the deportation of Latino meatpacking workers. Somalis had refugee status so there were few questions about their immigration status or eligibility to work legally. Under the new executive order, their immigration status is less secure and they may be less likely to speak out about working conditions.
A smaller but growing number of Cubans are coming to Nebraska for meatpacking work as well. Like Somalis, Cubans are deemed to be refugees so their ability to work lawfully is not a question for employers. However in the waning days of Obama administration, President Obama ended automatic refugee status for Cubans in an effort to normalize relationship with the Castro regime. There was little public outcry over this order like there was for the so-called Muslim Ban. However because of an executive order, Cuban nationals working in Nebraska may be less inclined to speak out about working conditions or claim workers compensation benefits due to newfound uncertainty over their immigration status.
Immigration reform is a continual and vexing issue in Washington. While politicians, lobbyists, and service organizations grapple with potential resolutions, there is no disputing the existence of illegal immigrants working for employers in our country. And when there are employees working, work injuries happen. This may be especially true with the undocumented population who may be more susceptible to significant injuries because many perform more dangerous or hazardous jobs that other may not accept. For further information, see Do Immigrants Work in Riskier Jobs? and the CDC’s report on work-related injury deaths among Hispanics.
…excluding illegal immigrants from worker’s compensation coverage could create a financial incentive for employers to keep hiring illegal immigrants.
When injured, are these undocumented workers eligible for worker’s compensation? Some harshly argue that these workers should receive no benefits, as they are not working legally in the country. However, one of the underlying pillars of worker’s compensation is that the expense of workplace injuries (covered by insurance) should be placed on the employers who profit from the workers’ labors. Additionally, excluding illegal immigrants from worker’s compensation coverage could create a financial incentive for employers to keep hiring illegal immigrants—a practice that is against federal law.
The worker’s compensation laws in our country do not have a definitive answer to this question—though the trend is toward coverage of undocumented workers. Many states do Continue reading