Workers' Compensation Insurance Makes America Work

Does danger come to mind when you think about work? Not so long ago, labor was just as dangerous as war.

At the height of the Industrial Revolution corporations grew fast and so did the body count. Some people died working machines, some were injured handling steel, and even children suffered cotton spinner amputations. William B. Hard investigated the steel industry in 1907 and estimated about 12% of steelworkers were killed or injured, he said: "Steel is war".

Employers wanted more production yet lacked a vision for safety. Injured workers responded with lawsuits citing faulty work conditions and equipment but courts often favored the employer who blamed the employee's behavior. Employers were constantly hiring new people to replace those injured until Workers' Compensation Insurance was enacted.

Workers' Compensation Insurance pays medical bills when workers get hurt on the job (regardless of whose fault it is) it's what also provides income until their return.

"Workmen's Comp" became the United States' first nationwide social insurance program. By the dawn of the 21st century, work-related fatalities plummeted by 94%

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Workers' Compensation Insurance is Beneficial for Employees

If employers have an economic incentive to eliminate workplace hazards they would do so - Crystal Eastman

At the time Crystal was mocked as a "pretend lawyer" for what some might have called critical work theory. She wasn't just a woman in a male-dominated field she criticized the cares of employers saying workers would continue to suffer until economic interests aligned with safety, and modern work conditions are in fact better now that costs are tied to work-related injuries.  

After 100+ years of cultivating safety programs, EAPs, preventative measures, equipment upgrades, and company policies, workers' comp (in tandem with other progressive labor laws) radically transformed work conditions.

The best workers' comp benefit is safety! Employees can thrive at work in good conscious knowing their employer is striving toward the safest workplace environment possible. If an injury does happen, you or your family will be taken care of. 

benefits include:

  • Medical treatment: Doctor and hospital expenses 
  • Rehabilitation
  • In the case of death, payment to the surviving family
  • Wage Replacement: Often two-thirds of ordinary income 
  • Maximum Medical Improvement: Lump sum payment when full recovery is impossible 

Crystal Eastman drafted what became the first New York workers’ compensation law, but soon after on March 24, 1911, the New York Court of Appeals ruled that it violated the state constitutional due process rights of employers. The very next day March 25th, the infamous 'Triangle Shirtwaist Factory Fire' in New York City killed 146 workers they were mostly white teenage immigrant girls who did not speak English.

The fire spread quickly due to the piles of flammable materials (cloth scraps). Many of the exits were locked to prevent theft and unauthorized breaks, leaving the girls trapped inside inhaling the fire's smoke. The workers' union marched on New York’s Fifth Avenue on April 5th protesting conditions that led to the fire. 80,000 people attended garnering international attention.

The New York Constitution was amended on January 1st, 1914 to allow for workers' compensation. 

In most states (like Maryland) Worker's Comp Insurance is legally required for companies with at least one employee. If you were injured at work seek medical attention immediately and tell your manager as soon as it's safe to do so. Workers Comp is already paid for by your employer and prompt reporting is key for processing. If you learn that your employer does not have coverage contact your state.

Workers' Compensation Insurance Saves Employers

Just prior to Workers' Comp, corporations were increasingly challenged in more ways than one. Business owners rushed to purchase employers' liability insurance because they were constantly threatened by more workplace negligence lawsuits, lawsuits from the new national labor unions, union-led strikes causing work stoppage, political campaigns, and public outcry.

Unions even won a day to honor the workers. Labor Day became a national holiday in 1894.

There was a major work-related disaster each year leading up to the Triangle Shirtwaist Factory Fire. In 1909, 60 workers constructing a water intake tunnel died after a powder magazine exploded. In 1910 a coalmine explosion trapped 145 men killing 80, and the NY factory fire was in 1911.

Employers' attitudes towards workers' compensation laws evolved. Given the increasing number of lawsuits and the potential for large payouts, many employers came to see the benefits of a more predictable workers' comp insurance expense. They wanted employees to give up their right to sue for negligence in exchange for no-fault coverage. This trade-off is often referred to as the "workers' compensation bargain." 

Between 1911 and 1949 all 50 states enacted Workmens' comp laws.

It works like this: 

Employers pay these premiums like any other insurance, premiums decrease when the number of workplace accidents or the severity of those accidents decreases & vice versa an increase in accidents increases premiums. Experience Modification Rate is the primary metric used by insurance companies to determine business workers' comp premiums. The EMR compares a company's actual loss (claims) to the expected loss experience for businesses of similar size in the same industry. 

More employer benefits:
  • Annual Payments: usually come with a discount
  • Dividend Plans: Lower claims can result in policy dividends or refunds.
  • Deductible Options: Higher deductibles can reduce premiums, especially with low accident rates.
  • Safety Programs: Insurance discounts may be offered for established safety and training initiatives.

Workers' Compensation is Not Perfect

Workers' Compensation laws should not be credited for all the progress over the past 115 years it has its own criticisms:
  • Delayed/Denied Claims: Workers sometimes face claim delays or denials.
  • Varied State Rules: U.S. workers' comp regulations differ by state.
  • Return-to-Work Pressure: Workers feel pressure to return to before they are ready
  • Permanent Injuries: Compensation may be inadequate for lasting disabilities.
  • Mental Health: The system historically emphasized physical over mental injuries.
  • Employer Retaliation: Workers may avoid claims due to fear of employer backlash.
  • Partial Compensation: Some compensations only partially cover medical costs or lost wages.
  • Finagled Incentives: Employers might prioritize cost savings over genuine safety improvements.
  • Fraud: It's vulnerable to fraud from both workers exaggerating injuries and employers underreporting.

Workplace safety benefited from the wider labor movement and the likes of the SOX Act, OSHA, Civil Rights Act, Equal Pay Act, Medical discoveries, technological advances, & the introduction of new low-risk industries.

In 2019 & 2020 the healthcare and social assistance sector saw spikes in work-related illnesses surely due to the COVID-19 pandemic, but were there effective strategic precautions that could have been taken as a preventive measure that weren't? Is this something insurance companies or OSHA was aware of? Where were the interests? Could it be time for a new law?


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