09/ 20/ 2004
Small-business owners across the nation share the same concerns when it comes to the welfare of their business, and one of those concerns is the cost of workers’ compensation. The latest edition of the NFIB Small-Business Problems and Priorities report shows that issues related to workers’ compensation are the third biggest problem facing small-business owners today, topped only by the cost of health insurance and the cost and availability of liability insurance. But it hasn’t always been that way.
In the last Problems and Priorities report, which was released in 2001, workers’ compensation ranked as the seventh highest concern facing small-business owners, with only 21 percent of respondents calling it a critical problem. In this year’s survey, the percentage of respondents calling workers’ compensation a critical problem jumped to 32.8 percent.
While every state has a different system, the concern across the nation remains the same: premiums for workers’ compensation are spiraling out of control. California boasts the highest workers’ compensation premiums, with businesses there paying almost three times the national average for workers’ compensation premiums. The New York Times recently told the story of a local California grocer, which, after more than 70 years in business, had to shut down because workers’ compensation premiums were too much to bear. In 2003, the cost to cover Pioneer Super Market’s 68 employees was $240,000, a 400 percent increase over its premium in 2000.
While workers’ compensation doesn’t get more expensive than in California, states like Florida and Hawaii, which boast the second and third highest rates in the country, and Washington and New York, are not far behind.
So why are premiums so high? Driving up the cost of workers’ compensation insurance are increased medical costs, increased claims – as well as fraudulent injury claims that often end up in court – the cost of litigation and exorbitant administrative costs.
With so many factors contributing to the third biggest problem facing small business, it makes reforming workers’ compensation a more difficult battle to wage, but it doesn’t make it an impossible fight. NFIB is representing small business in the capitals of all 50 states, but we need your help.
Be Heard.
Contact your lawmakers as well as your state workers’ compensation agency and tell them that small business needs workers’ compensation reform and lower premiums in order to stay in business.
Also, NFIB is always looking for small-business members to testify before legislative committees and other policymakers on behalf of Main Street. If you are interested in testifying on how workers’ compensation system in your state affects your business, contact your NFIB state director.
Be Connected.
Get more ideas and solutions for workers’ compensation all week on NFIB.com.
