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Editorial: Workers compensation warning bells go off

By   /   Friday, September 2nd, 2011  /   Comments Off on Editorial: Workers compensation warning bells go off

Worker’s compensation rates are starting to creep higher and so are claims.

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Worker’s compensation rates are starting to creep higher and so are claims.

Whether this increase will amount to a full blown crisis in worker’s comp — remember 2003 — remains to be seen. But the Sacramento Business Journal recently reported that some of the ingredients for a new explosion in costs are in place.

The average rate paid by employers was $2.38 per $100 of payroll in the first quarter, a 3 percent climb from a year earlier.

Written premiums were up 7 percent and the total number of claims jumped 6.9 percent in 2010.

It was  only the second increase in the past 20 years, although some of that can be attributed to a reclassification of medical-only claims compared to past years, the Business Journal’s Kelly Johnson wrote.

Worker’s comp is generally a boring subject until employers start to get hit with rates that make it difficult to bid on major projects or that drive competitiveness in certain industries — think manufacturing — into the ground. It goes without saying that some of California’s biggest competitors in manufacturing — the Chinese,  for example — don’t face anything like the worker’s comp cost burden that California employers must bear.

And  rising worker’s comp costs are almost certain to undermine the competitiveness of California as a place for corporate expansion.

Paying a premium on payrolls that can be 10 percent or more in high risk industries will drive plenty of businesses — in retail, distribution and the highly-touted green jobs sector — to Arizona, Colorado or Texas.

Recently, we haven’t heard much from California’s jobs czar, from Lt. Gov. Gavin Newsom, the point person on economic development, or the governor himself.

Maybe the next time they talk about jobs, they ought to address the problem of rising worker’s compensation costs and how they intend to crack down on the easiest thing to fix — fraud and abuse of the system.

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