Workers’ compensation benefits vary greatly from state to state. In North Carolina, for example, the average maximum payout for losing an arm while on the job is $220,880. In Nevada, meanwhile, the same condition earns an average of $859,624, while in Alabama victims receive an average payout of only $48,840.
Such discrepancies underscore a national problem. As ProPublica reports, a “geographic lottery” has emerged because congress allows each state to set its own workers’ compensation statutes. And because there are no federally mandated minimum payouts, many injured workers are guaranteed to lose this lottery.
A “race to the bottom” for benefits
For more than a decade, state compensation boards have engaged in what is apparently a “race to the bottom.” Simply put, almost every state has enacted new laws and policies that make it much more difficult for workers to be adequately compensated for on-the-job injuries. A recent report issued by the Department of Labor (DOL) emphasized that recent legislation has resulted the denial of more claims, decreased cash benefits to those who are injured, more restrictions on available medical care, and an increasingly complicated application process.
What the DOL recommends
Indeed, states have set their own workers’ compensation laws with minimal federal oversight for nearly a century. Yet, as the DOL report makes clear, the recently illuminated disparity of benefits from state to state, as well as the current practice of reducing benefits as much as possible, has created a need for the federal government to assume more control and authority. While the report proposes no direct administrative or legal action, at least one senator is drafting legislation to address the problem.
With no minimum nationwide standards, Labor Secretary Thomas Perez stated that the current system “is really putting workers who are hurt on the job on a pathway to poverty.” Truly, many feel that in the interests of fairness, nationwide standards should be imposed to avoid such dramatic differences between states and ensure that all injured workers are adequately compensated. Moreover, congress has an active interest in bolstering these benefits; when injured employees are denied worker’s compensation payouts, it places a heavier burden on Medicare and Social Security to care for them.
Not all are in favor
Many employers and organizations – the American Insurance Association among them – are opposed to any oversight and say they are prepared to fight any federal intervention. They argue that state-based systems are more sensitive to the individual needs and economic dynamics.
Perhaps more promising: After a 2015 NPR report on the growing problem, some states passed legislation to increase benefits and reduce the difficulties encountered during the application process. Still, it seems clear that without federal help, many workers remain at risk.