Michigan ranks at top of list for controlling workers compensation costs

Lawyer refutes contention that workers compensation costs are a negative factor for job creation in Michigan.

I recently read a blog post entitled Michigan’s employment policies hinder job growth, says US Chamber of Commerce report by Jackie Headapohl.

The report from the U.S. Chamber of Commerce ranked Michigan as “Tier III:  Poor” with a “difficult environment for new job creation.”

The report focused on six main categories including workers compensation costs. A factor mentioned as contributing to the state’s “poor” ranking was the existence of a state-wide task force to pursue independent- contractor misclassifications.

Other questionable conclusions from the report

“Benefits typically equal roughly two thirds of lost wages, but in some cases—when tax benefits are taken into account—may actually exceed an employee’s lost earnings.”

“There is strong evidence that higher workers’ compensation benefits result in lower levels of employment, with the evidence suggesting overall that a 10 percent increase in benefits increases lost hours of work by between five and 10 percent.”

“In addition, of course, high workers’ compensation premiums, which act as a de facto tax on labor, also reduce employment and affect employer decisions on where to locate their workforces.”

Why the U.S. Chamber of Commerce has got it all wrong

The Workers Compensation Research Institute (WCRI), a nonpartisan and not-for-profit research organization, recently found that the “Michigan workers compensation system offered a better value proposition for both employers and injured workers both in terms of medical costs per claim and worker outcomes.”

The WCRI noted that “the average medical cost per claim with more than seven days of lost time paid by employers in Michigan was among the lowest of the 15 study states” and that “injured workers in Michigan reported typical physical recovery, typical access to desired care and satisfaction with overall care, as well as fairly typical return-to-work rate and speed.”

“More importantly, compared to the study states that Michigan often competes with for business, employers in Michigan paid much less for medical care received by injured workers, according to Cambridge, Mass.-based WCRI.   The states that Michigan often competes with for business studied in the report include Illinois, Indiana, Iowa, Minnesota, Pennsylvania, Tennessee, and Wisconsin.”

The U.S. Chamber of Commerce wants to take away the rights of injured workers

Michigan enacted its workers compensation law as a compromise between employee and employer interests.  The employee gave up his or her right to sue the employer for negligence in exchange for what are essentially no-fault benefits.  The primary workers compensation benefits being medical treatment and wage loss. This is a delicate balance of interests and it has worked for nearly 100 years.

An employee is limited to 80% of his or her after-tax average weekly wage for wage loss benefits.  This works out to be approximately 60% of gross wages when taxes are considered.  Contrary to the  U.S. Chamber of Commerce’s assertion, wage loss benefits will never exceed actual earnings in Michigan. 

This type of misinformation is frequently used to justify the argument that injured workers do not have the motivation to get back to work because they get more on disability. I can tell you for a fact that it is better for our clients to work because workers compensation will never pay what regular employment would over a lifetime. None of our clients want to be disabled and unable to make a living.

In addition, Michigan should be applauded for its efforts to identify bad employers who miscategorize employees as independent contractors to avoid paying workers compensation benefits.  Not only does this behavior harm the injured worker but it places the costs of medical care directly on taxpayers through government programs like Medicaid and Medicare.

The cost of workers compensation insurance is not a tax on business but a necessary expense to protect both the employee and employer from a work injury. The idea that workers compensation is a barrier to job growth in Michigan is inaccurate.

To speak with one of our workers compensation lawyers, call (855) 221-2667 for a free consultation.

Alex Berman is the founder of the law firm. He’s been representing injured and disabled workers exclusively for more than 35 years.  Alex has helped countless people obtain workers compensation benefits and never charges a fee to evaluate a case.

Related information:

FAQs about workers compensation to help protect you

Video: Advice from a Michigan workers comp lawyer

The Impact of State Employment Policies on Job Growth

Injured On The Job: A Guide to Michigan Workers Compensation Law Injured On
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A Guide to Michigan Workers Compensation Law Free Book
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