According to the Department of Labor & Industries, the costs of running our state-run industrial insurance system will increase by nearly 20% next year.  L&I plans cover part of the cost by increasing workers’ compensation taxes by an average of 7.6%, and will use dwindling reserves combined with the hope of economic recovery to cover the rest. 

But in 2009, when L&I increased workers’ comp taxes by an average of 3%, the construction industry took a much bigger hit.  The percent increase for wood frame building construction was more than three times higher than the statewide average.  The construction industry is vital to our state’s economic recovery. Every single family home built generates 2.84 full time jobs and $22,479 in state and local revenue.  With unemployment up to 9.2% in our state, one would think that getting residential construction back on track would be a priority for our state’s leaders.

Unfortunately, employers are continuing to pay more for the privilege of providing jobs in this state, and as Tracy Warner noted yesterday in the Wenatchee World, “Basic economics tells you if you want more of something, jobs in this case, do not tax it. Raise the cost of something and people will buy less, jobs in this case.”  That’s why it’s no surprise that others are joining the call for competition in our workers’ compensation system. 

Leaders at the Department of Labor & Industries can continue to bury their heads in the sand and pretend that the myth of a “high-benefit, low-cost” system is true.  In the meantime, job providers know that the status quo is unacceptable.  More than a half dozen bills have been introduced in the Legislature in recent years to bring costs under control at L&I.  Not one has even made it through a public hearing in committee. 

 Perhaps Richard Davis says it best in the Everett Herald, “Rising premiums put jobs at risk. Policy reform is critically important to getting benefit costs under control. But, as experience elsewhere demonstrates, market forces are producing better outcomes for workers and employers. Don’t expect the call for choice and competition to disappear anytime soon.”