The following letter to the editor by ITLA President Christopher T. Hurley appeared in Crain’s Chicago Business on December 5, 2016.
Leave it to the Illinois Policy Institute to promote the fiction that the loss of manufacturing jobs has been driven by the cost of workers’ compensation insurance and to propose, as a solution, a right hook to men and women hurt on the job.
IPI is desperate to validate Gov. Bruce Rauner’s race-to-the-bottom pursuits – demands for changes in state law that would hurt Illinois’ working and middle class families before he will even discuss completing work on a budget the state has lacked for an unprecedented two years – and it is eager to distract from the fact that profits are growing for workers’ comp insurers.
The group’s recent column (“When it comes to workers’ comp, which state is the banana republic?”) feigns concern for Illinois taxpayers by claiming workers’ comp benefits are too generous for injured workers. In reality, quashing the ability of employees to access such benefits will shift the burden of caring for the injured from the insurer to the taxpayers – both individuals and businesses – with higher public assistance costs.
There’s no question manufacturing jobs have suffered. In 1979, such jobs peaked nationally at 19.5 million. Today, they stand at 12.3 million according to the U.S. Bureau of Labor Statistics. Yet during that same period, manufacturing output, as measured by the Industrial Production Index, nearly doubled. In Illinois, manufacturing output climbed from approximately $70 billion in 2002 to $99.7 billion in 2014, according to the National Association of Manufacturers. As has been well reported, automation of jobs and more efficient manufacturing processes aided by technological advances played the principal role in the job decline. We make more than ever with far fewer people.
IPI ignores the fact that wages are a primary driver behind an employer’s workers’ comp expenses. Our system, to which employers and employees contribute, helps injured workers pay their medical expenses and makes up for a portion of their income while they recuperate. So, of course if Illinoisans have higher incomes than Hoosiers, it will cost more to cover a part of their lost wages. That’s logical and, more importantly, fair.
IPI also doesn’t mention that the insurance industry’s cost of writing policies has dropped dramatically since state lawmakers rewrote the workers’ comp law in 2011. That legislation curtailed longstanding workers’ rights in an effort to reduce premiums paid by employers. The National Council on Compensation Insurance, an insurance industry trade group, has since recommended workers’ comp rate cuts totaling nearly 30 percent. That guidance has been ignored.
In 2017, the NCCI suggests that Illinois insurers lower workers’ comp premiums by 13 percent. This would represent the third largest drop in the nation and total more than Indiana, Iowa, Missouri and Wisconsin combined. But, employers won’t see a reduction when insurers refuse to pass the savings along.
A recent report by the Illinois Department of Insurance revealed that workers’ comp insurers here saw profit jump nearly 22 points between 2010 and 2014, and, by the end of that period, nearly match the national average. Attracted by insufficient regulation, there are 332 insurance companies writing workers’ comp policies in Illinois, more than any other state.
Though its name sounds academic and dispassionate, IPI is highly partisan and at the forefront of the governor’s campaign to prevent passage of a state budget until he first enacts his harmful agenda. Aside from Rauner, who donated more than $500,000 to IPI before taking office, many of its donors are unknown. But its conclusions are predetermined.
The first step towards fixing our state’s economy is for legislators and the governor to enact a budget – not erode injured workers’ rights. Then, they should turn their attention to reforming the workers’ comp insurance industry.
Christopher T. Hurley
President, Illinois Trial Lawyers Association
