Low Worker’s Comp Costs Boosts Oregon’s Economic Gains

Saturday, November 15, 2014

Joanna Evoniuk, GoLocalPDX Contributor

Photo credit: iStock

Oregon employers pay some of the lowest insurance rates for workers compensation in the U.S., helping economic growth and employment in the state. Lower insurance premiums mean lower operating costs for business, helping them become more successful.

“It’s crippling to a business starting out to have a burden of excess cost of workers’ compensation,” Carol Ward, vice president of human resources for Magus Corporation in Portland, said. “It’s so different [now]compared to 25 years ago.”

Oregon has the 9th lowest workers’ compensation premiums in the country, with employers only paying an average of $1.85 per $100 of an employee’s payroll to insurance companies who fund worker compensation benefits. The ranking was recently released by the Oregon Department of Consumer and Business Services.

Some states have almost three times those insurance rates, like California who has an average of premium of $3.48 per $100 of an employee’s payroll. The lowest premiums are in South Dakota, averaging $0.88.

Boosting the Economy

Low premium rates encourage business and economic growth in the state, John Shilts, administrator of the Oregon Workers’ Compensation Division, said. Premiums are part of the fixed costs companies consider when starting or expanding a business. A new business is more likely to choose a state were fixed costs, like workers compensation insurance, are low, Shilts said.

Oregon has been one of the fastest growing states economically since 2010, mostly due to its increase in manufacturing output, USA Today reported. The state has almost reached peak employment levels from before the recession, according to the Oregon Economic Review and Forecast released this month. Job rates are also growing, with Oregon 8th in the nation for job growth in September.

“It’s a competitive edge for Oregon,” Shilts said. “Businesses really care about workers’ compensation costs. Ultimately it reflects in the price of products and services.”

Ward agreed, saying business can focus their resources on things like affordable prices and workers’ raises if they don’t have to worry about workers’ compensation insurance costs.

Shilts gave the example of trucking companies in Oregon who survived hard times in the recession partly because low workers compensation premiums helped them stay in business and in the state.

Workers’ compensation insurance is low in Oregon partly because it’s a safe place to work, Mike Manley, research coordinator for the Oregon Department of Consumer and Business Services and co-author of the study, said. Injury and complaint rates have gone down since the 1980s, along with the length of time workers are off, Manley said.

“Any time your reduce rates of injury and reduce severe injury, you reduce costs paid out to claims,” Manley said.

Occupational injury and illness rates have dropped from 5.6 to 3.9 between 2003 and 2012, the study reports.

Manley said another factor is Oregon’s high-quality return to work programs, which help worker’s transition back to their job after an injury. These programs help employees save resources spent on finding new employees, Shilts said.

Oregon’s workers compensation insurance premiums are expected to continue falling next year, with a 5.3 percent decrease in 2015, the study reported. Shilts says Oregon has consistently decreased the rate over the years last 20 years, and will probably continue to so.

“There’s no reason why it shouldn’t,” Shilts said. “Oregon ought to be really proud about something that’s working really well.”