Why Workers Comp Claims Will Continue to Trend Downward

According to NCCI, the number of lost-times claims has been on a downward trend for more than a decade.  With the exception of 2010, the number of lost time claims has been declining over the past decade at a predictable rate of approximately 2% - 3% per year.  ( See “NCCI Workers Compensation 2013 Issues Report”, page 4).  The question, though, is whether this trend will continue. 

I have read that many analysts are predicting a rising trend in the number and frequency of lost time workers compensation claims.  This certainly may be true for 2014 as the United States is finally emerging from one of the longest recessions in history, coupled with the resurgence of the domestic oil and natural gas industry.  However, this upward blip will have little, if any, effect on the long-term downward trend.  I see several reasons why, except for 2014, this downward trend will continue:

DECLINE IN MANUFACTURING JOBS

It should come as a surprise to no one that the U.S. economy has been shifting away from manufacturing jobs and towards a service-based economy.  Even prior to The Great Recession of 2008, manufacturing jobs were disappearing at an alarming rate.  2005 marked the first year since the Industrial Revolution that fewer than 10% of American workers were employed in manufacturing. 

According to the Bureau of Labor Statistics, U.S. Manufacturing employment fell from 19.6 million jobs in 1979 to 13.7 million jobs in 2007.  Since 2007 the decline has only increased.

It stands to reason that as this trend away from manufacturing jobs continues, increased jobs in the service sector (where safety risks are often reduced) will lead to reduced lost-time workers compensation claims.  Even if 2014 is an outlier, this trend will continue for the foreseeable future as the service sector employment numbers continue to rise.

INCREASED SOCIAL SECURITY DISABILITY CLAIMS

Obviously, people who receive Social Security Disability benefits are either out of the work force or have a reduced employment capacity.  While the last 3 decades has revealed a sharp increase in the number of Americans receiving Social Security Disability, this trend has increased even more sharply over the past few years.

According to the Wall Street Journal, there has been a surge in the number of Americans receiving social Security Disability benefits - - up a whopping 42% since 2004.  The actual number of Americans receiving Social Security Disability benefits hit almost 11 million in 2013.

Data for 2014 shows that the number of people filing new Social Security Disability claims has leveled off.  However, this plateau has settled at level that exceeds the levels seen prior to 2013 and there is no indication that the number of such claims will actually decrease in the near future.

INCREASED FOCUS ON SAFETY

Over the past decade we have seen the creation of an entirely new business sector - - workplace safety.  Driven by both the requirements of OSHA and the workers comp savings realized by reducing accidents, this workplace safety business sector continues to make strides.

According to the Bureau of Labor Statistics, 4,383 fatal work injuries occurred in 2012, with 3.2 injury deaths per 100,000 full-time equivalent workers. This is a drop from the 2011 figures of 4,693 fatal work injures and a rate of 3.5 deaths per 100,000 full-time workers.

According to Amanda Wood, director of labor and employment policy at the National Association of Manufacturers, OSHA has played a role in this downward trend but the bulk of the credit for these improvements should go to employer's who are focused on a safe work environment.  “I think those numbers show business's commitment to a safe workplace,” Wood said in a recent interview with Safety and Health Magazine.

Insurance carriers have also jumped on the safety bandwagon.  In years past I would often speak with “THE” safety professional with an insurance carrier.  Now, carriers have entire safety divisions and even local safety professionals in every major market - - all dedicated to reducing the number of workplace accidents.

CHANGING DEFINITION OF “WORKPLACE”

Two technology trends are truly changing our definition of the “workplace” - - mobile technology and internet/cloud technology.  “Telecommuting” was a brand new word just a few years ago.  Now it is commonplace.  There was a day when claims adjusters were all working from regional call centers scattered across the country.  Now, more often than not, a claim's adjuster is working from his or her basement…as are scores of other 21^st century workers.

If all of the data accessed by an employee is available in the cloud as opposed to an office mainframe computer, it makes sense to give workers flexibility on where the actual work is performed.  Employees benefit because commute time is eliminated, and employers can lower costs by reducing the amount of real estate that must be owned or leased.  Regardless of who benefits the most from this trend, the effect of this trend on workplace accidents will continue to push the average number of claims down over time.

Combine this with the current emphasis on mobile technology and one can easily see why “getting to work” may become as archaic as saying “saddle up the horse”.  While using mobile technology does increase the opportunities for accidents while driving cars, this is more than offset by the physical removal of a large number of employees from company owned “workplaces” that present even more opportunities for accidents and injuries.

Bottom line - - except for 2014, we should continue to see great strides in workplace safety and a continued downward trend in workplace injuries.

About the Author

J. BRADLEY YOUNG is a partner with the St. Louis, Missouri law firm of Harris, Dowell, Fisher & Harris, where he is the manager of the Worker's Compensation Defense Group and represents self-insured companies and insurance carriers in the defense of workers' compensation claims in both Missouri and Illinois.  Brad is a frequent Conference Speaker and can be regularly heard on KMOX radio in St. Louis discussing a wide variety of legal topics.  You can email Brad at byoung@hdfh.com .

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