Turnaround Fact Sheet #1: Workers' Compensation

This is the first in a series of CTBA Fact Sheets reviewing the proposals in Governor Bruce Rauner's "Turnaround Agenda," which the Governor's office has made a precondition of signing any state budget. It concludes that although advocates of workers' compensation reform claim that it is necessary in order to improve the state economy and grow its tax base, independent studies suggest that workers' compensation reform is unlikely to improve either wages or employment growth in Illinois, and recent statewide and national trends suggest that bringing down employer costs by reducing worker benefits is unlikely to succeed.

Specifically:

• Little independent evidence exists that ties workers' compensation costs to economic performance. One study found that a 10 percent increase in workers' compensation costs reduced employment by just 0.07 percent. Another concluded that the effects of workers' compensation were "economically insignificant."
• Attempting to reduce employer costs by targeting worker benefits defies recent statewide and national trends. Between 2010 and 2014, worker benefits in Illinois fell by 20 percent, but employer costs fell just 4.4 percent. Nationwide, worker benefits fell by nearly 10 percent, but employer costs increased by over eight percent.
• Illinois' workers' compensation employer costs are below the national average, although they are higher than some of our Midwestern neighbors.

The report concludes that this evidence casts doubt on the relevance of workers' compensation reform to the state budget process.

You can read the full report as a web document here, or as a PDF by clicking the link below.