program dropped off the scholarly map, its disappearance may be related to the general neglect of state-level social policy after the New Deal. 2
This paper helps to fill a void in the welfare state literature by exploring the development of workers’ compensation across the entire 20th century. In particular, I examine why workers’ compensation has remained the province of state governments when almost every other social program involves the national government in some significant way. Workers’ compensation laws “are unlike other social insurance programs in the United States – such as Social Security, Medicare, and unemployment insurance – in that they have no federal involvement in financing, administration, or mandatory minimum coverage standards” (Mont, Burton, Reno 1999: 3).3 From a cross-national perspective, workers’ compensation in the U.S. is also unusual. Virtually every nation in the world with workers’ compensation, including federal systems like Germany and India, has a single program operating within its borders. 4
Operating a single national program makes good sense. If workers’ compensation were a developmental program, like education or sanitation, one could imagine why the states might be considered the proper level of government to take control. But workers’ compensation is clearly a redistributive program, transferring income to injured workers and their families. In theory, it belongs at the national level so that states do not compete to have the least generous program, thereby reducing coverage and benefits for a vulnerable group of citizens (Peterson 1995; Graetz and Mashaw 1999).
Conceivably, policy makers in the U.S. may have seen some technical advantage in state-level control, such as the need for flexibility and innovation. Faced with sizable variation in local conditions, or great uncertainty about the best remedies, it may have been thought best to let states serve as policy laboratories (Banting 1987; Osborne 1988). Such arguments have been used in the past to justify placement of redistributive programs like job training at the state and local levels. Though invoked at times, this line of reasoning did not have a major influence on the development of workers’ compensation. National officials were more likely to view state-level variation as a weakness of workers’ compensation programs than as a strength.
The more plausible explanation is explicitly political and hinges on the considerable power of federalism to influence policy debates in the United States. By the time policy makers gave serious thought to involvement by the national government, workers’ compensation laws were so firmly entrenched in the states that major change was politically costly. States’ worker compensation laws created a textbook example of a “preempted policy space”:
For a multitiered system, the enactment of policies at a decentralized level may constrain the options available to authorities in the central tier. Once adopted, policies go through a gradual process of institutionalization. Established programs