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WORKERS COMPENSATION, FEDERALISM, - page 6 / 43

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As evidence, I compare four prominent episodes in the development of workers’ compensation from the late 19th century to the late 20th century. National involvement was considered but rejected in three of these cases and extended on a very limited basis in the fourth. The first and arguably most important set of decisions occurred in 1934-35 in connection with the Social Security Act. At a time when policy makers were rethinking virtually every component of social policy, they essentially ignored workers’ compensation, and I try to explain why. The second episode began in the late 1930s and culminated with the passage of disability insurance in 1956. Given the opportunity to create a single disability program or make major changes to workers’ compensation, policy makers decided to create a separate program for nonoccupational injuries and leave states responsible for occupational injuries.

The third case in this chronology is the exception. In 1969, Congress passed and President Nixon signed the Coal Mine Safety and Health Act, part of which obligated the national government to pay workers suffering from black lung disease. This program currently pays out about $450 million in benefits each year, a tiny fraction of overall spending on workers’ compensation. I explain why policy makers felt that national involvement was appropriate, and how their remedy left workers’ compensation intact.

Contrary to fears expressed at the time, the advent of the Black Lung program was not the beginning of the end of state-level control, as the fourth case demonstrates. Greater national involvement was considered but rejected early in the process of drafting the Occupational Safety and Health Act of 1970. All that did pass Congress was a commission to investigate state workers’ compensation laws. The commission published a number of studies and issued numerous recommendations in the early 1970s. The end result was significant improvements to state laws, but again no additional involvement from Washington. This proved to be the last time during the 20th century that workers’ compensation attracted much scrutiny at the national level.

As a practical matter, state-level control of workers’ compensation has led to some truly bizarre variations in policy. For example, workers in small business (3-5 employees) are covered in 35 states but not in the rest. Someone who loses a hand because of a workplace accident in Connecticut, Iowa, or New Hampshire is entitled to over $160,000 in compensation. If that same injured worker is unlucky enough to live in Alabama, Colorado, or Massachusetts, compensation is less than $30,000. Workers who suffer permanent total disability in Iowa can receive weekly benefits equal to 200% of the state’s average weekly wage. Similar workers in Indiana, Mississippi, New Jersey, and Wyoming, by contrast, can receive at most 66-75% of those states’ average weekly wages. Burial expenses range from $2000-$10,000 across the states (AFL-CIO 2000).5 There is no conceivable moral or technical rationale for such disparate treatment of similarly situated individuals. The only plausible explanation is historical and political. About the only uniform features of the program are the inadequacy of benefits and the considerable amounts of money consumed by administrative costs (Graetz and Mashaw 1999: 82-87).

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