Marathon Pundit: Illinois desperately in need of workers' comp reform

Wednesday, April 13, 2011

Illinois desperately in need of workers' comp reform

High taxes aren't the only reason Illinois business owners are eying greener pastures in other states. The cost of workers' compensation claims here are another.

From the Peoria Journal Star:

If you need a local example to illustrate in real dollar terms just what it means to have the second highest workers' comp costs in America - behind only Alaska, by the governor's own admission - look no further than Morton-based CORE Construction Group Ltd., which operates nine companies in five states.

Marc Collins, associate risk manager for CORE, compared five years' worth of claims between the local construction firm Otto Baum Company and Sun Valley Masonry, another of their holdings in Phoenix, Ariz. The two companies are of similar size, with about the same number of employees. What he discovered was that local claims averaged $32,807 each over that time frame, compared to $6,212 in Arizona. While some of that reflects differences in wages - employers are required to pay two-thirds of an employee's compensation while he's hurt - it most certainly does not account for the more than five-fold difference.

Caterpillar - which obviously deals in much bigger numbers - has an even more dramatic story, one CEO Doug Oberhelman shared with Gov. Pat Quinn when he was in town last week. The Peoria-based company compared an engine manufacturing plant in Illinois to another it has in Indiana. "The jobs are essentially the same. The injury risks are the same. The production work force head count was roughly the same," noted the company. And yet in 2008, "the total incurred cost of the injuries at the Illinois plant was seven times higher than the cost of the injuries at the Indiana plant."

That is borne out statewide. If a hernia suffered on the job costs an employer more than $18,700 in Illinois, the next closest state comes in $6,300 less, with we flatlanders nearly 140 percent higher than the national median. A shoulder or elbow injury? The Illinois employer is out almost $24,000, compared to about $14,300 for the runner-up, 160 percent higher than the median. Need an arthroscopic procedure? Illinois is double its nearest competitor, more than triple the median.

[Bold print emphasis mine.]

Do you want more? Illinois employs 70,000 workers, there are an astounding 25,000 open workers' compensation claims among them. It appears that the these "public servants" know how to milk the system.

More from the Illinois Chamber of Commerce:

Business Leaders Push for Workers' Compensation Reform at IL Chamber Lobby Day

SPRINGFIELD, IL – About 200 business owners and executives from across the state converged in Springfield on Tuesday to urge state leaders to pass much-needed workers' compensation reform during the spring legislative session.

The Lobby Day was led by the Illinois Chamber of Commerce, in conjunction with the National Federation of Independent Businesses (NFIB) and the Illinois Association of Chamber of Commerce Executives (IACCE).

"If the objective of Illinois' elected officials is to improve the outlook for the state’s 588,500 unemployed residents, then they must pay attention to our state’s high cost of doing business," said Doug Whitley, Illinois Chamber President & CEO. "And that means they have to reduce the cost of workers’ compensation in Illinois."

According to Whitley, Illinois' workers' compensation costs are the third highest in the country, and the biased and broken system has long stifled job creation and burdened state taxpayers and employers alike with prohibitive costs

Illinois Governor Pat Quinn, Illinois Senate President John Cullerton, Illinois Senate Republican Leader Christine Radogno, House Republican Leader Tom Cross and Whitley addressed the issue of workers' compensation at the event, which took place at the Abraham Lincoln Hotel & Conference Center in downtown Springfield.

After a morning session of briefings from key legislative and business leaders, the crowd descended on the Capitol to talk with their legislators one-on-one about creating a more business-friendly environment in Illinois.

"Employers and lawmakers should be working hand-in-hand to reduce unemployment and grow the state’s economy," Whitley said. "The current business climate in Illinois demands that the state's elected officials take action. There is no stronger signal the governor and the General Assembly can send about their desire to create jobs than by helping employers address workers' compensation and the business climate."

Leaders from the NFIB and IACCE echoed Whitley's call for reform. "Now is a very important time in Springfield because we are the verge of passing perhaps the most significant workers' compensation reform in decades, and lawmakers need to hear from small business owners about how workers’ compensation impacts their bottom lines," said NFIB State Director Kim Clarke Maisch, whose organization represents more than 10,000 small business owners in Illinois.

Jim Uszler, IACCE legislative division chair and executive director of the Mt. Prospect Chamber of Commerce, also stressed the importance of communicating with legislators.

"We need to let our state senators and representatives know that we are concerned about legislation they are passing that impacts our businesses," Uszler said. "Lately it seems like the only measures they're able to pass are those that result in increased fees, taxes and regulations. That’s not what helps businesses to create jobs."

Workers' compensation reform is a central theme of the Illinois Chamber's Jobs Agenda, a document created to provide legislators and other policymakers with a blueprint on how to best establish an environment that helps businesses create jobs. The report includes recommendations in several areas, including tax policy, energy, the state budget and transportation. Copies of the Jobs Agenda were distributed to attendees, and are available upon request from the Illinois Chamber as well as online at http://bit.ly/eaHefZ