Overall Trends in Workers’ Compensation Benefits and Employer Costs

Total cash benefits to injured workers and medical payments for their health care were $57.5 billion in 2010, a 0.7 percent decrease from $57.9 billion in 2009. Medical payments decreased by 2.1 percent to $28.1 billion, but cash benefits to injured workers increased by 0.7 percent to $29.5 billion.

Workers’ compensation costs to employers were $71.3 billion in 2010, a decrease of 2.7 percent from 2009. This decrease in employer costs is a continuation of the downward trend in employer costs since 2006, which reflects the overall decline in employment in the recession.

The number of workers covered by workers’ compensation in 2010 was 0.3 percent smaller than in 2009 and 4.7 percent smaller than in 2008. Moreover, the sluggish economy of 2010 saw even sharper declines in the construction industry, a sector that has above average workers’ compensation costs due to a higher frequency and severity of workplace injuries. Construction was the hardest hit industry in the recession with a decline in employment of 19 percent between 2008 and 2009 and a further decline of 8.3 percent between 2009 and 2010.

Relative to wages, benefits and costs peaked in the early 1990s, declined sharply to a low in 2000, rebounded somewhat after 2000, and then declined in recent years. Since 2005, workers’ compensation benefits and employers’ cost relative to covered wages have been on the decline and continued to fall in 2010. Nationally, employer costs of $1.23 per $100 of covered wages in 2010 were at the lowest point since 1980, the earliest date when comparable data are available. Benefits per $100 of payroll were $0.99 in 2010, three cents less than $1.02 in 2009.