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Overall Trends in Workers’ Compensation Benefits and Employer Costs

Workers’ compensation employer costs as a share of payroll declined in 2015, reversing a four-year trend, and benefits as a share of payroll fell for the fourth straight year, according to the report, Workers’ Compensation: Benefits, Coverage, and Costs

As the economic recovery has spurred growth in employment and a corresponding increase in employees covered by workers’ compensation, benefits per $100 of payroll fell from $0.92 in 2014 to $0.86 in 2015—the lowest level since 1980. Between 2011 and 2015, benefits as a share of payroll fell in all but three states, continuing a national trend of declining benefits relative to payroll that began in the 1990s. 

Meanwhile, workers’ compensation employer costs per $100 of payroll ticked down to $1.32 in 2015—the fourth lowest level since 1980. Employer costs as a share of payroll had increased consistently after the Great Recession, but leveled off in 2014 and declined in 2015, reversing its previous trend.  Between 2011 and 2015, employer costs as a share of payroll declined in 27 states.

In aggregate, workers’ compensation benefits paid in 2015 were $61.9 billion, a 0.7 percent increase from 2011. Aggregate employer costs for workers’ compensation increased by 20.1 percent across the same period, reaching $94.8 billion in 2015. Most of the growth in employer costs occurred between 2011 and 2014; in 2015 costs increased only 2.3 percent from the previous year.

In 2015, total wages covered by workers’ compensation exceeded $7 trillion for the first time, increasing by nearly 19 percent between 2011 and 2015. Overall, in 2015, workers’ compensation coverage extended to an estimated 86.3 percent of all jobs in the employed workforce, comprising more than 135 million workers.