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Employers Disappointed with Stand-Alone Minimum Wage Bill

Posted by John Regan on Nov 18, 2013 8:45:00 AM

The minimum-wage increase steaming toward approval in the Massachusetts Senate this week is disappointing for many reasons.

Minimum WageThere is, first of all, the argument on the merits. Increasing the minimum wage misses the real reason that many of our fellow citizens struggle to achieve an adequate standard of living - lack of appropriate training for the high-value jobs driving the state economy.

A market-based economy provides financial compensation to employees according to their ability to contribute to the success and profitability of the organization. That’s why AIM has for decades supported education reform, school-to-work initiatives, increased opportunities for training, community-college-based training initiatives, tax credits for training, and funding for the Massachusetts Workforce Training Fund.

Increasing the minimum wage has the perverse effect of limiting opportunity for young and lower-skilled workers and pushing jobs out of the market. Far from helping poor people, the proposal to increase the minimum wage to $11 an hour by January 2016 and then index it to inflation will simply ensure that people whose skills do not justify that wage will not find jobs.

U.S. Census Bureau data shows that 90 percent of Massachusetts employees earning the minimum wage live with either their parents or another relative, they live alone or have a working spouse.  Just 10 percent are sole wage earners in families with children.  Why pass an across-the-board increase for all minimum-wage earners when our real intent is to help those who have families to support?

The more targeted approach to assist these families is through the Earned Income Tax Credit (EITC), a credit currently set at 15 percent of the amount of the federal credit in Massachusetts.  These sole earners derive greater economic benefit from the combined state and federal EITC.  Because the EITC does not have a correspondingly negative impact on job creation and business costs, AIM has supported this approach rather than simply raising the minimum wage, or here simply indexing the wage to CPI.

But the disappointment of employers with the current minimum wage bill extends beyond the issue itself to the broader question of Beacon Hill’s commitment to balancing the needs of workers with those of small employers struggling in an uncertain economy still afflicted with 7.2 percent unemployment.

AIM and its 5,000 member employers were encouraged in October when Legislative leaders indicated that they might link the minimum wage increase with an attempt to reform the commonwealth’s antiquated and expensive unemployment insurance system.

“In addition to the minimum wage, I think maybe we have to change some of the burdens that businesses presently face in Massachusetts,” House Speaker Robert DeLeo told the State House News Service on October 29.

Massachusetts UI costs, driven by high wages, lenient qualification requirements and an overly generous benefit structure, are the highest in the country. AIM has long supported changes to the system through which benefits are paid to unemployed workers. It is a system that has generated dizzying uncertainty for employers during the last five years as lawmakers have been forced to freeze automatic rate increases that were not needed to maintain the financial stability of the Unemployment Insurance Trust Fund.

The Legislature’s Joint Committee on Labor and Workforce Development has, indeed, been gathering information about a possible Unemployment Insurance/Minimum Wage package. Employers would need to see the final contours of the package before determining whether to support it, but the business community generally believes that such a combined approach holds the most potential for helping the Massachusetts economy.

So employers – even those who have no workers earning the minimum wage – were shocked and disheartened to learn that the Senate will move forward on the wage measure without accompanying structural reforms to the unemployment insurance system. We now hope that the House of Representatives maintains its commitment to a balanced approach that will at long last address one of the most  problematic and unnecessary cost issues facing Massachusetts employers.

AIM has a clear definition of substantive UI reform:

  1. Adjust the UI rate schedule to require negatively rated employers, those who habitually put employees into the UI system, to pay higher rates than more stable employers whose employees rarely use the UI system; and to require that new employers contribution rate be set at the so-called zero positive rate, more accurately reflecting the employers actual trust fund balance and avoiding "sticker shock" when receiving the actual bill after the first year of operation. 
  2. Increase the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to forty and requiring wages to be paid in at least two quarters, bringing Massachusetts into line with the majority of other states; (estimated annual savings:  $30 million.)
  3. Reduce the maximum duration of benefit weeks from 30 to 26 when the state's economy is performing well by adjusting the statutory trigger mechanism from 5.1 percent unemployment in each of the 10 local labor markets in the state to a straight 5.1 percent unemployment rate statewide over the preceding six months - producing savings in the UI Trust Fund of between $50 and $90 million per year. This provision would bring Massachusetts' benefits into line with all other states.

Topics: Minimum Wage, Unemployment insurance, Issues

Employers Face Deadline on Chemical Standards Training

Posted by Wendy Rosati on Nov 18, 2013 8:20:00 AM

Editor's Note - Wendy Rosati is Consultant, Injury Prevention & Worksite Wellness, for A.I.M. Mutual Insurance Company in Burlington.

Manufacturers and other employers who use chemicals in the workplace have until December 1 to train employees about a significant revision by the U.S. Occupational Safety and Health Administration (OSHA) to its hazard communication standard.

HazardCommOSHA’s changes to the standard will align it with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (GHS).  The shift marks one of the agency’s most significant rulemaking efforts in more than a decade.

The rule, released on March 26, 2012, is expected to affect more than five million businesses across the country. An estimated 40 million employees will need to be re-trained on hazard communication.

The UN maintains that aligning U.S. hazard communication standards with those of the rest of the world will eliminate what has been a patchwork system and establish in its place a common process for identifying hazardous materials and warning users.  Supporters say that adoption of the GHS classification system will streamline international shipments and sales of chemical products, ensure that people worldwide receive the same basic standards of protection when using products, facilitate training and literacy concerns, decrease supplier costs and improve overall workplace injury rates.

GHS has specific criteria for the classification of chemicals, including standardized language for health, physical and environmental categories and chemical mixtures. New labeling provisions include nine pictograms, which include a symbol and graphical elements, such as borders and background colors.

 Eight of the nine pictograms will be regulated by OSHA. The signal words "DANGER" or “WARNING" will be required on labels, dependent on hazard severity. Labels will also require hazard and precautionary statements, which describe the chemical hazards and recommended measures to protect against exposures.

Material Safety Data Sheets (MSDS) are now referred to as Safety Data Sheets (SDS) under the revised standard. Safety Data Sheets have 16 sections, and new requirements will include identification, hazard identification, composition and ingredient information, first aid and fire-fighting and accidental release measures, handling and storage, exposure controls, personal protection, physical and chemical properties, stability and reactivity, toxicological information, the date of preparation and last revision.

Every employer will be required to re-train their employees on the elements of the new standard.  By December 1, affected employers are required to provide employees awareness training, which includes GHS formatting.

Chemical manufacturers and distributors assume significant workload under the new standard, and must gather relevant chemical data and review to determine hazards using GHS criteria, produce/author/re-author safety data sheets and labels in GHS format, and ensure that SDS and labels address specific standards of each country to which they ship by June 1, 2015.

By December 1, 2015, distributors must send only updated SDS and labels. By June 2016, employers must have compared old safety data sheets to new ones, noted any new hazards requiring new employee safety training, secured missing SDS sheets and archived older ones, updated written hazard communication programs, relabeled secondary containers using GHS format, and trained employees on new hazards.

AIM members with questions about the new standards may email Bob Paine (rpaine@aimnet.org), Senior Vice President of Membership.

Topics: Issues, Environment, Safety

Warren Enlists Employers to Push Solution to DC Stalemate

Posted by Christopher Geehern on Nov 16, 2013 10:23:00 AM

Senator Elizabeth Warren challenged employers on Friday to initiate a “national conversation” that will overcome the Washington political gridlock she says threatens the economic and social structures of the nation.

Warren urged more than 250 business leaders at the AIM Executive Forum to contact their friends and colleagues across the country to discuss a path to compromise on the intractable stalemates over the federal budget and national debt.

“This has to be a national conversation. It cannot be a conversation just here in Massachusetts. We cannot sit around and just agree with each other,” Warren said.

“I urge you all hit to your email on regular basis and have this conversation, however you feel about it. But we’ve got to get this resolved and get our country moving forward.”

The commonwealth’s senior senator said fundamental philosophical differences between Democrats and Republicans are weighing down the economic recovery and preventing the country from making long-term investments in education, infrastructure and research.

“How stupid is the sequester? That we are now caught in an across-the-board hatchet cut to everything. It is just mindless,” she told the audience.

“And you all realize that if we can’t get this budget deal worked out we’re about to roll into a second year of sequester. That doesn’t mean second year of the same cuts, it means we double the cuts we’ve got and keep on rolling from there.”

Warren argued that the nation built a formidable economy out of the Great Depression with government investments in education and training, construction of the federal highway system and basic research that produced advances such as GPS and the Internet. The manufacturing base that grew out of those investments frayed during the latter half of the 20th century, she said, threatening the economic security of the middle class and challenging the nation to again think about the future of how it makes things.

She rejected the notion that manufacturing inevitably flows overseas.

“It’s the wrong way to think about our present. It’s also the wrong way to think about our future,” she said.

Addressing the employers, she said, “I truly believe that when you grow, America’s middle class grows, and when the middle class grows, America grows.”

Warren also maintained that community colleges must play a key role in ensuring that employers have access to the qualified workers they need to expand. The federal government must maintain funding of those community colleges while letting the institutions themselves determine the skills that employers in their regions need.

“What it takes to do almost any skilled work today is a lot more than it took 30 years ago. The idea that you could do things with a tenth-grade education as you did 30 or 40 years ago, those high paying manufacturing jobs, it’s just not true anymore,” she said.

Topics: U.S. Senate, Elizabeth Warren, Issues

Massachusetts is Number One in Education. Is That Enough?

Posted by Brian Gilmore on Nov 7, 2013 9:24:00 AM

Ask any Massachusetts employer about the challenges facing his or her business and you are bound to hear some variation of: “I can’t find people with the skills and education needed to work in my company.”

Education ReformThe gap between the knowledge required by globally competitive Bay State employers and the knowledge offered by job seekers remains a major impediment to economic growth across Massachusetts. It is a gap that has persisted throughout the Great Recession, ranging from software companies that could hire dozens of programmers tomorrow but cannot find them, to precision manufacturers starved for young workers with the mathematical and mechanical skills to do high-tolerance machining.

The need to match educational achievement to a voraciously competitive global knowledge economy was the primary reason that Associated Industries of Massachusetts and other business groups supported the landmark 1993 Massachusetts Educational Reform Act.

The overhaul raised the overall performance of Massachusetts public schools with a unique combination of measurable student testing, transparency, results-based management, and increased funding. Massachusetts students score the highest in the nation on both the National Assessment of Educational Progress (NAEP) and the Trends in International Mathematics and Science Study (TIMMS) tests.

But our state's first-in-the-nation status for student achievement hides some troubling truths about the condition of public education in the commonwealth, a recent publication by our education partner the Massachusetts Business Alliance for Education (MBAE) points out.

  • Despite the overall gains in student achievement in K-12 public education since passage of the 1993 reform, we have not closed achievement gaps affecting minority and low-income students.
  • We have reached a point of slower improvement, especially in our Gateway Cities – while other states and nations continue to move forward.
  • While Massachusetts eighth graders scored highest in the U.S. on an international test in math and science, only 19 percent did well enough to be considered advanced in math, compared to nearly 50 percent of eighth-graders in Taiwan, South Korea, and Singapore.
  • Just 14 percent of students in Massachusetts took the Advanced Placement (AP) exam in Math, and only 9 percent scored high enough to earn college credit; the same percentage of students took an AP exam in a science, and 8 percent scored a three or above.      
  • Sixty-five percent of students who enter our community colleges require at least one remedial course – a burden of some $57 million a year in instructional costs and lost earnings that could be saved if all students graduated from high school ready for college.

These troubling issues and the accelerating educational demands of employers are again prompting AIM, Massachusetts lawmakers and the business community to take a look at the commonwealth’s public education system. Two decades after the Education Reform 1.0, we are seeking employer perspectives on how well the schools are preparing the work force of tomorrow.

  • What has education reform has meant for the employer community?
  •  Have gains in student achievement produced better, prepared, more productive employees?
  •  Is our state’s workforce still a major competitive advantage?
  •  Do continuing “achievement gaps” cast a shadow on our economic future?
  •  What should be included on an education reform agenda for the next generation?  

AIM is working with MBAE and other groups to collect employer opinions on education issues. The survey results will be used to develop a set of education priorities for the business community to focus on in the months ahead. Please click the link below and share your views with us today.

Take the Education Survey

Topics: Issues, Massachusetts economy, Education

Connector Seeks Repeal of Section 125 Requirement

Posted by Russ Sullivan on Oct 30, 2013 11:15:00 AM

Health Care ReformThe Massachusetts Health Connector announced Monday that it plans to file legislation to repeal several key requirements of the state health reform law, including the Section 125 requirement, the Employer Health Insurance Responsibility Disclosure (Employer HIRD) requirement, the free-rider surcharge, and the recently created Section 125 notification requirement.

The announcement comes as welcome news to Massachusetts employers.

The 2006 Massachusetts health reform required employers with 11 or more workers to offer all employees who work 64 hours or more per month the opportunity to pay for health insurance on a pre-tax basis through the employer’s section 125 plan.  Employees could use the plan to purchase insurance through the employer, if eligible, the Massachusetts Health Connector or a private third party.  Now, effective the last day of current plans in 2014, the federal Affordable Care Act eliminates the use of section 125 plans for the purchase of health insurance through a public health exchange such as the Massachusetts Health Connector.

Despite the new restrictions, Massachusetts has maintained its section 125 requirement so that employees who do not meet their employer’s health care eligibility requirements may still purchase health insurance privately through a third party and save money through pre-tax payroll deductions.  Those employees just are not be able to use the section 125 deductions for plans purchased through the Connector.

Massachusetts employers raised concerns about this process during recent forums with the Health Connector, the Division of Insurance and AIM.  Collecting payroll deductions and forwarding the funds to a private insurance company seems a significant burden to employers, while benefitting few employees.

AIM applauds the Health Connector for listening to employers and addressing their concerns. The association also urges members of the Massachusetts Legislature to approve the Connector’s plan to eliminate the section 125 requirements.

In the meantime, some advice for employers:

  • If you currently have employees using your section 125 plan to pay for plans through the Connector, they may continue to do so until the plan year ends in 2014. 
  • You need not make your section 125 plan available to employees who are not eligible to participate in the company’s health insurance.
  • You may continue to use the existing Notice of Health Care Exchanges for new hires. 

 

Topics: Health Care Reform, Issues

Speaker Offers Hope for Unemployment Insurance Reform

Posted by John Regan on Oct 29, 2013 4:33:00 PM

Massachusetts House Speaker Robert DeLeo provided a dose of hope to employers today by confirming that lawmakers may attempt to reform the commonwealth’s antiquated and expensive unemployment insurance system.

DeLeoState House News Service reported that DeLeo is looking to link structural changes to the UI system with an anticipated effort to increase the state minimum wage or other issues.

“In addition to the minimum wage, I think maybe we have to change some of the burdens that businesses presently face in Massachusetts,” DeLeo told the News Service.

Associated Industries of Massachusetts has long supported changes to the system through which benefits are paid to unemployed workers. It is a system that has generated dizzying uncertainty for employers during the last five years as lawmakers have been forced to freeze automatic rate increases that were not needed to maintain the financial stability of the Unemployment Insurance Trust Fund.

Massachusetts UI costs, driven by high wages, lenient qualification requirements and an overly generous benefit structure, are the highest in the country. AIM’s Unemployment Insurance reform proposal, contained in House Bill 1732 and reflected in other bills, seeks to introduce more than $100 million in one-time and recurring cost savings into the system by the following reforms:

  1. Adjusting the UI rate schedule to require negatively rated employers, those who habitually put employees into the UI system, to pay higher rates than more stable employers whose employees rarely use the UI system; and to require that new employers contribution rate be set at the so-called zero positive rate, more accurately reflecting the employers actual trust fund balance and avoiding “sticker shock” when receiving the actual bill after the first year of operation.  
  2. Increasing the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to forty and requiring wages to be paid in at least two quarters, bringing Massachusetts into line with the majority of other states; (estimated annual savings:  $30 million.)
  3. Reducing the maximum duration of benefit weeks from 30 to 26 when the state’s economy is performing well by adjusting the statutory trigger mechanism from 5.1 percent unemployment in each of the 10 local labor markets in the state to a straight 5.1 percent unemployment rate statewide over the preceding six months – producing savings in the UI Trust Fund of between $50 and $90 million per year. This provision would bring Massachusetts’ benefits into line with all other states.

AIM is less enthusiastic about linking UI reform to an increase in the $8-per-hour minimum wage or to measures compelling employers to provide paid sick time. Both proposals would dampen the already anemic job growth in the commonwealth and should, in any case, be debated on their own merits as a matter of good government.

The minimum wage increase and paid sick time could both appear on the 2014 state ballot. Activists collecting signatures propose to ask voters to raise the minimum wage to $10.50

“The chair’s been talking to a lot of different parties to come up with a comprehensive package that deals with the minimum wage on one side and the UI on the other so we have an employer-dash-employee piece of legislation that can be beneficial to both. Whether right now we’re going to be there or not, I don’t know,” DeLeo told State House News.

Asked about a perceived lack of appetite among members to take votes on two issues that could be seen as unfriendly to business, DeLeo said, “That could be right, but I wouldn’t want to rule it out just yet.”

Many small business owners cannot afford to pay higher wages and continue to hire new employees. While Massachusetts’ minimum wage remains 75 cents higher than the national $7.25 base rate, other states are moving toward higher wages.

Topics: Minimum Wage, Unemployment insurance, Issues

Protect Employers who Tell the Truth on References

Posted by Christopher Geehern on Oct 25, 2013 11:43:00 AM

It’s the call that Massachusetts employers dread – a fellow employer wants a reference about a job applicant who used to work for your company.

ReferencesDo you tell the second employer the truth about the circumstances surrounding the employee’s departure and risk being sued by the former worker? Or do you provide a vague, uninformative reference that could cause the second employer to sue if the employee causes the same problems at the new work site?

The simple act of one employer providing an honest reference about a former employee to another employer has all but broken down under an avalanche of litigation from all sides.

That’s why AIM has filed legislation to provide employers with protection from civil lawsuits arising out of the employee reference process.  The bill, House 1682, would protect employers from liability if information disclosed to prospective employers in the hiring process is truthful. 

AIM testified in support of the bill Friday before the Legislature’s Joint Committee on the Judiciary.

“In recent years, an unprecedented wave of employment-related lawsuits has flooded the courts.  One particularly troublesome aspect of this phenomenon is the number of libel and slander claims against employers based on negative job interviews, unfavorable job references, negative termination interviews, and other forms of workplace defamation,” said Brad MacDougall, Vice President of Government Affairs.

Many employers have reacted to the litigation threat by watering down their employee performance evaluations or ceasing to provide references altogether.   Danger remains, however, since a non-specific reference could produce a lawsuit for contributing to another employer's "negligent hire." 

Several jurisdictions even recognize a "doctrine of compelled self-disclosure" whereby a silent employer could be liable when a discharged employee complies with the request of a prospective employer to disclose the reason for departure from a prior employment.

Employer reticence about providing an accurate and honest job reference is a loss to all parties. It also sets back efforts to control violence in the workplace because employers who know the background of candidates for employment are able to make informed decisions regarding appropriate hiring and the safety of others. 

It's time to protect employers who tell the truth.

Topics: Massachusetts Legislature, Issues, Employment Law

Study: Extended Jobless Benefits Keep Workers Unemployed Longer

Posted by John Regan on Oct 24, 2013 2:46:00 PM

Extended unemployment insurance benefits in the wake of the Great Recession raised the average time that jobless people remained out of work and also increased the overall jobless rate by four-tenths of one percent.

Unemployment InsuranceThat’s the conclusion of a striking new study by the National Bureau of Economic Research, which compared economic growth in adjacent counties of different states with varying unemployment insurance benefits. It’s a conclusion that should resonate with Massachusetts lawmakers currently contemplating structural changes to the benefit-rich Bay State Unemployment Insurance System.

"Most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility," conclude the authors of Unemployment Benefits and Unemployment in the Great Recession.

Workers who lost their jobs in the aftermath of the 2007-2009 recession were eligible to receive UI benefits for a maximum of 99 weeks in most states, compared with the normal UI availability of 26 weeks- 30 weeks in Massachusetts. The NBER finds that these extended UI benefits in the aftermath of the Great Recession prolonged the average duration of unemployment by 7 percent and caused the unemployment rate to increase by an extra 0.4 percentage points.

The same dynamic occurred during the much milder downturn of the early 2000s, but the effects were smaller because the extension of benefits was not as widespread, or as generous, as in the Great Recession.

The study found that people who lost jobs during the 2001 recession and whose unemployment duration placed them in the top fifth of the distribution were unemployed for an average of 5.4 months. The authors estimate that this group experienced one extra week of unemployment due to extended benefits. By contrast, in the aftermath of the Great Recession, during 2009-11, individuals in the top fifth of the unemployment distribution were unemployed for an average of 6.8 months, and experienced about two extra weeks of unemployment due to extended benefits.

AIM has for years supported long-term structural reforms that would bring Massachusetts into line with Unemployment Insurance practices in a majority of other states by limiting the duration of benefits to 26 weeks, increasing work and wage requirements for benefit eligibility, and updating rate tables to create equity in employer UI payments. Massachusetts currently has one of the highest Unemployment Insurance rates in the nation.

The Wall Street Journal, writing about the NBER study, notes that the problem with extended UI benefits is not that they discourage people from finding new jobs but that they deter the creation of jobs for those people to fill.

“The reason is that extended unemployment benefits create upward pressure on wages. The higher wage level reduces the employer's potential profits on any new job created, so naturally they don't create them. With fewer jobs available, the number of unemployed who land a job also stays low. High unemployment persists,” the Journal argues.

The bottom line for Massachusetts policymakers: holding onto the longest UI benefit duration in the country actually harms the workers those benefits are intended to help.

Topics: Unemployment insurance, Issues, Jobs

Why Employers Back a Study of Extended Mandatory School Age

Posted by Andre Mayer on Oct 10, 2013 1:25:00 PM

As our economy slowly recovers from the recent, very severe recession, long-term changes in employment patterns are becoming evident. Lower educational attainment means not just lower pay, but a much higher chance of being unemployed. Unemployment among young entrants to the workforce is especially high – in fact, there has probably never been less opportunity for youth workers.

EducationAIM's employer members of course value a strong work ethic, but they are equally concerned about the education and skills that prospective employees bring to the workplace. They know that in the 21st-century economy, dropping out of school to go to work is likely to be a bad decision. Legal requirements aside, the messages society sends to young people are important – and we are sending the wrong message.

School attendance is currently compulsory in Massachusetts for ages 6-16, but some 32 states now mandate school attendance to age 17 or 18, and nine require attendance from age 5. With “pre-school” increasingly recognized as integral to the education process and high school graduation becoming a near-necessity for career success, our state – with its pre-eminent knowledge-based economy – should examine the desirability and cost implications of extending its requirements.

That is why Associated Industries of Massachusetts supports a bill, H. 341, a resolution authorizing and directing the Board of Elementary and Secondary Education to conduct such a study. The measure is sponsored by Senator Garrett Bradley.

We do not believe that this study requirement will be an onerous task. Other states have adopted extended requirements, in some cases quite recently. As Massachusetts is in this case a follower rather than a leader, the board will be able to draw on experience elsewhere to estimate the impacts of similar changes in our state.

We do not advance our resolution in preference to more decisive action as proposed by Representative Bradley, or to a more comprehensive approach as proposed by Senator Chang-Diaz. We observe, however, that these proposals have not succeeded in past sessions, largely because of concerns about their cost implications; and we urge that at the very least the Legislature take this simple step towards a better understanding of what those costs might be.

Topics: Issues, Education, Economy

Don't Tinker with Workers Compensation Success Story

Posted by Christopher Geehern on Oct 9, 2013 10:04:00 AM

The Massachusetts workers compensation system is, well, working.

Workers CompensationOnce on the brink of financial collapse, the commonwealth’s system for paying the lost wages and medical bills of workers injured on the job is now a model for the rest of the country. A landmark reform passed in 1991 has reduced average workers compensation premiums 60 percent, improved workplace safety and redirected hundreds of millions of dollars to employers for investment in growth.

And that’s exactly why lawmakers should tread lightly in reviewing more than 30 bills that have been filed proposing changes to the workers compensation system. AIM supports some of these changes – including one that would increase the funeral benefit for workers killed on the job – but overall believes it is dangerous to tinker with one of the great economic and policy success stories of the past 30 years.

“By every measure, the reforms of 1991 are working and they were beneficial to both employees and employers.  This is a tremendous success story.  Rather than funding a broken system, hundreds of millions of dollars are made available to companies to invest in creating jobs and improving safety.  We have a system that works,” said John Regan, Executive Vice President of Government Affairs at AIM, in testimony yesterday before the Legislature’s Joint Committee on Labor and Workforce Development.

The turnaround of workers compensation is by now a familiar tale to most Massachusetts employers.

The system hurtled out of control from the 1980s until late 1991 as excessive benefit duration spawned an unhealthy mentality for workers who were urged to hold out for huge lump-sum settlements.  One in five workers made more while collecting workers compensation benefits than they did while earning pre-injury wages.  The voluntary insurance market collapsed, resulting in an assignment of 65 percent of workers' compensation premiums to the assigned risk pool.   

The 1991 reform stabilized the system and subsequently made the system work for both employers and workers:

  • Attention paid to workplace safety is up and accident frequency is down;
  • The number of disputed cases continues to decline;
  • The amount of insurance premium written through the assigned risk pool is modest;
  • Insurance rates are down more than 68 percent since 1993;
  • Insurers are coming to Massachusetts – 357 licensed workers compensation insurers.   

Regan outlined for legislators four principles by which AIM evaluates any proposal to change the workers compensation system:

  1. AIM supports a cost effective workers compensation system which provides for injured workers during their period of injury, helping them achieve maximum medical improvement, and allowing them to return to work earning a living for themselves and their families as soon as is safely possible.
  2. Workers compensation is a cost of doing business, which during the past several years has gone from among the highest in the nation to a more appropriate level. Massachusetts' workers' compensation costs must remain within the national average for all states. In fact, the Massachusetts system is characterized as a relatively low cost/high benefit state. At 60 percent of pre-injury wages, given the tax exempt status of compensation and given that many other work-related deductions for benefits are not withheld, take home pay for workers collecting benefits is at the appropriate level. We strongly oppose any change that will add cost to the existing system, placing Massachusetts companies at a competitive disadvantage relative to other states.
  3. AIM believes that any discussion regarding change to the current workers compensation system must be preceded by a full and fair cost/benefit analysis, which determines the practical impact of any change to the system on all parties, and on bottom-line costs.
  4. AIM advocates that all parties to the workers compensation system — workers, their families and the business community —be treated fairly, neither particularly advantaged nor disadvantaged by any proposed change. AIM is particularly concerned about increasing or incurring costs that do not accrue to the benefit of workers but to others associated with the workers compensation system.

 

Topics: Workers Compensation, Massachusetts Legislature, Issues

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