(The Center Square) – Washington state employers and employees will feel another pinch in their wallet come 2025 with a rate increase for workers’ compensation.
The Department of Labor & Industries has proposed increasing the workers’ compensation rate by an average of 3.8%.
“The proposed increase reflects the fact that the costs of replacing injured workers’ wages and covering their medical care have increased,” L&I Director Joel Sacks said in a Tuesday news release.
Individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry risk classification, but most will see an increase.
The proposed increase applies to 283 of 326 risk classes next year, with some risk categories going up much higher than the average.
For example, in riskier fields like glass installation and sheet metal siding and downspout installation, the rate increase is 12%. L&I rates for carpet cleaning services are going up 11%, and airline flight crew workers’ compensation rates are going up 15%.
On the flip side, those who work in shake and shingle mills (non-automated) will see rates fall by 33%, and those in the field of dam construction, will see rates go down 15%.
The problem is the average rate increase is once again expected to be less than L&I pays out.
Emily Makings with the Washington Research Council tells The Center Square, the agency will make up the difference in reserves.
“The break-even average rate increase would be 5.5%,” said Makings, who pointed out the policy of proposing below break-even rates hides the true costs of the workers’ compensation system.
According to the WRC, Washington’s workers’ compensation benefit costs per covered worker are still the nation’s highest. Benefit costs in Washington were $849.67 per covered worker in 2021, up from $824.53 in 2020. The second highest was $772.41 per covered worker in Wyoming.
“We have a very costly system,” said Makings.
Add in the high rate of claims the state is paying out and the result is higher premiums.
According to the Bureau of Labor Statistics, in 2023 Washington saw 3.9 injuries and illnesses for every 100 full-time workers, tied for the second highest rate of any state state in the country. That number rises to 4.3 when government workers are factored in.
According to the BLS, government workers in Washington had 9.3 workplace injuries per 100 workers in 2022, the highest rate of any single industry in any state.
For two decades, Washington’s workplace injury rates has been well above the national average based on statistics from L&I.
Last year, a member of the Washington Policy Center think tank wrote about potential solution to the problem of continually increasing workers’ compensation rates: a competitive system.
“In states with competitive systems in place, private insurers offer benefits that include options like 100 percent replacement of a workers’ salary for a set period after a disability or death along with a funeral benefit,” Pam Lewison, Director of WPC’s Center for Agriculture blogged. “Washington state is one of just a handful of states in the U.S. that has a monopoly on workers’ compensation.”
That means that businesses in Washington are not allowed to shop around to find the best premiums for their coverage.
“L&I said they’re proposing the lower rate to provide some consistency for employers, so it’s not jumping around all over the place,” said Makings, who added that some employers pay the full amount, “so not all employees will see any difference.”
“If they did have to break even every year, I’m not sure what that would look like,” she said. “But, it would certainly mean employers have to pay more.”
The Center Square reached out to L&I to inquire as to how much the state has in contingency reserve funds for workers’ compensation.
An email from L&I Public Affairs Manager Matt Ross said, “The amount in the reserve is $5.4 billion.”
