The Cost of Workers' Compensation

How much does workers’ compensation cost the economy?

The greatest cost of work-related injury and illness is paid by workers and their families…period. There is no appropriate way to quantify the human suffering and loss, burden of disease, and opportunities lost to society because of preventable workplace incidents and exposures.

A lesser cost is quantifiable. The dollars and cents that employers (and in some jurisdictions, workers) pay for workers’ compensation coverage provide a relative measure of the cost of preventable injury to the other costs of production. There are two ways to look at these costs. The first is the cost of the workers’ compensation insurance itself. The second is the cost of the actual benefits paid (and the cost of administration for making those payments). The former is reflects current incurred costs while the latter estimates the actual dollars expended in a year.

In a recent report from the National Academy of Social Insurance (NASI.ORG), the total employer cost for workers’ compensation for the year 2006 were pegged at $70.5 billion. In Canada for calendar year 2006, premium and other assessment revenue from employers (including those self insured but administered by the workers’ compensation system) topped $8.5 billion. In Australia, a report estimated workers’ comp premiums in that country were $7.5 billion in 2000-1.

These are not trivial sums. Yet, it would be wrong to stop there in estimating the costs. There are replacement costs employers must pay for workers who are injured, investigation costs, lost productivity of other workers… the list goes on and on. And all these costs begin in almost every case with a preventable injury. We are all worse off because of work-related injury, illness and disease.

How much does workers’ compensation cost the economy? The answer is simple: too much both in dollar terms and, more importantly, in lives and dreams and opportunities for workers, families and society.