NCPA - National Center for Policy Analysis

California's Workers' Compensation Law Unsound

August 18, 2003

Businesses are quitting California in record numbers. Since 2000, California has lost 250,000 manufacturing jobs. Its business climate, probably the worst in the nation, discourages companies from moving in and encourages those already there to quit, says Investors' Business Daily (IBD).

The reason? The states workers' compensation system is the most expensive system in the nation and rising:

  • The system costs California employers 30 to 60 percent -- some reports say as much as 125 percent -- more in premiums than Nevada businesses are required to pay.
  • For every $100 of payroll, California companies pay $5.85 in workers' compensation premiums.
  • In Arizona, employers pay $1.63, in Nevada $3.02 and in Oregon $2.06.
  • The U.S. average is a mere $2.50, less than half the rate paid by California businesses.

Rather than pay those costs and steep medical expenses -- which are rising fast -- that employers are responsible for, California businesses are making the easy decision to relocate. For many companies, it's either move or shut down, says IBD.

Source: Editorial, "California Draining," Investor's Business Daily, August 18, 2003.


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