NCPA - National Center for Policy Analysis


September 17, 2004

California has the most generous workers' compensation program in the United States and it has become a growing burden on businesses, say observers.

Though the state government has made moves to reduce the insurance premiums paid by businesses, it remains to be seen whether that will be enough:

  • Last year, California businesses paid an average of $6.30 per $100 in payroll for insurance.
  • Florida, with the second-highest rate, paid $4.50 per $100 in payroll, while the national average was $2.68 in 2003.

One business casualty was Pioneer Super Market in Los Angeles; a store that had served the community since the 1930s but had to be closed down last month. The company's insurance premiums ballooned from $60,000 in 2000 to $240,000 last year, even though its employees rarely filed injury claims.

A resigned Pioneer general manager said that in order to pay a $240,000 worker's comp bill, the store would have to charge about $5 for a gallon of milk.

Source: Regan Morris, "Insurance Premiums Take a Toll," New York Times, September 9, 2004.

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