A Top Concern of NC Businesses:

Keeping Workers’ Compensation Costs Competitive

As a member-driven business advocacy organization, our Chamber continues to gather input from our customers about their top economic concerns and ways to improve their capacity for growth and job creation.  Repeatedly, workers’ compensation costs emerge near the top of the list among businesses of all sizes and types, particularly manufacturers.  In addition to citing workers’ compensation costs as a deterrent to job growth in our Chamber’s CEO and Manufacturing Competitiveness polls, businesses are delivering the same message right now in a series of “listening meetings” we are hosting across the state in the seven economic development regions. 

Another Rate Increase Contributes to Rising
Workers’ Compensation Costs

Workers’ compensation costs in North Carolina are going up again.  Just last week, the state Department of Insurance approved a 1.6 percent rate increase.  Although the increase is significantly lower than the N.C. Rate Bureau’s request of 5.9 percent, it comes on top of a 7.3 percent increase last year and a 9.3 percent increase in 2005.

Because North Carolina businesses across the state are telling us workers’ compensation costs impact their ability to grow and create jobs, any rate increase matters.  Three consecutive year’s of rate increases add up; coupled with other systemic cost drivers and no significant reform in a decade, they make workers’ compensation costs a notable competitiveness issue for our state.

A key issue driving up workers’ compensation costs is the fact that North Carolina has no limit on the amount of time workers are allowed to collect benefits while other states do.  Another area for improvement centers on return-to-work policies that encourage employees to rejoin the workforce as soon as they are able. Employers are also grappling with issues of medical inflation and fraudulent injury claims. As cost differentials between states continue to figure prominently in the minds of business owners, North Carolina must ensure competitive workers’ compensation costs to continue to grow our economy and attract, keep and grow good jobs.

Competitor States are Ahead of NC in Reform Efforts

Other states are busy reforming their workers’ compensation systems in their efforts to reign in costs and improve their business climates to attract and create jobs.  As states around us implement reform initiatives, they will continue to gain ground on North Carolina until we reform our own system. 

South Carolina, for example, just passed a comprehensive workers’ compensation reform package during its recent legislative session.  The legislation will reportedly end up saving South Carolina businesses in excess of $24 million.  In addition, Tennessee passed a reform package that placed administrative guidelines and restrictions on its workers’ compensation system.  The Governor of Tennessee commented publicly: “I am grateful to the General Assembly for taking the necessary bold steps to control spiraling workers’ compensation costs. Doing this will help Tennessee employers more easily focus on what really matters, growing their business and making a living for themselves and their employees.”

Our Chamber’s report on the state of business in North Carolina tells us that business costs are on the rise, and according to our Annual Competitiveness Index, workers’ compensation costs are a contributing factor.  Our Chamber looks forward to working with our employer members and state leaders and lawmakers on solutions to this growing competitiveness challenge toward the same end: Ensuring North Carolina is the best place in the nation to do business with a thriving economy to sustain growth and generate the revenue necessary to meet the increases in demand for vital public services.