When a regular household finds that their costs are rising, perhaps on heating their home, their first instinct is to find the cause. The homeowner may investigate and find that their windows are old and drafty. Rather than save money by not using their heat at all or searching for a cheaper furnace, they fix and replace the problematic windows.
When a business is looking to cut costs, say on healthcare, their approach is very different. They typically slash benefits, charge employees more, or seek out a cheaper insurer. In the end, they are addressing a symptom rather than the root cause, and the ultimate cost of insurance will still be the same—it will just be up to the employees to foot the bill.
Who Is Shouldering the Cost of Workplace Injuries?
Workers’ compensation insurance is meant to care for employees who are injured on the job by providing medical and wage loss benefits during their period away from work, or until other benefits are able to be collected.
Unfortunately, many households that rely on workers’ compensation find themselves facing extreme financial hardship as their compensation runs out or is significantly lower than they anticipated. Even after the injured employee is able to return to work, they will likely see a significant reduction in earnings in the years following their injury.
As these families and individuals struggle to get by, they may eventually turn to food stamps or other federal assistance programs to help them feed, clothe, and house their family. This shifts costs away from the employer and squarely on the household and tax payers—leaving the employer cutting costs while everyone else picks up the slack.
In a report recently released by the United States Department of Labor and the Occupational Safety and Health Administration (OSHA), this cost shift is more problematic than just money—it relieves employers of the pressure to create a safer work environment as a cost-saving measure. When the financial responsibility to care for injured employees is lifted, employees are left to compensate for unsafe work environments.
A Shift From Reactive to Proactive
What’s the solution? OSHA’s is similar to the family with the drafty windows. Rather than shifting workers’ compensation costs continuously away from employers, the most effective solution may be to put a premium on preventing workplace injuries in the first place. By proactively creating a safer work environment, employers can save money for themselves, their employees, and taxpayers alike.
What do you think is the solution to lowering the cost of workers’ compensation? Can prevention be effective, or are we doomed to shoulder the costs? Sound off in our comment section below and let us know what you think!