Workers' Comp Reform is Step 1 for N.Y. Toward Economic Peak

Saturday, March 24, 2007 | 0

By Joseph D. Morelle

For decades, it's been undeniable that New York's workers' compensation system is among the worst in the nation. Costly to employers, meager in its benefits to injured workers, it has been one of the primary obstacles to new job growth in our state.

Last week's agreement in principle on compensation reform between Gov. Spitzer, the state Legislature, and business and labor leaders is the culmination of years of debate and discussion. I'm proud to have been one of the leaders in this effort. I also want to commend the many advocacy groups, such as Unshackle Upstate, who have fought tirelessly for an overhaul of the workers' compensation system.

With state Sen. Jim Alesi, I sponsored a bill last year that provided a basis for many of the elements of last week's compromise, which will save taxpayers and employers hundreds of millions of dollars while improving employee benefits through the following changes:

* A new maximum of 10 years during which claimants with "permanent partial disabilities" may receive cash benefits, instead of the lifetime payouts the current system mandates.

* New programs to provide medical care in a timely manner while helping workers find new and gainful employment.

* Stepped-up anti-fraud measures, including a crackdown on employers who fail to buy workers' compensation insurance for their employees.

* Increases over four years in the maximum weekly benefits for injured workers from the current $400 to $600 in Year 3 and, in the fourth year and beyond, to an indexed figure equal to two-thirds of the average weekly wage earned in New York, which at current calculation is approximately $700.

The net effect of these changes will be a reduction of employee premiums by as much as 15 percent.

It is hard to overstate the importance of this reform to the future of New York's economy. In my report, "Creating a State of Innovation: Unleashing the Power of New York's Entrepreneurial Economy," I detailed the job-killing effect of burdensome regulation and outmoded benefit models such as workers' compensation. At the time the report was published, the average compensation case in New York cost more than $11,000  the third highest in the nation, with benefits ranking among the very lowest.

Wherever I travel in New York to discuss my findings, the lament is the same: Workers' compensation is strangling our economy. Certainly, it is among the reasons New York, particularly upstate, slumbered while much of the nation prospered, to paraphrase Gov. Spitzer's inaugural address.

Still ahead is a need for greater cost reduction in business liability, energy costs and taxation. More, too, must be done to promote innovation, entrepreneurship and work force development, as well as benchmarking and accountability to ensure that state economic policies are working as intended.

The agreement on workers' compensation proves that change is possible and that, indeed, change is at hand for New York. I look forward to taking the next steps with the governor, my colleagues in the Legislature and all those in the private sector whose goal is the same as mine: a return to prosperity for the Empire State.

Joseph D. Morelle, D-Irondequoit, represents the 132nd District in the state Assembly. This column first appeared in the Rochestor Democrat and Chronicle on March 7.

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