Work injury has fundamentally changed since the Disability Management Employer Coalition (DMEC) was founded in 1992 and in a direction that confirms the organization’s vision—to be a leader in “absence and disability solutions that enhance workforce health and productivity.”
The phrase implies, correctly, that health and productivity improve from the creation of many solutions to the myriad workforce risks. Marcia Carruthers, one of the association’s founders and now chairman, has told me that at the outset, the organization’s founders had in mind an integration of health benefits and work-related disability benefits.
The most recalcitrant barrier to integrated injury prevention, absence, and disability practices is the state-based system of Workers’ Compensation. Many DMEC members and some vendors have contrived some degree of integration in practice. But not a single state has even shown an interest in explicitly coordinating work injury benefits with other absence benefits. The barrier to graceful harmonization appears as immovable now as ever. State legislators and many Workers’ Compensation professionals remain mental prisoners of the idea that work injury risk is by nature unique among worker risks.
Yet for some time, and more notably during the lifetime of DMEC, the historical foundation of the traditional Workers’ Compensation system has been eroding into collapse. Economic, social, and political forces have been laying a new foundation for work injury protections, one shared with other work absence protections and more suited to workers’ concerns.
The shape of a new work injury benefit’s legal edifice is not yet clear to me. It might have a federalized context, evolving in an unplanned way and suggested by the Texas and Oklahoma opt-out programs. 1
A Thumbnail History Lesson
Toward the last decades of the 20th Century and into the 21st, profound change occurred in the demographics of work injury risk. And the pace of change has been accelerating.
The Workers’ Compensation system arrived in the 1910s, several decades after industry eclipsed farming, not in employment numbers, but in share of national economic output. Industrial workers, overwhelmingly male notwithstanding the mostly female victim profile of the 1911 Triangle Shirtwaist fire, gradually won, through often-violent struggle, protections and benefits that seemed provocative at the time but later become ingrained in popular expectations. They included child labor laws, the obligation of the employer to pay for workplace tools, and standardized hours of work. The Workers’ Compensation system was expressly designed for a male industrial workforce engaged in full-time, lifetime work in which injury risk was high, with injuries serious and potentially career-ending, if not fatal.
Shift attention to the 1960s. The service sector over the previous hundred-plus years had remained roughly equal to industry in its share of national output, but had crept higher since the 1920s. In the 1960s took off at the expense of industry in output. Employment in services began an unrelenting climb, going from 55% to 85% of total employment.2 Women flooded into new service jobs.3 The leading demographic of the times was women, who obtained ever-higher formal education achievement and were often in the role of “PROP”s—people responsible for other people. The share of married mothers who worked rose from 39% in 1968 to 66% in 1989.4
The Big Fade in Work Injuries
The service sector is inherently work injury–safer than the industrial sector, with some important exceptions, such as patient care. For example, the standard workers’ compensation cost per hundred dollars payroll in Illinois today is $6.65 for automobile manufacturing but only 21 cents for a clerk. Women today face half the rate of work injuries as do men, which is largely due to their working mostly in either a service organization or in the service part of an industrial company.5
Meanwhile, the threat of a life time income–ending industrial work injury for men dropped significantly. That became especially evident just before the time of DMEC’s founding in 1992. The frequency of lost-time injuries declined by two thirds in manufacturing between 1994 to 2012. The risk of a time lost injury in manufacturing today is about the same as in the service sector. Manufacturing employment, 70% of which was male, dropped by about a third.6
In sum, work injury demographics essentially flipped due to job safety improvements and very large workforce shifts, and the traditional male, high risk image evaporated. In 1994, for every ten manufacturing work injuries involving at least one day’s lost time, there were eight such service sector injuries. By 2012, for every ten service sector lost-time injuries, there were two manufacturing injuries.
The scope and nature of legally protected work absence is radically different from a century ago. Work injuries would meld into a larger deck of absences if only law and employers would allow it. With the currently prevailing lost-time injury rate of about 1% (for both manufacturing and service sectors), work injuries are today a minor share of protected absences.
According to a survey by the Integrated Benefits Institute, the incidence rate of Family and Medical Leave Act (FMLA) leaves is about 5%; that is, five times the rate of lost- time work injuries.7 About 60% of these are for the employee’s own health conditions. They are followed by leaves for the birth or adoption of a child, which are followed by leaves caused by the health condition of family member. The IBI survey found that the incidence rates of short-term disability claims, among workforces covered by a corporate short-term disability policy, is about 3% a year. Long-term disability claims incidence was only about 0.2%.
In sum, work injury risk has changed from career destruction (or death) for men to one among several protected absence risks shared by both men and women. I have called this phenomenon The Big Fade, as work injuries as a class fade into the fabric of common life and it is no longer useful to worker or employer to consider them as needing isolated protection.
Women in the Ranks
These trends strike me as distinctly female-centric. That is not simply because more FMLA claims are made by women than by men. 8 It’s also because the working female demographic drove the creation of FMLA, to help mitigate workers against myriad absence risks that often involve caring for other people or giving birth. And it’s also because women are gaining ever more influence over workforce policy in corporations and the public square and will include in the world of the worker their personal trials and expectations.9
To be sure, men outnumber women in the workforce, and boardrooms remain male domains to a large degree. But since 2004, the percentage of working women who had four years’ college education grew by 30% vs. 17% for men.10 Undoubtedly, the glass ceiling remains, and women’s career dilemmas are more severe. The participation of married mothers in the workforce has recently declined. This might be a rationale for even better absence protections. One example is the FAMILY Act, which would create a paid family and medical leave insurance program.11
DMEC: Making the Future Work
Law changes and employer practices might create a workplace climate in which an employee claiming an absence benefit does not very much care on what grounds the absence is needed because, occupational or not, the core policies and processes are uniform for all protected absences. DMEC has had a leadership role in teasing out and testing the operational design of such a system, well before the system can be legally created and enforced. It has nurtured a very large cohort of professionals to make the future work.
Employers in Texas and, since early in 2014, in Oklahoma, that opt out have the legal freedom to create such a uniform, or integrated, context for absence management. Opt-out legislation allows an employer to exit the state Workers’ Compensation system. The normal practice of these employers, such as Marriott, Safeway, and Walmart, is to create a work injury benefit system that meets the definition of an ERISA plan under federal law.1 In Oklahoma, injury benefits must by law be at least equal to statutory benefits.12
I have tried to find employers in Texas that had opted out and merged their occupational and non-occupational absence plans together, but I found none. The formal arrangement would be an ERISA plan in which is lodged work injury benefits, sick leave, STD, LTD and FMLA management in ways that meet ERISA and FMLA standards.
The other day I discussed the theme of this article with a New York City–based corporate risk manager, Paul Stasz. He compared the labor protections that came before the passage of Workers’ Compensation laws with FMLA and envelope-expanding proposals such as the FAMILY Act and others by the National Coalition for Women and Families. He predicted that before long, these kinds of protections will be ingrained in popular expectations. He speculated that FMLA and ADA might serve as a path for the federalization of Workers’ Compensation, through a back door.
The original foundation for Workers’ Compensation has collapsed. DMEC members and friends have, in effect, been building upon a new foundation.
Peter Rousmaniere is a journalist and consultant in the field of risk management, with a special focus on work injury risk. He writes primarily for WorkCompCentral and lives in Woodstock, Vermont.
The statements and opinions expressed herein are those of the individual author and do not necessarily represent the views of the association, its staff, board of directors or its editors.
1 Newstreet Group. Workers’ Compensation Opt-Out: Can Privatization Work? 2012.
2 Johnson L. History lessons: Understanding the decline in manufacturing. MINNPOST February 22, 2012. Published online.
3 Cartwright B et al, Job and industry gender segregation: NAICS categories and EEO–1 job groups. Monthly Labor Review, November 2011. Autor D et al. The growth of low-skill service jobs and the polarization of the U.S. labor market. American Economic Review. 2013, 103(5): 1553–1597
4 Chinhui J et al. Changes in labor force participation in the United States. J Econ Perspect 2006 20 (3): 27-46
5 Smith G et al. Injuries at work in the US adult population: contributions to the total injury burden. Am J Public Health. 2005 July; 95(7): 1213–1219.
6 Injury rates found in annual Bureau of Labor Statistics reports
7 Integrated Benefits Institute. Early Warnings: Using FMLA to Understand and Manage Disability Absence. February 2013
8 National Partnership for Women and Families. A Look at the U.S. Department of Labor’s 2012 Family and Medical Leave Act Employee and Worksite Surveys. February 2013.
9 For selected data on education and work by gender over time, go to http://www.census.gov/newsroom/pdf/women_workforce_slides.pdf
12 Newstreet Group. Workers’ Compensation Deregulation Alert: What Employers Need to Know about the New Oklahoma Law. May 2013.