Wage Loss Monitoring for Injured Workers in California's Workers' Compensation System

2016–2017 Injury Year Findings (Third Interim Report)

by Stephanie Rennane, Nicholas Broten, Michael Dworsky

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Research Questions

  1. What are the trends in earnings losses for the average injured worker in California with injury dates from 2005 through 2017?
  2. What are the trends for workers with indemnity benefits?
  3. What are the trends for workers with permanent disability?
  4. How do differences in earnings loss levels and changes across subgroups of injuries compare?

The authors of this report present new estimates of wage loss for California's injured workers in 2016–2017 and compare these estimates with trends before, during, and after the Great Recession. They also analyze trends for key subgroups of interest in the workers' compensation system, including analyses by receipt of indemnity benefits, industry, type of injury, and geographic region. Finally, for the first time in this series of reports, the authors are able to analyze outcomes for a constant-maturity sample of workers with permanent disability, through injury dates in 2015; as a result, they present earnings losses for a constant-maturity sample of workers with permanent disability.

The authors find that overall wage losses have remained relatively constant through 2017 but are beginning to increase for workers most affected by workplace injury: workers with indemnity payments, cumulative trauma, and permanent disability. Still, the overall gains are modest, and relative earnings remain lower than they were in the years prior to the Great Recession, suggesting that injured workers have not yet experienced the full benefits of the economic expansion.

Key Findings

Earnings losses for injured workers stayed steady in 2016–2017

In the first year after their injury, workers injured in 2016–2017 earned 92 percent of what they would have earned if the injury had not taken place, which is similar to the findings for those injured in 2013–2015, both of which are down from the 95 percent first-year relative earnings for those injured in 2005.

Relative earnings for injured workers with indemnity benefits increased modestly

Relative earnings in the first year after injury for workers with indemnity payments increased by one percentage point, to 78 percent, for injured workers in 2016 and 2017 and increased by one percentage point, to 82 percent, in the second year after injury for 2016 injuries.

Relative earnings increased in Los Angeles but declined in the Bay Area

Relative earnings in the first year after injury increased in Los Angeles by 2.1 percentage points and declined in the Bay Area by 1.9 percentage points in 2016–2017.

Outcomes for overall cumulative injuries in Southern California improved

Workers with cumulative injuries in Southern California have significantly lower relative earnings than other injured workers in the state. However, relative earning for workers with cumulative injuries in Southern California increased by an average of 3.8 percentage points during the first year after injury for workers injured in 2016 and 2017 and increased by 2.7 percentage points during the second year after injury for workers injured in 2016.

There may be signs of improvement for workers with permanent disability

For workers with permanent disability, relative earnings in the second year after injury increased to 71 percentage point for workers injured in 2014 and 2015 from a low of 70 percent for workers injured in 2013.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Data and Methods for Wage Loss Monitoring

  • Chapter Three

    Labor Market Impacts of Workplace Injury: Trends Through 2017

  • Chapter Four

    Labor Market Impacts of Workplace Injury: Differences in Earnings Loss Across Groups of Injured Workers Through 2017

  • Chapter Five

    Conclusion

  • Appendix

    Methods and Supplementary Results

Research conducted by

The research described in this report was prepared for the State of California Department of Industrial Relations and conducted by the RAND Institute for Civil Justice (ICJ), part of the Justice Policy Program within RAND Social and Economic Well-Being.

This report is part of the RAND Corporation research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.