By Denis Hughes, New York State AFL-CIO president
Buffalo News
November 22, 2005

A recent proposal by Gov. George E. Pataki regarding the workers' compensation crisis has garnered much attention. While details of the proposal must be scrutinized for their short- and long-term impact on injured workers, contrary to public belief, the New York State AFL-CIO welcomes the opportunity to fully and openly discuss this most urgent matter.

As in all public policy and legislative proposals, the devil is in the details. However, the labor movement is pleased that a reasonable and intelligent discussion may finally take place concerning a system that has long shunned the needs and interests of injured workers in this state.

Much of the initial media coverage, particularly in Western New York, surrounding this proposal centered on how it could possibly assist Delphi in its time of financial need. However, the State Constitution clearly states that you cannot reduce legislated benefits, pensions being a prime example. Therefore, any savings Delphi would realize as a result of this proposal would apply only to future workers' compensation claims.

It should also be noted that Delphi is self-insured, meaning it is responsible for its own workers' compensation rates. The problem it has is the high cost of its surety bond, which covers the cost of all previous and anticipated workers' compensation awards. A smarter approach may be to get all regional self-insured companies to create a mechanism that allows them to invest in a joint, low-cost bond where they can share these costs.

As for the current system, the last increase in benefits for injured workers was signed into law 14 years ago in January. Since 1992, all changes to the workers' compensation system have been made to reduce costs and/or liability to employers. While the state AFL-CIO strongly supports reduced costs for employers, shouldn't some contingencies have been made to raise benefit levels in that time?

And why is it that the business community has not fought against proposed premium increases? Twice in the past two years, the state AFL-CIO has presented testimony to the New York State Insurance Rating Board urging it to forgo premium increases on employers. This is documented. Yet the Business Council did not send a representative to oppose premium increases for its constituents.

Here's the million-dollar question: If employer premiums continue to be stifling, as employers contend and which no one denies, and injured worker benefits have not been raised in 14 years, where is all the money going? Everyone seems to be ignoring the proverbial elephant in the room - the insurance industry.

In 2003, the most recent year for which data was available, New York insurance carrier profit for workers' compensation was 9.9 percent. The national average was 6.6 percent. Shouldn't insurance carriers have to answer for that?

The state AFL-CIO hopes that a comprehensive discussion between business and labor takes place as a result of the governor's recent proposal. Injured workers and their employers deserve no less.


Denis Hughes is president of the state AFL-CIO, representing 2 million union members in New York State.