Workers' comp benefits, costs continue to decline as a share of payroll

Updated: Jun 24

Despite the five-year decline, the experiences of individual states vary considerably with the nation as a whole.


By Denny Jacob



Benefits as a share of payroll declined in 36 states, with the largest percentage decreases occurring in Michigan and Oklahoma where benefits as a share of payroll declined by over 10% in 2016.

Workers’ compensation benefits as a share of payroll declined in 2016, continuing a five-year trend, according to Workers’ Compensation: Benefits, Coverage, and Costs, a new report from the National Academy of Social Insurance.


Despite the growing economy and increased employment, the experiences of individual states vary considerably with the nation as a whole.


The disparity in workers’ comp

Nationally, workers’ compensation benefits fell to $0.83 per $100 in 2016 from $0.86 per $100 of covered payroll in 2015, a decrease of 3.5% and the lowest level since 1980.


Benefits as a share of payroll declined in 36 states, with the largest percentage decreases occurring in Michigan and Oklahoma where benefits as a share of payroll declined by over 10% in 2016. In contrast, 15 states experienced increases in workers’ compensation benefits as a share of payroll in 2016, with the largest percentage increases occurring in Wyoming and Iowa where benefits per $100 of payroll increased by more than 5%.


Workers’ compensation programs are administered by the states, without mandates or regulations from the federal government, so part of the variation in benefits as a share of payroll reflects differences among the state systems,” Marjorie Baldwin, professor at Arizona State University W.P. Carey School of Business and co-author of the report, said in a statement.


Related: Workers’ comp motor vehicle accident frequency on the rise


Other key findings

  • Workers’ compensation costs to employers fell for the third year in a row at the national level, from $1.33 per $100 of covered payroll in 2015 to $1.30 in 2016 — a decrease of 2.3%

  • More than two-thirds of states experienced an annual decline in employer costs as a share of payroll, and 14 jurisdictions had a decline of 5% or more.

  • The largest percentage decreases were in the District of Columbia (24%) and Texas (14.3%).

Workers’ Compensation: Benefits, Costs, and Coverage is the 21st in an annual series. The full report can be found on the National Academy of Social Insurance’s website.




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