As Dick noted on Wednesday, his column this week “debunks the charge that [business climate ranking] studies are bunk.” He also linked to the Washington Roundtable’s Benchmarks for a Better Washington, which look at how Washington does (compared to other states) on measures of innovation, quality of life, and business costs.

Today, David Groves of the Washington State Labor Council writes in The Stand, “No, their benchmarks aren’t necessarily bunk, but they should be taken with a grain of salt.” He specifically points to workers’ compensation benefits and questions their inclusion, as opposed to a cost measure.

Washington has the highest workers’ compensation benefits paid in the country. Unfortunately, good apples-to-apples system cost comparisons are not available. The Oregon Department of Consumer and Business Services ranks premium rates among the states, but, as we have written extensively, it is not a good measure of Washington’s workers’ comp system costs. (It is tailored to Oregon’s industry mix; Washington’s rates have to be converted from hourly to payroll; Washington has many more self-insured employers than Oregon, whose costs are not included.)

Groves writes,

Washington has very competitive workers’ compensation costs for employers. The latest Oregon Department of Consumer and Business Services study ranks us 22nd among the states in terms of employer costs.

Actually, according to the latest Oregon study, Washington’s premium rates were the 13th highest in 2012 — a big increase from our rank of 26th highest in 2010 and 38th highest in 2008. (And that increase comes even as the Department of Labor and Industries has been keeping premium rates artificially low.)

Where does the 22nd highest premiums number come from? It’s a back-of-the-envelope calculation that attempts to remove the amount that is the statutory employee portion of the premium rate (23 percent in 2012) and add in the supplemental pension fund (both of which are unique to Washington).

Doing so downplays the costs of the system (as measured by the Oregon study) and ignores the likelihood that the employee portion is factored into compensation or included in collective bargaining agreements. Take, for example, the July 1, 2011 through June 30, 2013 collective bargaining agreement between Washington and SEIU Healthcare 775NW (emphasis added):

To the maximum extent permissible by law, the home care worker premium share for worker’s compensation insurance shall be paid by the Employer. The Employer may, in its sole discretion, seek a statutory change or a change in rule to accomplish this objective. If applicable laws or rules prevent the Employer from paying the premium share at any time during the life of this Agreement, or if the Employer believes in good faith that the applicable laws and rules prevent the Employer from paying the home care workers’ premium share during the life of this Agreement and the Employer chooses not to exercise its discretion to seek a statutory or rule change, the Employer shall adjust each step of the wage scale established under Article 9, Compensation of this Agreement upward by an amount equivalent to the home care worker premium share for worker’s compensation insurance.

Given the peculiarities of Washington’s system, benefits paid is the best metric for comparison. And, as the National Academy of Social Insurance says, “several studies . . . demonstrate that the level of statutory benefits is a major determinant of the costs of workers’ compensation in a state.”