Yesterday the Department of Labor and Industries proposed reducing average workers’ compensation premiums for 2020 by 0.8 percent. If adopted, the average rate decrease will be the third decrease in a row. (From 2008 through 2017, the average rate increased each year.)

According to L&I,

The price drop would result in employers paying an average of about $15 less a year per employee for workers’ compensation coverage. Employees would see a very small increase in the amount they pay because of a rise in costs related to the supplemental pension fund, due to an increase in the average wage in Washington.

It doesn’t really make sense to separate the impacts for employers versus employees. As we have pointed out (see page 2), while statute indicates that employees in Washington bear a portion of the premiums, employers are not actually required to deduct any portion from employee paychecks (and they don’t always). Further, economists assume that statutory employer shares of payroll taxes are effectively borne by employees.

The statutory incidence of these premiums is immaterial. Instead, it is important to consider the cost of the system as a whole: Washington’s workers’ compensation costs are high compared to other states.