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Morgan Hill
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December 2, 2021

Workers’ comp insurance rate increases are forcing firms out of the state

EDITOR: The skyrocketing cost of workers
’ compensation insurance is shaping up to single biggest
obstacle to economic recovery in California. With businessmen and
women facing double-digit and triple-digit increases in their
insurance costs, this crisis is posing a direct threat not only to
their bottom line – it’s threatening the j
obs of the men and women they employ.
EDITOR:

The skyrocketing cost of workers’ compensation insurance is shaping up to single biggest obstacle to economic recovery in California. With businessmen and women facing double-digit and triple-digit increases in their insurance costs, this crisis is posing a direct threat not only to their bottom line – it’s threatening the jobs of the men and women they employ.

In recent weeks, Senate Republicans have heard from hundreds of businesses – both for-profit and non-profit – across the state on the workers’ compensation crisis how they’re being forced to respond. What follows are some of their verbatim responses:

The owner of a sheet metal works plant in San Diego County, whose rates have soared from $260,000 to $674,000 in one year: “We will have to generate $2 to $4 million increase in revenue to cover these costs.”

A member of the California Landscape Contractors Association, whose insurance costs has risen to more than $36,000 for a company that does just over $600,000 in gross business last year: “I can only pray that somehow I will be able to survive after being in business for over 13 years.”

• The owner of a Monterrey engineering company: “Our workers’ compensation went up more than 70 percent and wiped out our bottom line. Last August we employed 130 employees. We are now down to barely 100.”’

• The chief financial officer of a construction firm in Marysville: “We are seriously considering moving this operation out of state because of workers’ compensation increases. We will not be able to take another 62 percent increase next year!”

• A non-profit firm in Lakeport that provides services to the developmentally disabled: “Along with having to decrease the employee health package, we have also had merit freezes and rate reductions …”

• The owner of a apparel company in Tustin who has been in business for 35 years: “I have never seen workers’ compensation (costs) this bad. We are the last people to manufacture our product in California in our industry. If something is not done immediately, we will be forced to eliminate 350 jobs and take our business overseas.”

• A dried fruit manufacturer in Southern California employing 125 workers: “We will either move or shut down this year if no workers’ compensation reform occurs. Our annual premium increased from $50,000 to $313,000. The best economic development program Utah, Arizona, Nevada and Oregon have is California’s workers’ compensation.”

• A computer-related small businesses in San Francisco: “We have never had a single worker’s comp claim to date and still experienced 50 to 75 percent increase over the last three or four years. This has created a huge problem for small businesses like ours at a time when the economy is so bad that we are not able to increase our rates, which leaves us with no alternative that pass on the cost to employees by freezing salaries and terminating employer matching 401k contributions …”

In response to the concerns and recommendations from these job creators, Senate Republican Caucus has developed a workers’ compensation legislative reform package of more than a dozen bills.

Larry Venus, Communications Division

Senate Republican Caucus, Sacramento

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