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The workers’ compensation system is broken — and it’s driving people into poverty

Fewer people are getting injured on the job, but the financial consequences are dire for those who do.

There’s a good news/bad news situation for occupational injuries in the United States: Fewer people are getting hurt on the job. But those who do are getting less help.

That’s according to a couple of important new reports out Wednesday on how the system for cleaning up workplace accidents is broken -- both because of the changing circumstances of the people who are getting injured, and the disintegration of programs that are supposed to pay for them.

The first comes from the Department of Labor, which aims to tie the 3 million workplace injuries reported per year -- the number is actually much higher, because many workers fear raising the issue with their employers -- into the ongoing national conversation about inequality. In an overview of research on the topic, the agency finds that low-wage workers (especially Latinos) have disproportionately high injury rates, and that injuries can slice 15 percent off a person’s earnings over 10 years after the accident.

“Income inequality is a very active conversation led by the White House,” David Michaels, assistant secretary of labor for occupational safety and health, said in an interview. “Injuries are knocking many families out of the middle class, and block many low-wage workers from getting out of poverty. So we think it’s an important component of this conversation.”

There are two main components to the financial implications of a workplace injury. The first is the legal status of the people getting injured. A staggering number of workers in the construction industry are misclassified as independent contractors, which means they’re not entitled to workers' compensation payments. Also, more of them are employees of temporary staffing agencies, who tend to be less well-trained and less likely to report their injuries. Businesses will often contract out their most dangerous work, which allows them to keep their own workers' compensation premiums to a minimum.

The second component is the degradation of workers' compensation programs themselves. That issue is addressed by the second report out Wednesday, from ProPublica and NPR, which looks at how employers have lobbied states to get out of paying as much as they used to in workers' compensation, leaving injured workers with inadequate treatment.

“The cutbacks have been so drastic in some places that they virtually guarantee injured workers will plummet into poverty,” write authors Michael Grabell and Howard Berkes. “Workers often battle insurance companies for years to get the surgeries, prescriptions and basic help their doctors recommend.”

Since 2003, the investigation found, 33 states have weakened their workers' compensation regulations, scaling back the procedures that will be covered and the duration for which benefits are offered. In addition, while businesses often push for reforms on the grounds that workers' compensation costs are out of control, data shows that premiums are lower than they’ve been at any point since the early 1990s.

Somebody ends up paying for those injuries, though: taxpayers. When a worker ends up unable to work because of an injury, he or she can be covered by Social Security Disability Insurance, a program that has steadily increased in cost over the past two decades. The rise has many demographic factors behind it, but it looks like the abdication of responsibility by employers may have played a role as well.

The Department of Labor has tried to tackle the misclassification problem -- which contributes to unsafe workplaces, and prevents those who are injured from getting help -- by aggressively pursuing employers abusing the system. But there’s not much they can do about the decline in workers' compensation coverage. That’s something states are going to address themselves -- over employers’ strong objections.