Washington farmers fight Worker’s Compensation rate change

Washington Farm Bureau Comments on Proposed 2011 Workers’ Compensation Rates Dear Director Schurke:
By Washington Farm Bureau
Comments:  On behalf of farmers and ranchers across Washington state and our more than 40,000 member families, I would like to thank you for the opportunity to submit comments regarding the proposed increase in industrial insurance rates for 2011.

As you know, Washington Farm Bureau has for decades educated our members on responsible workplace safety standards as part of our Retro/Safety program. We take seriously our endeavors to keep agricultural workplaces as safe as possible, so that workers remain healthy and premiums remain low for employers.

We believe this hard work has paid off insofar as agriculture is expected to see only an average 7 percent increase, as opposed to the average 12 percent increase for all businesses or the indicated rate of nearly 18 percent.

However, a 7 percent increase still hits our industry very hard at a time when profit margins are thin. Because of national and international competition, our growers cannot demand more money from the sale of their commodities. Our producers are forced to pay higher workers’ comp premiums – and other government-mandated labor-related increases such as unemployment insurance taxes and higher wages – out of their own bottom lines. As this trend continues, our farms will be less profitable, and thus less competitive than farmers in nearby states.

Just yesterday I spoke to a mid-size apple grower who will end up paying an additional $14,000 in workers’ comp premiums in 2011, along with an equal amount for UI premiums. These amounts were calculated before he took into account an additional $40,000 that he will have to pay due to the 2011 minimum wage increase. If he wants to run the same operation this year as he ran last year, he will be starting out $68,000 in the hole. This means fewer workers, less yield, or sheer hope that apples will be more valuable this fall than they have been for the past three years in which he has either broken even or lost money.

If Washington state values the $38 billion dollars that the ag and food industry means to our state’s economy and wants to see our industry help provide local sources of food and exports to help our economy rebound, we must figure out ways for our state-sponsored workers’ comp program to provide adequate coverage without squeezing employers more.

We have concerns about the way the Department has managed the workers’ comp system in recent years, and we feel that these shortcomings will soon gravely and negatively affect employers and workers. The system is reaching a breaking point, with insolvency either here now or just right around the corner – as the state auditor’s recent report by Deloitte clearly showed. To ensure the long-term solvency of this public system, we need bold, comprehensive reforms without pulling more money from the businesses that are trying to provide jobs and keep the economy alive.

We understand that the Department has been working on some solutions with representatives from various groups, and we believe that some progress can be made there. However, given the insolvency or near-insolvency of some of the workers’ comp funds, we believe that reforms must be enacted immediately. These can include improvements to the claims management process, some form of negotiated settlements, and finding alternative funding sources to programs at the Department that are funded out of workers’ comp monies but that are not directly related to the workers’ comp system.

Washington Farm Bureau will keep working to make these necessary changes to rein in the unwarranted costs of our current workers’ comp system, and we stand ready to work with the Department and others whenever we can find common ground on reform proposals. But we have to take these steps now, because our employers cannot bear the additional costs required of them for 2011 – much less double-digit increases in future years.

Sincerely, Scott Dilley Public Policy Analyst

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