Monday, September 28, 2015

A Sharp Point

There's a big debate going on in the United States, and workers' compensation, as it is with many bigger issues, is a microcosm of what ails society: the gulf between the haves and the have-nots; i.e. wealth distribution.

Minimum wage, living wage, tax reform, health and medicine - you name the financial topic and arguments break out about the widening gulf between the poor and the wealthy to such an extent that many are saying that the middle class is in jeopardy of being marginalized, if not out right extinguished.

Charles Moore, in the Saturday Essay of the Wall Street Journal, opines that the middle class is trending towards a "have-less", though not quite yet a "have-not", status.

"When things go backward in nations accustomed to middle-class stability, people start to ask questions," Moore writes. "What is the use of capitalism if its rewards go to the few and its risks are dumped on the many? The rights of property do not seem so enticing if the value of what you own collapses or if that property is trapped by debt. What is so great about globalization if it means that the products and services you offer are undercut by foreign competition and that millions of new people can come to your country, take your jobs and enjoy your welfare benefits?"

And we have started in the past decade to ask these same type of questions about workers' compensation.

What is so great about a no fault system of injury protection when you have to go to court to prove that an injury was not your fault (co-morbidities, psychological status, drug or alcohol use, cancer, etc.)?

What is so great about spreading the risk when the cost of spreading that risk causes business to question the value of such?

"The owner of capital decides where money goes, whereas the people who sell only their labor lack that power, " observes Moore. "This makes it hard for society to be shaped in their interests. In recent years, that disproportion has reached destructive levels, so if we don’t want to be a Marxist society, we need to put it right."

As recent studies and publications have explored, there is great disproportion between states as to benefits in workers' compensation.

But more than that, there is good evidence that there has been an increasing disproportion between wages, maximum benefit levels and the financial destruction to a wage earner's future.

Workers' compensation has been around for over 100 years in the United States. And since 1948, every state and federal agency has had a workers' compensation system. Other than in Texas, work comp is compulsory, and essentially has become a "right" unto The People. In fact, most states have workers' compensation embedded into their state constitutions.

Each state controls their own work comp system. They make it, tweak it, and regulate it based on the local social norms, which is why some states are more expensive than others, and why some states are less expensive than others. And why some states provide more benefits than other states, and some are more or less efficient than others.

Workers' compensation has essentially become a "states rights" program - just mention federalization of workers' compensation and you will see the passion flow, and more often than not a "hell no!" exclamation from the vast majority.

Here's the friction: workers' compensation is a right unto The People. That right has evolved over 100 years. Even in Texas, when workers' compensation is invoked, it is not just a benefit, but a right - the worker hurt doing his job is ENTITLED to compensation. In fact, work comp is much more of a right unto the people than even health care...

And when I say "compensation" in this context, I'm not just talking about indemnity, but also provision of medical benefits.

Disparity in compensation among the states has drawn public attention. And when enough public attention gets drawn to an issue that affects a big proportion of the population, government takes notice.

What DOES matter is the widening gap between have, and have not. Class divide. Socio-economic disparity.

When socio-economic disparity reaches intolerable levels, revolution occurs.

Throughout history, when the divide between the rich and the poor got too large, either the government took steps to redistribute the wealth or there was revolution and 'blood in the streets'. If you don't believe that you might want to check with Tsar Nicholas, Louis XVI, or Marie Antoinette.

The Federal Government made a massive wealth grab in 1913 with Income Taxes, going off the gold reserve, and setting up the Federal Reserve Board of Governors. Most of that was done under the influence of Teddy Roosevelt (who is also credited as a leading progenitor of work comp). In 1935, Congress passed the Social Security Act under Franklin Roosevelt. The Social Security Act of 1965 established Medicare and Medicaid under Lyndon Johnson with his Great Society and War on Poverty. They were all government controlled wealth transfers - from the rich to the poor.

"Labor is prior to and independent of capital," wrote Abraham Lincoln. "Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." Abraham Lincoln wasn't against slavery simply because it was a human rights abuse so much as it was unfair competition...

Yet, in workers' compensation it's capital that comes first. Those that influence and make our workers' compensation laws have forgotten that without labor, workers' compensation would not be needed at all.

So, will the federal government step in and take over work comp, federalizing a states' rights program?

I don't see it, at least not in our current political environment. Good luck getting four people in Congress to vote for that. Right now Congress is so dysfunctional that their only aim is to make sure that whatever the other party wants to do, gets defeated - even if it is a bill to 'Pull Grandma out from under the bus.' It's not one-sided; the Democrats and Republicans share the blame equally. And no Senator or Representative will ever vote for legislation that curbs States Rights.

But the United States Supreme Court has no problem dictating States Rights. And it has weighed in on workers' compensation before, addressing its constitutionality, and they can do it again.

The Commerce Clause of the United States Constitution (Article I, Section 8, Clause 3) gives Congress, and by extension, the Supreme Court, basically full rein to do whatever they want.

The 14th Amendment (Equal Protection under The Law) puts the nail in the coffin. That gives the Supreme Court nearly unfettered power to legislate from the bench. And the Supreme Court has no problem doing so, its recent rulings on same sex marriage and the Affordable Care Act being the most current examples.

So, it is not a stretch of the imagination to see the Supreme Court invoke the Commerce Clause and the 14th Amendment to enforce a system where everyone gets equal access to work comp with equal benefits. Such action will be provoked by a sensitivity that there is an unacceptable declination in the Middle Class, that the gulf between haves, and have-nots, is too wide, as exemplified by the great disparity in benefits between states given the same or similarly situated injured worker.

Workers' compensation tends to live in its own shell, but we tend to forget that it is a microcosm of society - what happens in work comp is happening in the rest of the world. Work comp is just a focal point.

Albeit, a sharp point.


  1. “Capital is reckless of the health or length of life of the laborer, unless under compulsion from society.”

    Karl Marx

  2. Also, in industrialized societies, when the middle class is threatened they seek out a strong leader. If you don't believe me, just ask that paperhanger from Vienna with the Charlie Chaplin mustache how he came to power.