U.S. Job Growth Expected to Spike Workers' Comp Claims
Employers will likely face an increase in workers’ compensation claims in light of the U.S. Labor Department’s May 2024 report indicating the country added 272,000 new jobs.
“New employees not only equal more workers’ comp premiums, they are significantly more likely to incur a claim,” Joe Paduda, owner of Health Strategy Associates, said in an interview with PropertyCasualty360.com. “Jobs in health care and construction are at the highest risk.”
He added that the workers’ comp insurance market has been extremely profitable for decades, leading to even more downward pressure on premiums as insurers fight for market share. “Meanwhile, wages have grown dramatically the last year and should significantly increase workers’ comp premiums, but the declining rates will mitigate portions of a potential increase,” Paduda said.
According to a recent study from the National Council on Compensation Insurance (NCCI), the job growth in May was broad-based, with 12 out of 14 industry groups adding to the total. At the same time, payroll growth remained strong and above the pre-pandemic average.
“Strong employment gains, coupled with strong wage gains, will continue to support payroll growth in workers’ compensation,” NCCI Executive Director and Senior Economist Stephen Cooper told PropertyCasualty360.com.
“The latest jobs report showed that the labor market remains strong even as labor supply and demand move towards a more balanced state,” Cooper concluded.
The U.S. Bureau of Labor Statistics reported Friday that U.S. employment continued to trend upward in May led by health care, government, leisure and hospitality, professional, scientific, and technical services.
Despite the bump in May’s job growth, the report also showed both the unemployment rate and number of unemployed people were little changed year over year, remaining near 4% and 6.6 million respectively.
The jobless rate was at 3.7% this time last year, while the number of unemployed people reached 6.1 million.
“Employment gains were stronger than many experts projected, but most of them didn’t know what to expect,” said Clemson University Economist Bruce Yandle.
“Looking closer, we see a significant reshuffling of economic activities,” Yandle said. “There was hardly any gain in the goods producing sectors, and overall, we know that higher income people are enjoying their gains, while lower income folks are still struggling to offset the rising cost of living, especially with credit card debt and required auto and home insurance costs on the rise.”
Article Published By: PropertyCasualty360.com
Article Written By: Joe Toppe
