Schwarzenegger’s Proposal To Raise Payments To Disabled Workers Falls Short: Benefits Woefully Inadequate

By Julius Young

Aides to Governor Schwarzenegger have recently announced proposals for a small increase in payments to permanently disabled workers. The proposed fix is inadequate and, even if implemented, will not replace the need for the legislative solution proposed by Senator Don Perata, SB 1717.

Since 2005, several studies have shown that permanent disability benefits have been reduced by over 60%. Overall , California comp insurers take between 60-70 cents out of each premium dollar for overhead and profit while workers medical benefits and monetary payments are somewhere between 30 -41 cents out of the dollar. System administration costs and carrier profits now truly dwarf the benefits for workers for which the system was designed. And permanent partial disability payments are only a small fraction of benefits paid out (medical treatment and temporary total disability payments being the larger payouts). Employer premiums have been reduced substantially, but reductions have not been passed along to employers to the degree that might have been expected.

Meanwhile, California workers are struggling. Since California does not have a wage loss workers comp law and prohibits workers from suing employers for on-the-job injuries, permanent disability payments are monies that help workers recoup earnings losses and compensate for pain and suffering.

California currently lags far behind most states in many disability categories. According to U.S. Chamber of Commerce statistics, the national average for loss of an eye is $74,558. In California it’s $17,714. This would rise under Schwarzenegger’s proposal to around $20,000, still far under the national average.

For total hearing loss in one ear, the national average is $30,655. California pays only $5,280. The governor’s plan would raise this only by a small amount.

Loss of a leg at the hip? The national average is $114,522. California pays only $61,435, the 6th lowest in the nation.

Loss of a toe? The national average (according to U.S. Chamber of Commerce stats) is $4,974. But in California the payout is $660. Under the governor’s plan the payout would still be lowest in the nation, less than a quarter of the national average.

How about loss of a finger? The national average is $21,621. California’s average is $8,415.

Workers who have permanent partial disabilities receive awards based on the extent of their disability. In 2004 California adopted a more stringent method of assessing impairment, based on American Medical Association standards.

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