WCRI Prior Recession Report – The COVID-19 Economic Recovery

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WCRI Prior Recession Report Shadows The COVID Economic Situation

WCRI Prior Recession Report and COVID comparison 

NCCI COVID-19 WCRI Recession Report
Public Use License – See prior graphic

Dr. Savych has published many reports on the post-return-to-work attitudes of injured employees. 

I received this email today from WCRI.  The report may be worth a look.   WCRI also offers a free medical pricing report that will pop up when you go to their website. 

At the same time, these measures are expected to be of limited duration and the economy may rebound quickly after the restrictions are lifted. Longer-term unemployment may be limited due to the possible quick turnaround, though this observation is tempered by the possibility that the temporary closures will remain permanent for some businesses. So, the results of the WCRI study summarized below, while instructive, hopefully, will have limited applicability to the current situation.

Recession, Fear of Job Loss, and Return to Work – The study is located here. 

The study identifies two different channels of the impact of a recession on return to work of those injured at work:
• Direct effect: Workers seeking to return to work might find that job opportunities are scarcer and that return to work is delayed.
• Indirect effect: Workers may fear job loss if they do not return to work, so they may try to hasten that return to work.

The study used WCRI’s Worker Outcomes Surveys prior to the Great Recession to evaluate how variations in the local unemployment rate affect return to work of those injured at work through the two channels identified above. The workers in these surveys were out of work due to injury for more than 7 days, a group more likely to feel the impact of a recession on return to work. The study asked what would be the impact on longer-term unemployment of doubling the unemployment rate from 5 to 10 percent. Longer-term unemployment is defined as not returning to work within 2.5 years after injury.

The study showed:

Vector wcri prior recession report Growth graph
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• Direct effect:   Doubling the unemployment rate increases the percentage of injured workers experiencing longer-term unemployment from 14.7 percent to 18.7 percent due to lack of available job opportunities.

• Indirect effect:   At the same time, doubling the unemployment rate increased the percentage of workers fearing job loss when injured from 35.5 percent to 51.3 percent. This increased fear of job loss resulted in an increase in the percentage of injured workers avoiding long-term job loss of 1.6 percentage points. This offsets the direct effect of the unemployment rate increase.

The net effect of an increase in the unemployment rate from 5 to 10 percent is to increase longer-term unemployment from 14.7 percent to 17.1 percent, or 16 percent.

The study also considers other scenarios where the impact of a recession on the fear of job loss and resulting worker response is even greater than measured in the data (perhaps because the data were collected prior to the Great Recession). In these scenarios, the probability of longer-term unemployment increases to a lesser extent than the net effect described above.

Usefulness

business strategy wcri prior recession report transparent board
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The report may be useful to those who are trying to predict the impact of the current recession on return-to-work interventions and outcomes, as well as on workers’ compensation claims and costs—especially for income benefits. It may also be relevant for predicting the impact of an economic recovery. As the economy strengthens and the unemployment rate falls, there will be more job opportunities, less fear of job loss, and perhaps less aggressive efforts by injured workers to seek reemployment.

Key findings:

Workers who are afraid of being fired are less likely to become longer-term unemployed after an injury. These workers may be more aggressive in seeking return-to-work opportunities, making an extra effort to return to work earlier or to take steps to increase their chances that their job will exist after return to work.
Injured workers in areas with unemployment rates that are rising or that are higher than normal for the area are more likely to fear losing their jobs. The greater the fear, the more likely it is that workers will more actively pursue returning to work, thus reducing the number of workers that experience longer-term unemployment.

Recession, Fear of Job Loss, and Return to Work. Richard A. Victor, Bogdan Savych. April 2010. WC-10-03.

 

©J&L Risk Management Inc Copyright Notice

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

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