Boca Raton, FL – NCCI recently released a new Insights report, Why Wage Inflation Matters in Workers Compensation, noting that as we emerged from the COVID-19 pandemic, a labor shortage became apparent. To lure workers back to the workforce, wages needed to increase. As a result, all economic sectors have experienced wage growth, and lower-wage workers are seeing the fastest percentage growth among all workers.
The new report examines where wage inflation occurred, and how it impacts the workers compensation (WC) system, as well as how NCCI accounts for these changes in its ratemaking methodology.
Key findings included:
- Wages grew fastest in recent years for low-paying jobs, and the growth was particularly strong in 2021
- Amid the Great Reshuffle, wage growth varies significantly by economic sector
- High-wage earners have a relatively lower share of injuries than low-wage earners
Nonuniform wage inflation is more impactful in states with:
- High minimum weekly indemnity benefits
- Low maximum weekly indemnity benefits
- State Average Weekly Wage (SAWW) indices, which influence state indemnity benefit levels, may increase by a greater amount than normal in the near-term, reflecting the nonuniform wage inflation
This analysis generally follows the structure of NCCI’s AIS 2022 presentation “Why Wage Inflation Matters in Workers Compensation.” However, the data has been updated in certain exhibits.
View the report: NCCI: Why Wage Inflation Matters in Workers’ Compensation (PDF)