Workers' Compensation

Work-Injury Impact on Wealth of U.S. Workers

Workers with injuries experienced slow to significant income loss post-injury compared to steeper increases for non-injured workers over time

By Roger Rabb, J.D.

Although there are many studies exploring the costs of workplace injuries in the U.S., often in the form of analysis of the costs to employers or workers’ compensation insurance carriers, there is less research on the long-term economic effects of workplace injuries on the workers themselves. Moreover, the studies that do attempt to measure the economic effects on workers are often limited, for example, to workers who file workers’ compensation claims. One recent study published by the American Journal of Industrial Medicine, “Economic Consequences of Workplace Injuries in the United States: Findings From the National Longitudinal Survey of Youth (NLSY79),” analyzes long-term economic effects on injured workers, including both those who filed workers’ compensation claims and those who did not, by studying data compiled from the 1979 cohort of the National Longitudinal Survey of Youth.

The NLSY79 survey first interviewed over 12,000 persons between the ages of 14 and 22 in 1979 and then conducted follow-up interviews with those persons annually or every other year since then, collecting self-reported information about demographic characteristics, employment history, income and assets, education, and health status. As of 2008, the final year from which data was used, 82 percent of the survey population was still responding.

The information solicited in the NLSY79 survey included whether or not the person had sustained an injury or illness because of an incident at work, and if so, whether or not the injury or illness resulted in days away from work (not counting the day of the incident itself). From this data, the authors of this particular study categorized persons into those with DAFW injuries (injuries resulting in days away from work), those with NDAFW injuries (no days away from work), and non-injured persons. Other information relevant to the study was also collected in the survey, such as whether injured persons filed and received workers’ compensation benefits, whether they lost wages, worked less than full time, changed jobs, or were laid off or fired after the injury.

The authors found many interesting results about injuries and impacts on income and wealth from the survey participants. For example, the incidence rate for DAFW injuries in the construction industry was 7.8%, while the rate was only 4.7% for non-construction workers; conversely, the incidence rate for NDAFW injuries was only 4.3% for construction workers, compared to 3.3% for non-construction workers. This suggests that construction workers who are injured are more likely to suffer a more severe injury than a worker in another occupation who suffers an injury. Strangely, however, injured construction workers were less likely to file for workers’ compensation benefits than persons in other occupations, although they were slightly more likely to receive benefits if they did file a claim. Injured construction workers were also more likely to suffer lost wages, more likely to work less than full time or get laid off, and less likely to get assigned to a different job than injured workers in other occupations.

The study also identified that differences in gender and education level impacted injury rates. For example, males comprised only 53% of the non-injured workers, but made up two-thirds of the injured workers. In addition, the proportion of workers with less than a high school education was at its highest among those with DAFW injuries and next highest among those with NDAFW injuries.

As to changes in earnings, between 1988 and 2008, annual wage and salary for the entire survey group increased from about $24,900 to about $41,600, and average family net worth for the whole group increased during that span from $49,300 to $275,800 (measured in year 2000 dollars). As noted by the authors, such increases during that span would be expected, as the survey participants would have been progressing from young to middle-aged during those years and many would have been married by then.

Although both annual earnings and family wealth increased for the survey group, the study found that the increase in income and wealth varied among different demographic groups. For example, while Black workers’ earnings increased by 48.4% during the period from 1988 to 2008, the rate of increase for non-Black, non-Hispanic workers was 69.7%. Similarly, family net worth for non-Black, non-Hispanic workers was about $311,000 in 2008, while it was only about $107,100 for Black workers. Similar gender disparities were identified, as annual earnings for males increased by $22,600 from 1988 to 2008, but only increased by $10,000 for females. As expected, earning increases were also smaller for those with less education, as the annual earnings only increased by about $2,500 over the 20-year period for those with less than a high school degree. The study also found that while the proportion of disabled workers nearly doubled in that span of years, income and family net worth grew at a lower rate than for non-disabled workers.

When analyzing the data for injured workers for 10 years after an injury, the study found that workers with DAFW injuries experienced annual earnings growth that was $3,700 less than for non-injured workers, and workers with NDAFW injuries experienced annual wage growth that was $1,200 less than non-injured workers. As described by the authors, workers with DAFW injuries “experienced significant income loss post-injury compared to the steeper increases for non-injured workers over time.” Similarly, wage growth for workers with NDAFW workers slowed after the injury compared to non-injured workers, even though income gains for members of those two groups had been very similar prior to the injuries.

The study also found that increases in family wealth were lower for workers with DAFW injuries than for workers who were not injured or who sustained NDAFW injuries, although this difference was not statistically significant after accounting for other demographic factors. For example, minority status and less education had a significant negative impact on annual changes in family net worth. Although gender did not have a significant impact over time, that may have been because many female workers got married, and for purposes of measuring family net worth, married workers had obvious advantages over non-married workers. Occupation was also a significant factor, as construction workers had the smallest annual growth in family net worth, possibly due to wage stagnation in that industry, while managers and professionals had the greatest growth in net worth, as would be expected. As described by the authors, “once the enormous variations in family net worth associated with race/ethnicity, education, and marital status were controlled for in multiple regression analysis, the long-term impact from workplace injury on family net worth was no longer significant.”

As the authors note, there are several limitations on their study. Information was self-reported by participants, which creates the possibility for inaccuracies. Workers may have sustained multiple injuries in the same reporting period, and some injured workers may have suffered disability for non-work-related reasons. Moreover, the study does not attempt to account for negative impacts from injury such as stigma, job insecurity, depression, drug or alcohol abuse, negative impacts on family life, and the like. The study also notes the apparent positive impact of union membership on post-injury earnings, and recognizes the need for further study of all of these factors on post-injury earnings and wealth.

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