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* UPDATED x1 * Cullerton: “Workers’ comp is not an economic development tool”

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* Senate President John Cullerton is making the rounds this week. Here he is with Greg Hinz…

On workers’ comp, Cullerton said Rauner “needs to understand what we’ve already done.” Changes ordered a few years ago are just now showing up in reduced rates, he said.

“We’re always willing to work on fraud and savings,” he added. “But you don’t blow up the system. . . .If you say, ‘Employers don’t want to pay any premiums, we’ll abolish workers’ comp,’ I guarantee you, they’ll scream.” Why? Because, he reasoned, without workers’ comp, all sides will have to wage expensive court fights on tens of thousands of workplace injuries a year.

What Democrats won’t agree to is “a race to the bottom,” Cullerton said. “Workers’ comp is not an economic development tool.”

It’s not? Tell that to the governor and some business owners…

[Rauner] got a boost, in part, from the president of Tennant Truck Lines, the Colona firm he visited.

Aaron Tennant, the chief executive of the company, introduced Rauner while noting his company would save $450,000 in workers’ compensation costs if it moved to Iowa.

“I can go nine miles across the river and save a heck of a lot of money,” he said.

This situation cannot be ignored.

*** UPDATE *** Along the same lines…

Things got heated during Tuesday’s debate [of the House Committee of the Whole on DCEO restructuring] when the issue of public jobs versus private jobs was addressed. In a line of questioning between Democratic Representative Will Davis and DCEO’s Director, Davis expressed concerns about a loss of jobs for DCEO if there were to be the creation of a private-public partnership to spur on economic development. Schultz responded with what he believes is his role.

“So those individuals will not be working for DCEO,” Davis said. “Which means the workforce of DCEO will decline.”

“I didn’t come here to create jobs for DCEO,” Schultz fired back. “I didn’t come here to create jobs just for the State of Illinois. I came to create jobs for every citizen in the state of Illinois, all 12.9 million citizens. In the end I care about net jobs, not about a particular agency.”

The two sides are from different worlds and are speaking different languages.

posted by Rich Miller
Wednesday, Jun 17, 15 @ 1:08 pm

Comments

Therein lies the fundamental issue this impasse seems to be about.

If I’m employer, do I look at that 450K as profit I’m not getting (but want)?

Or do I look at that 450K as a way to give my workers safety and security and peace of mind?

And if I can’t afford that 450K — if I’m an employer and need that as a make-or-break — then maybe I’m not running my business properly in the first place?

Comment by Frenchie Mendoza Wednesday, Jun 17, 15 @ 1:11 pm
BTW — In one interview yesterday (or maybe the day before) Cullerton seemed to indicate — he didn’t say outright, but seemed to indicate — that Rauner and his team didn’t even know worker’s comp reforms were passed four years ago.

Could this be? That Rauner wasn’t even aware? Not that he would agree with the reforms in the first place — but Cullerton seemed to say in so many words that he had to remind Rauner of the legislation that had already been worked on.

Comment by Frenchie Mendoza Wednesday, Jun 17, 15 @ 1:13 pm
Frenchie-

Because its not taking care of your workers to pay into a broken system where people can get claims paid because they hurt themselves doing a keg stand the weekend before? Give me a break.

The middle class doesn’t need Democrat sanctioned fraud in order to have a decent quality of life.

Comment by Rauner Derangement Syndrome Wednesday, Jun 17, 15 @ 1:16 pm
=== then maybe I’m not running my business properly in the first place? ===

You must be a state worker.

Comment by Rich Miller Wednesday, Jun 17, 15 @ 1:17 pm
I’d like to see the math on that $450k.

Comment by PMcP Wednesday, Jun 17, 15 @ 1:17 pm
Lenient WC laws don’t help those who can’t find work. Some of these guys need to understand that there is a balance that had to be found. Without reform, IL cannot continue. Too many job creators and young people are leaving. Status quo is not a viable option Mr. Cullerton.

Comment by Allen Skillicorn Wednesday, Jun 17, 15 @ 1:18 pm
Here is a winner for the Governor.

If the Governor’s Office has WC and “one” other win, that’s really good for a revenue swap, (with all, not most, all 67 green) and a budget deal out there.

The Governor “wants/ed” only “two” at the end of May. The deal is rotting in the June sun…

Comment by Oswego Willy Wednesday, Jun 17, 15 @ 1:18 pm
It’s obvious Frenchie has absolutely no experience running a company in Illinois or being an employer who has had to deal with Illinois workers’ comp program. Don’t tell me we passed reform, especially if I’m self-funded. I’ve got enough ‘causation’ cases that would fill a file cabinet.

Comment by Joe Schmoe Wednesday, Jun 17, 15 @ 1:19 pm
FM are you kidding me? In business you try to maximize profits while providing a competitive wage and benefits package to attracted the best workers. If you are in a competitive business market (not an oligopoly like say Google) then running altruistic business as you suggest will find you either bankrupt or without the sufficient capital required to expand and modernize your business to compete effectively.

Comment by CB Wednesday, Jun 17, 15 @ 1:20 pm
Workers Comp reform is a must. Or we will continue to see jobs leave downstate for Indiana and other low cost states. With the jobs go the people. IL lost 10K people last year. Almost exclusively from downstate as the Chicago metro continues to grow.

Comment by Tone Wednesday, Jun 17, 15 @ 1:22 pm
Frenchie if this was another website I thought you would be trolling.

I believe only Louis Atsaves should be allowed to comment on this post to save us the time and frustration of arguing back and forth. Thanks again for your insight on last Friday.

Comment by Almost the Weekend Wednesday, Jun 17, 15 @ 1:23 pm
Yeah, wouldn’t it be nice to pay 8.98% on that 450k! Seriously, would this guy want to move to Iowa to more than double his income tax rate? As president of Tennant, I would guess his income is relatively high and taking all things into consideration, Illinois is a better place to be.

Comment by Ducky LaMoore Wednesday, Jun 17, 15 @ 1:24 pm
===“I can go nine miles across the river and save a heck of a lot of money,” he said.===

And how much would it cost to relocate his business? The dude who operates a 500 truck business that is active in all across the country and has multiple shipping yards probably isn’t being accurate in his assessment of savings.

Comment by Anon Wednesday, Jun 17, 15 @ 1:24 pm
I was going to type a quasi-rebuttal to Frenchie, but then I thought of something.

Why don’t these companies band together and sue the providers for price fixing?

I rarely side with President Cullerton, but we have a fairly open legal system. Such a case could be filed in federal court, and a competent firm could easily argue that state-licensed providers are violating the interstate commerce clause by price gouging. Why not? What’s it hurt to lose? The providers are clearly not holding up their end of the “bargain”. The same happened with ISMIE.

Torts are a two-way street. Use your capital to fight that battle instead of whining.

I do sympathize with Mr. Tennant, but he has other methods at his disposal instead of just “packing up and driving 9 miles”.

Comment by Team Sleep Wednesday, Jun 17, 15 @ 1:26 pm
==- Joe Schmoe - Wednesday, Jun 17, 15 @ 1:19 pm:==

Tell us about some of them. I’m sure Rich would even be willing to make a post about it, like he has on other occasions, most recently Mr. Atsaves IIRC.

If Mr. Tennant can save all that money, which adds up big over several years, why doesn’t he just move? Is that Iowa has other regulations that are more burdensome? Is that Illinois has a better customer base for his business, thus a better business climate?

Comment by Precinct Captain Wednesday, Jun 17, 15 @ 1:28 pm
Businessmen are often prone to exaggerations. With that kind of saving he would have already moved.

Neither side seems to have an explanation why Illinois rates are high or why the previous reform didn’t have an impact. Of course the Dems are going to look after workers and Rauner obviously places profit at the cost of workers very high on his agenda.

Comment by Liberty Wednesday, Jun 17, 15 @ 1:29 pm
Joey,
Did you get a chance to testify about all of your causation cases? Do you use work smart programs? How about safety training? Do you provide safety equipment? Testify about your poor little self… Could the truth of the matter is your paid by someone to post?

Comment by Umm like Wednesday, Jun 17, 15 @ 1:30 pm
OK. I find this a little hard to believe. No businessman would leave a savings like that on the table.

Given the “facts” provided, why hasn’t this business moved? Business is all about profit. Why not move and cut that $450,000.00 cost substantially?

Most companies involved in these “political” statements have little loyalty to any state that I can identify. They only seem loyal to politicians promising a greater profit or advantage.

Is this (perhaps) some variation of the “Give me tax expenditures or I’ll move!” game?

No one likes fraud. On the other hand, few want to see injured workers cheated.

What am I missing here?

Comment by Skeptic Wednesday, Jun 17, 15 @ 1:31 pm
I could live with real worker’s compensation reform for an income tax hike.

Comment by Lee Dixon=Arsenal legend Wednesday, Jun 17, 15 @ 1:33 pm
Rich -

Unless we know WHY his worker comp rates are higher in Illinois, how can we fix the problem?

And if the problem is, as many have suggested, that Illinois workers make a higher salary, so their wage replacement costs are higher, what should the solution be?

Tell the guy who lost his leg he’s just going to have to sell his house and go on public assistance?

Comment by Juvenal Wednesday, Jun 17, 15 @ 1:35 pm
Frenchie’s comment is the end result of VanilliaMan’s thought yesterday that had everyone gushing.

Comment by Yobogoya Wednesday, Jun 17, 15 @ 1:35 pm
A lot of people seem to not understand that IL is in dire straights. The state is losing population and still has yet to recover all the jobs lost since 2000. IL has 127,000 jobs less now than in 2000.

Comment by Tone Wednesday, Jun 17, 15 @ 1:36 pm
I could live with real worker’s compensation reform for an income tax hike and spending cuts.

Comment by Tone Wednesday, Jun 17, 15 @ 1:37 pm
WC is like education funding. You will never do enough to please the business company on comp just like you can never give schools too much money.

Comment by Tom Wednesday, Jun 17, 15 @ 1:39 pm
=== What Democrats won’t agree to is “a race to the bottom,” Cullerton said. “Workers’ comp is not an economic development tool.” ===

I agree with one out of two of your statements Mr. President. You may want to quibble with the development, but it is a business expense that can impact location and expansion decisions.

Comment by Norseman Wednesday, Jun 17, 15 @ 1:42 pm
And they can move to china and save millions…. So let them move….. There are a lot of businesses making money here becuae we have higher household income which spursmour econmy. If a comlany wants tomgivenip those sales then let them go.

The assumption is that a business in another state will keep the same sales it has now…. Which is a falactious assumtpion. Sales are not necessarily fungible. A strong market for a product in one location does not mean it is just as strong elsewhere… Not to mention competitors, infrastructure etc.

Comment by Ghost Wednesday, Jun 17, 15 @ 1:43 pm
Cullerton is playing the role of the grown-up who’s patient but rolling his eyes while the adolescent Rauner throws tantrums, slams doors, etc. This will take a while to play out. Teenagers don’t mature overnight.

Comment by Roland the Headless Thompson Gunner Wednesday, Jun 17, 15 @ 1:45 pm
Skeptic -

It’s a family-owned company, with roots in a small town, and maybe he could save $450K on WC, but as others point out he’d pay Illinois’ much higher income tax rate.

Maybe Rich will call the guy and get his financials and we can all have fun with the math.

Comment by Juvenal Wednesday, Jun 17, 15 @ 1:46 pm
Cap Fax commenters be like:

http://cdn.meme.am/images/300x/12310428.jpg

Comment by Who Ya Crappin'? Wednesday, Jun 17, 15 @ 1:49 pm
Let’s do some math. I assume the $450,000 is a yearly savings and not say over 10 years. The study everyone uses for work comp is the Oregon study. The latest study has Illinois work comp costs at $2.35 per $100 of payroll and Iowa’s at $1.88. So for every $100 of payroll, the company would save $0.47. That means to save $450,000, the company has to have a payroll of $95.7 million. Sometimes using raw dollars can be misleading. $450,000 to a mom and pop retail store is a lot different than to a 100 person construction company than to Caterpillar.

Comment by Salty Wednesday, Jun 17, 15 @ 1:50 pm
BTW, Skeptic @ 1:31 was not me. Please choose another nickname.

Comment by Skeptic Wednesday, Jun 17, 15 @ 1:51 pm
This issue is not sexy with many voters but small, medium & big businesses all know WC insurance is absolutely unaffordable in IL. So this is an easy winner for the Gov and R’s. Madigan & Cullerton (despite his halting TV performances) know this well. The real problem for them is the other win Rauner wants; be it property tax freeze/term limits/fair maps … those are all very popular with voters. And Rauner wants one of those items too before he’ll give the D’s any help with revenue. And if the D’s don’t move expect lots of pounding in the media. Lots. #CompromiseCanBePainful

Comment by Georg Sande Wednesday, Jun 17, 15 @ 1:52 pm
Cullerton has his head in the sand on this one. I agree that Workers comp is not an economic development tool, but the current system is an economic development disaster. Also, despite the advertisements claim about being a wage issue, businesses with the same worker and the same wage pay a lot more in Illinois than our neighboring states. It’s the law as written and it needs fixed.

Comment by Ahoy! Wednesday, Jun 17, 15 @ 1:53 pm
Trend for IL manufacturing jobs from 1990-2015

http://data.bls.gov/pdq/SurveyOutputServlet

Comment by Tone Wednesday, Jun 17, 15 @ 1:53 pm
I love the posts suggesting that if it was all that bad, the guy would have already left.

“Well, not everybody has hit the road, so let’s not change a thing!” That explains a lot of what is happening in IL.

I rarely blame “special interests” because everybody is one special interest or another.

This one is different though. The plaintiffs’ bar spends a lot of money and gets its way on WC and a long list of other issues. When it comes to WC and liability cases generally, Illinois is pretty bad. We’ve created high costs for business and we’ve created laws that in some cases (notably construction liability) actually make the industry less safe.

But as long as those big checks come in, I’m not seeing a great chance for change.

Comment by Gooner Wednesday, Jun 17, 15 @ 1:54 pm
Sorry didn’t work, but 1/2000 there were 877,200 manufacturing jobs, 4/2015 there are 576,400.

Comment by Tone Wednesday, Jun 17, 15 @ 1:57 pm
Salty -

Well done.

I suspect that Mr. Tennant might be exaggerating just a smidgeon.

He’s also gonna pay a penny more in fuel tax in Iowa.

Comment by Juvenal Wednesday, Jun 17, 15 @ 2:00 pm
Did anyone ever cover the $15k Schultz donated to the Gov?

Comment by Juan MacLean Wednesday, Jun 17, 15 @ 2:00 pm
Gooner @ 1:54pm: “We’ve created high costs for business…”
Does “We” mean the WC insurance companies and their powerful lobbying groups?

Comment by Qui Tam Wednesday, Jun 17, 15 @ 2:03 pm
In Indiana on the other hand, there were 672,100 manufacturing jobs in 1/2000 and there are now 518,000 as of 4/2015.

So IN has lost 23% of its manufacturing base while IL has lost 34%.

Iowa has lost 15% in the same time.

Wisconsin has only lost 5% in that time frame.

Comment by Tone Wednesday, Jun 17, 15 @ 2:03 pm
Qui, are you suggesting IL WC insurers are particularly evil?

If it is the fault of the WC/EL carriers, why don’t we see similar issues in other states?

Comment by Gooner Wednesday, Jun 17, 15 @ 2:06 pm
===“Well, not everybody has hit the road, so let’s not change a thing!” That explains a lot of what is happening in IL.===

Exactly.

Just for snicks, I’ve also randomly checked a few IP addresses of some of the more critical commenters on this post.

Mainly government IP addresses. No private businesses.

Surprise!

Not.

Look, I don’t consider myself a business person. I’m an entrepreneur with no employees.

But I do know what it’s like to live on my own wits, to not have any protections of any kind (civil service, unions, etc.). It ain’t easy, it’s scary at times, and I can certainly empathize with the frustration of others when government makes it far too difficult to operate.

Some of y’all - particularly the government bureaucrats - would do well to remember that last point. You really are a big part of the problem here.

Comment by Rich Miller Wednesday, Jun 17, 15 @ 2:08 pm
==- Tone - Wednesday, Jun 17, 15 @ 1:36 pm:==

Jobs have been falling nationwide since 2000.

http://www.cbpp.org/research/economy/chart-book-the-legacy-of-the-great-recession

Comment by Precinct Captain Wednesday, Jun 17, 15 @ 2:09 pm
People near the borders of other jurisdictions can always point to one discrepancy where the other jurisdiction offers more favorable treatment like Iowa’s worker’s comp, and discrepancies in liquor, tobacco and fuel taxes across state and county borders.

Do you change the entire state system because a witness can identify a single discrepancy? That is the proverbial race to the bottom.

Workers comp was created to provide a speedy remedy to injured workers and to provide certainty and save businesses money in litigation costs–by removing the common law remedy to sue for damages. That was a major statutory deviation from the common law. In recent years, businesses have chiseled away at their end of the bargain, state by state, to increase corporate profits. Start with one or two states where businesses control the legislature, then point to those states everywhere else as representative of “the new compromise”. This race to the bottom will never end; because there will always be advocates to make the bottom lower and lower.

There is an entire package of discrepancies, constantly changing, to weigh as a whole, that affect business location decisions, which is what Illinois’ economic development experts should be monitoring. And there is no single answer as to what balance is best suited for each state.

Comment by James Wednesday, Jun 17, 15 @ 2:14 pm
Another one Cullys missing the boat on. WC is a major economic factor for a company expanding or coming to a state. Comments by Cullerton and Davis show just how narrow minded and outdated the demo thinking really is. I’m sure Cully is trying to keep the union and ambulance chaser money rolling in.

Comment by Short Bus Rider Wednesday, Jun 17, 15 @ 2:19 pm
Kind of wish there was an easy way to compare those here who say Tennant should leave with those who complained about Walgreens’ attempted tax inversion last year. I’m sure the results would be fascinating.

All business decisions contain political costs. Ignoring those costs, either by the owners or the politicians who create them, is delusional.

Comment by ChrisB Wednesday, Jun 17, 15 @ 2:19 pm
Sorry. Did not mean any offense. Just reflecting my thought.

Comment by Skeptical too Wednesday, Jun 17, 15 @ 2:20 pm
I don’t know what to think about WC in Illinois. I’ve never had to interface with it at either end. Is there some REASONABLY OBJECTIVE analysis of things that can be done to “fix” (or make better) WC in Illinois? I hear a lot of arguing but rarely any specifics from non-partisan sources. Certainly this comment thread has been no help.

Comment by 11Th Hour Wednesday, Jun 17, 15 @ 2:20 pm
Gooner -

But to put that in context, “reforms” without cost control measures are often akin to covering a worn piece of carpet with a carpet sample/square. It covers up the problem for a bit.

The med-mal “reforms” did little to decrease malpractice insurance. From all vantage points, it seems as though the 2011 “reforms” to worker’s comp had the same, ahem, impact.

Rich’s point is spot on but, even if full causation is enacted, a reduction in premiums would also have to occur for a full realization of cost savings to take place.

To a larger point, perhaps the question shouldn’t be “why don’t we see similar issues in other states” but “why doesn’t Illinois try to follow more efficient models”.

Comment by Team Sleep Wednesday, Jun 17, 15 @ 2:20 pm
The statistics are very clear. Look at the University of Oregon study that is the most comprehensive and often cited measure of states. Illinois today has the 7th highest cost per $100 of payroll - increasing from the 23rd highest cost in 2004 largely due to the Gov. Blago and the legislature increasing benefits by 7.5 percent in 2005. We were ranked 3rd but the 2011 reforms have resulted in some savings.

Look at the companies that left Illinois citing WC. Modern Drop Forge in Blue Island took hundreds of jobs to IN. Kenall Manufacturing took 300 jobs and then added 300 more jobs in WI. This is happening on a regular basis.

So yes, this is an economic development issue.

Comment by 1776 Wednesday, Jun 17, 15 @ 2:32 pm
Cullerton’s comments are just pandering to an ignorant public just as the Governor does.

The Amendments did not tie rates to cost savings. Although the costs are down 18+% since 2011, Cullerton and Madigan did not tie costs to savings.

Can someone ask Cullerton or Madigan why they won’t put a bill on the Governor’s desk forcing insurance companies to follow the NCCI rate guides? Cut costs to employers at the expense of out of state insurance companies. What on earth is the problem?

Fraud, Right now local state’s attorneys and the AG have authority to prosecute fraud. Locals won’t because it it is political suicide. The AG won’t…Well you have to ask her why because no one seems to know.

We can easily cut rates to employers and not cut any benefits to workers. 1 sentence fellas, 1 sentence.

Comment by the Patriot Wednesday, Jun 17, 15 @ 2:33 pm
== Changes ordered a few years ago are just not showing up in reduced rates, he said. ==

Do we need more Work Comp reform or do we need stricter insurance company regulation?

Comment by RNUG Wednesday, Jun 17, 15 @ 2:34 pm
Well, I say our State can’t get any worse, I’m perfectly happy experimenting a little with something different.

Comment by Just Me Wednesday, Jun 17, 15 @ 2:34 pm
Skeptical too: I took no offense, just didn’t want anyone to be confused.

Comment by Skeptic Wednesday, Jun 17, 15 @ 2:35 pm
Interesting in an article about Tennet says they started focusing on quality and safety in 2009- maybe their insurance carrier doesn’t think they have a good enough record yet.

“We really got focused on quality and safety in 2009,” he says. “We focused on the image of the driver and to keep good drivers, we treat them with respect, pay them fairly and hold them accountable for their actions. We have a very strict qualification standard and provide week-long training to all the new hires that covers all the basics.

“We go above the industry norm with our focus on professionalism, driver image and giving to the community. But professionalism is not just their image, it also has to do with load security, product handling and learning about the product we haul.”

Comment by Liberty Wednesday, Jun 17, 15 @ 2:36 pm
==“why doesn’t Illinois try to follow more efficient models”.==

“One reason why our national ranking may be so bad is that other states have been slashing benefits to the bone”

https://capitolfax.com/2015/06/11/workers-comp-thoughts/

Comment by Precinct Captain Wednesday, Jun 17, 15 @ 2:37 pm
–”I can go nine miles across the river and save a heck of a lot of money….–

Might want to check those Iowa tax rates first.

–12% corporate income tax over $250K

– 8.98% personal income tax over $68K (that’s not federal adjusted gross, either).

Pretty funny. If you’ve read the Iowa papers over the years, the Usual Suspects there are always pointing to Illinois as the low-cost, low-regulation business paradise.

Comment by Wordslinger Wednesday, Jun 17, 15 @ 2:37 pm
One thing all you government workers here need to realize is that venture capital valuations are what all small to medium companies are about these days, and they are VERY strict metrics that are used in these valuations.

The “rule of thumb” for attracting venture capital is 15% RPI and 15% revenue growth. If taking a one time charge to move gets you into that category, you do it.

Venture capital valuations are based on the size of revenues and profits as well as metrics. For example, a company with net profits of $5 million per year may be valued at a 6 times profit multiplier ($30 million) while a firm with the same growth and returns with $10 million profits may be valued at 7 times the profits ($70 million).

You increase the multiples by buying other companies, becoming more efficient and growing market share and revenues.

For the example I stated, the two companies had a value of $60 million as separate companies and $70 million as one company for the same revenues and profits.

When the venture company puts them together, they make a cool $10 million for the deal without increasing profits of revenues.

Bringing it back to the issue of WC, saving that $450K in workman’s comp and paying fair but lower labor rates and taxes can add a disproportionate value to your business. That’s why if you’re starting up a new business, you go to places like Texas and Florida where the costs of doing business are much less, and meeting the metrics is much easier.

This is a key issue in growing the small and medium sized businesses that create most of the job growth today. You government workers better figure this out, because if you fight reforms that make Illinois more competitive this way, there will be nobody left in Illinois to pay for your salaries, benefits and comfy early retirements.

It’s a game of inches, folks, and right now Illinois is miles behind….

Comment by Arizona Bob Wednesday, Jun 17, 15 @ 2:40 pm
Gooner asks: “Qui, are you suggesting IL WC insurers are particularly evil?

If it is the fault of the WC/EL carriers, why don’t we see similar issues in other states? ”

So you aren’t saying who “we” are @1:54.

Other states may have regulation on premiums, which would certainly impact rates and costs.

I’ll leave the portrayals of “evil” to you guys fighting those injured workers.

Comment by Qui Tam Wednesday, Jun 17, 15 @ 2:40 pm
The Tax Foundation’s rankings of states’ business climates http://taxfoundation.org/article/2015-state-business-tax-climate-index
is as follows for Illinois and its neighboring states:

IN 8th best business climate
MO 17th
IL 31st
IA 41st
WI 43rd

The rankings are based on a state’s corporate tax rate, individual income tax rate, sales tax, unemployment ins tax, and property taxes. So that may explain some of why Mr. Tennant just doesn’t move his business to Iowa. Unfortunately, the Tax Foundations State Business Climate rankings to not include Worker’s Comp insurance rates and/or benefits.

Comment by Joe M Wednesday, Jun 17, 15 @ 2:41 pm
Just “NOW” showing up in reduced rates, is the language from the Hinz article.

Comment by Anonymous Wednesday, Jun 17, 15 @ 2:43 pm
===is the language from the Hinz article. ===

I didn’t change it, so he must have.

Comment by Rich Miller Wednesday, Jun 17, 15 @ 2:44 pm
PC - hence why I said efficient. I don’t believe that to be an efficient way to run a worker’s comp system. And other than companies who employ in-house labor counsel, a Wild West system isn’t ideal, either.

I think RNUG’s point was more succinct than mine. Again - it’s window dressing if only one or two parts of an entire “machine” are actually targeted.

Comment by Team Sleep Wednesday, Jun 17, 15 @ 2:46 pm
http://www.bls.gov/ces/cesvininfo.htm

While the country has fully recovered from the recession, IL is down and is not projected to recover from the recession let alone the early 2000s all it’s lost jobs.

Comment by Tone Wednesday, Jun 17, 15 @ 2:48 pm
There is no Pension ‘crisis’.
Workers Comp is not an economic development tool.

Wow. Wow. Wow.

It’s like a book of Yogi Berra quotes, except they’re not funny.

When you can’t agree on even the very most basic of things, it’s really tough. I just can’t even believe I really read that. Wow.

Comment by A guy Wednesday, Jun 17, 15 @ 2:54 pm
Rich, I agree that savings can be had in the Workers’ Comp system. But I don’t think the way to go about it is to establish a fairly arbitrary threshold and then tell a worker who is injured that they can’t show that work was the primary cause, so they’re out entirely. Over twenty other states have standards that are similar to ours, and they are not seeing the same cost drivers that Illinois is. But the Governor does not appear to have much of an interest in discussing other alternatives to find savings in the system.

I would love for someone who was around for the 2005 reform package, because it seems a lot of the cost drivers we are seeing now are the result of items from that package. (Namely the medical fee schedule, which even after the 2011 reduction is still a significant driver, both because it raises medical costs and encourages medical professionals to push someone with an injury into the comp system, even if all the worker ultimately cares about is getting some help with their bad back.)

Comment by Juice Wednesday, Jun 17, 15 @ 2:55 pm
There’s a compromise here, one I hope they reach.

Comment by Robert the Bruce Wednesday, Jun 17, 15 @ 2:56 pm
== Changes ordered a few years ago are just not showing up in reduced rates, he said. ==

++Do we need more Work Comp reform or do we need stricter insurance company regulation?++

Good point RNUG. Just because insurance companies save money does not mean they pass the savings along.

Comment by jls Wednesday, Jun 17, 15 @ 2:58 pm
Illinois job loses of 127,000 since 2000? Is there impartial itemization of the amount of jobs lose each of those years with a breakdown by the various job sectors?

Comment by Buzzie Wednesday, Jun 17, 15 @ 2:58 pm
“A guy - Wednesday, Jun 17, 15 @ 2:54 pm:

There is no Pension ‘crisis’.
Workers Comp is not an economic development tool.

Wow. Wow. Wow.

It’s like a book of Yogi Berra quotes, except they’re not funny.

When you can’t agree on even the very most basic of things, it’s really tough. I just can’t even believe I really read that. Wow.”

It’s sad, but now I understand why IL is in this mess.

Comment by Tone Wednesday, Jun 17, 15 @ 3:00 pm
“Illinois job loses of 127,000 since 2000? Is there impartial itemization of the amount of jobs lose each of those years with a breakdown by the various job sectors?”

This is all public information:
http://www.bls.gov/regions/midwest/illinois.htm#eag

Comment by Tone Wednesday, Jun 17, 15 @ 3:01 pm
Cullerton seems to be living on a different planet.

Comment by econ prof Wednesday, Jun 17, 15 @ 3:17 pm
==Do we need more Work Comp reform or do we need stricter insurance company regulation?==

RNUG and others making this spurious allegation. If this is true, why did self insured businesses not see a drop in rates? This slander against insurance companies is a falsehood put out by those who are threatened by real WC reform.

Comment by phocion Wednesday, Jun 17, 15 @ 3:22 pm
” If this is true, why did self insured businesses not see a drop in rates?” I’m confused, I thought “self-insured” meant you paid the claims yourself, so there wouldn’t be any rates? Or are you saying they paid their premiums directly to the company instead of through the Government?

Comment by Skeptic Wednesday, Jun 17, 15 @ 3:26 pm
– I came to create jobs for every Illinois citizen, all 12.9 Illinois citizens .–

When did the repeal of child labor laws get added to the Turnaround Agenda?

It fits nicely with the rest of the nostalgia for the Harding years, but it might be a bridge too far.

Just kidding, I know Schultz is talking about jobs for adults.

His intent is for government to create jobs for all adults.

What do Republicans call that kind of system these days? It used to be called a couple of different things, back in the day.

Meh, he’s the bagman for corporate welfare. His job is to create multi-million press releases for the governor.

Comment by Wordslinger Wednesday, Jun 17, 15 @ 3:27 pm
RM 2:08 -word-

Comment by Nick Danger Wednesday, Jun 17, 15 @ 3:37 pm
– I came to create jobs for every Illinois citizen, all 12.9 Illinois citizens .–

So what are a few state employee layoffs? /s

Comment by jls Wednesday, Jun 17, 15 @ 3:39 pm
###What do Republicans call that kind of system these days? ###

They’ve gone so far to the right, they’re whirling all the way back around!

Comment by Anonymous Wednesday, Jun 17, 15 @ 3:41 pm
Representative Davis, Illinois is in a financial crisis and our economy is lagging behind the rest of the nation and he’s worried about a couple of government jobs at DCEO instead of making sure the agency is in the best position to retrain, expand and attract jobs?

What Davis lacks here is a little perspective.

Comment by Ahoy! Wednesday, Jun 17, 15 @ 3:43 pm
Cullerton talking the book of Illinois lawyers who make tons of money off workers comp

Comment by better days Wednesday, Jun 17, 15 @ 3:43 pm
To Salty and others doing the math, remember that the Oregon numbers are averages. Businesses with higher risks like manufacturers (which - shocker - Illinois has been losing) will have substantially higher rates. Wouldn’t take nearly the payroll you’re coming up with for those businesses.

Man guys, you’ve got to look in the mirror. If we’re not even willing to accept the business community’s word that workers compensation costs are killing them, this state will never get any better for them.

Comment by SES Wednesday, Jun 17, 15 @ 3:47 pm
Tone -
In Indiana benefits are capped at 10 years, which is dumping the permanently injured in emergency rooms and on welfare and SSI. THIS is what you want us to emulate?

Comment by Smitty Irving Wednesday, Jun 17, 15 @ 3:55 pm
Skeptic is correct. See page #6 of this BLS guide to insurance terms:

http://www.bls.gov/ncs/ebs/sp/healthterms.pdf

Comment by Team Sleep Wednesday, Jun 17, 15 @ 4:01 pm
Or, more generally, from Investopedia:

http://www.investopedia.com/terms/s/self-insure.asp

Comment by Team Sleep Wednesday, Jun 17, 15 @ 4:02 pm
And now AB adds Financial Engineer to his resume.

Truly breathtaking.

Comment by Anonymous Wednesday, Jun 17, 15 @ 4:03 pm
“The state is losing population”

Since most of the gaining-population states are in the Sun Belt, I always worry that reflexively adopting Sun Belt policies without adopting Sun Belt WEATHER won’t stop that out-migration.

Comment by Educated in the Suburbs Wednesday, Jun 17, 15 @ 4:06 pm
Several commenters have naively suggested stricter insurance regulation. This is doubtful to produce meaningful improvement, since Illinois is already among the most competitive WC insurance environments, with hundreds of insurers competing for business. If this was a hugely profitable line of business, some of these insurers would find ways to reduce rates to grab market share from their competitors. It wouldn’t take long for the profits to get squeezed down by rate competition.

Comment by Stu Wednesday, Jun 17, 15 @ 4:09 pm
The IPI claims to have the numbers for trucking comp premiums. 7th graphic down.

https://www.illinoispolicy.org/new-data-reveal-illinois-broken-workers-compensation-system-in-graphics/

Comment by Grendel Drendall Wednesday, Jun 17, 15 @ 4:13 pm
=RNUG and others making this spurious allegation. If this is true, why did self insured businesses not see a drop in rates? This slander against insurance companies is a falsehood put out by those who are threatened by real WC reform.=

Why not make insurance premium oversite and transparency part of the process? It does no good for businesses if there is reform without premium reduction.

Comment by Anonymous Wednesday, Jun 17, 15 @ 4:14 pm
The Oregon study - http://www.oregon.gov/DCBS/docs/news_releases/2014/workers-comp-rate-study- 14.pdf - ranks all 50 states and the District of Columbia by the amount insurance premiums rose or dropped in the last two years. It highlights that Illinois had the steepest reduction in workers’ compensation rates when compared to the median, with an estimated rate drop of 24 percentage points between 2012 and 2014 compared to the national median reduction of only 2 percent. http://www.iwcc.il.gov/PR101614.pdf

Comment by Liberty Wednesday, Jun 17, 15 @ 4:17 pm
Let’s go back to Rep Will Davis questioning the loss of jobs at DCEO if privatization takes place. I know Rep Davis was questioning DCEO’s Director Schultz, but Speaker Madigan at his press conference on Tuesday basically appeared to support the elimination of these same jobs with a sunset provision relating to the privatization of DCEO. So does Will Davis disagree with the Speaker’s apparent endorsement of privatization of DCEO? Because the Speaker wasn’t crying over the loss of these state jobs either.

Comment by Rod Wednesday, Jun 17, 15 @ 4:22 pm
—“I didn’t come here to create jobs just for the state of Illinois,” Schultz said, raising his voice. “I came to create jobs for every citizen in the state of Illinois, all 12.9 million citizens. In the end I care about net jobs, not about a particular agency.”

The remarks drew applause from Republicans in the chamber.

“I don’t understand why you are all clapping, I’m asking a workforce question and he’s not answering,” Davis shouted as Schultz talked over him.

Schultz said if DCEO was closed entirely, as some lawmakers asked, the state would lose 400 “middle class jobs.” If it’s privatized, he said there would be no net loss to Illinois, with about half moving to the private sector—

Ummmm wow, I have a friend who was on the conference call to all DCEO employees when the PPP bill was filed. Schulz flatly stated that only some of the current employees would be asked to join the PPP. He in no way shape or form stated that 200 or half of the employees would go to the PPP. In addition the Public side would be a small department. I can’t help but think that Schultz flat out lied about this. FLAT OUT LIED. This really angers me. I cannot see how saying that there would be no net loss in jobs to Illinois could be true.

Comment by Fudo Wednesday, Jun 17, 15 @ 4:25 pm
Just a point of fact. In our company’s job classification Illinois WC rates (prior to experience mod and credits) are $5.47 per $100 of payroll. In Indiana same job class is $3.00 and Michigan is $4.16. Don’t kid yourself that kind of cost differential is noticeable.

Comment by A Watcher Wednesday, Jun 17, 15 @ 4:38 pm
Talk about taking a quote out of context, just so we can have fun criticizing!

If you read Cullerton’s whole statement above, what he said was having no workers’ comp at all would not help the economy, or any business, because the costs in court would skyrocket.

He has and will again support improvements to Workers’ Comp that are both fair and result in lower net costs to businesses.

In fact, those improvements will be agreed before we have any other agreements. The question is will that be enough to begin seriously discuss the budget itself.

Comment by walker Wednesday, Jun 17, 15 @ 4:44 pm
===Do we need more Work Comp reform or do we need stricter insurance company regulation?===

Both.

Comment by A guy Wednesday, Jun 17, 15 @ 4:55 pm
Walk, I doubt the hysterics read more than the headline. Taking something out of context would require unnecessary effort for the “point” being made,

Phocion, is it really possible to slander an insurance company? That hasn’t been my life experience, as truth is a defense.

Comment by Wordslinger Wednesday, Jun 17, 15 @ 4:55 pm
Ahoy, please don’t be so cavalier about people losing their jobs. It’s so hard to find good jobs out there and some of those folks have put in a lot of faithful and good service. These are people who dont make the decisions or policy. They are regular folks whose families depend on them.

Comment by Honeybear Wednesday, Jun 17, 15 @ 4:58 pm
What I have seen through the years is any company. that makes these types of claims, are looking for deals from the governor to keep them in Illinois, something Quinn was very good at working with.. I really don’t think Rauner has a clue and probably thinks that if he gets the reforms, these businesses will actually stay…

Now as for those $$$, I don’t think he can really make those savings. First of all I am certain that he has private worker’s compensation Insurance and negotiates with that company as to what he will offer his employees. That being said, the only possible explanation would be Iowa’s premiums are cheaper than Illinois, but that isn’t because of worker reforms, it is because Illinois has more workers and a higher living expenses than Iowa. Furthermore he won’t move the entire business, just the headquarters as that is what determines the rates, that businesses pay.

Now here is a link that supports Cullerton’s assertion that the state HAS been working on worker’s compensation reform…

http://www.chicagobusiness.com/article/20140730/BLOGS02/140739976/quinn-illinois-workers-comp-rates-to-fall-5-5-percent-in-2015

Also I do not think that the owner “Tennant” knows what he is talking about. Comparing the two worker compensation requirements, Iowa’s is pretty wide ranging while Illinois is narrower.

https://www.iowaworkforce.org/wc/faq.htm#What

http://www.iwcc.il.gov/handbook.pdf

Comment by Kelly Speaks Wednesday, Jun 17, 15 @ 5:19 pm
Unless Tennant can produce some real numbers and evidence of his claim that WC ins costs him $450,00 more than it would in Iowa, I don’t think we can put much stock in those figures - especially when he was using those figures to introduce Rauner, who also likes to make up figures.

Comment by Joe M Wednesday, Jun 17, 15 @ 6:41 pm
==Let’s do some math. I assume the $450,000 is a yearly savings and not say over 10 years. The study everyone uses for work comp is the Oregon study. The latest study has Illinois work comp costs at $2.35 per $100 of payroll and Iowa’s at $1.88. So for every $100 of payroll, the company would save $0.47. That means to save $450,000, the company has to have a payroll of $95.7 million==

So Tennant Trucking would have to have a $95.7 million annual payroll for it to be costing them $450,000 more in WC than being in Iowa would.

http://www2.illinoisbiz.biz/communityprofiles/profiles/COLONA.htm#employment
shows that Tennant Trucking employes 238 employees. Correct me if I am wrong, but $97.5 millions in payroll among 238 employees means that each employee averages about $410,000 in salary. I am in the wrong field of employment.

Comment by Anonymous Wednesday, Jun 17, 15 @ 7:45 pm
That was me who made the last post about averaging $410,000 salary

Comment by Joe M Wednesday, Jun 17, 15 @ 7:47 pm
To follow up on my previous post, I think the way to fix (i.e. lower the costs) of the IL system is to speed up the process. The specific changes to the system should be removing much of the employer’s say in the injured worker’s treatment. And diagnostic treatment should prioritized but payments amounts for such treatment reduced. (Sort of like how your health insurance company pays $20 for a panel of blood work, so everyone gets it); but in comp, it’s a struggle to get diagnostics. Emphasis should be placed on returning as soon as possible, even if it’s light or restricted duty. the law is written that way but not actually practiced. In short, speed up cases, speed up healing, and save money.

Comment by debitor Wednesday, Jun 17, 15 @ 9:14 pm
@Gooner 2:06 =If it is the fault of WC/EL carriers, why don’t we see similar issues in other states?

Other states force the insurance companies to open their books, and other states regulate the profit margins of W/C companies.

Comment by DuPage Wednesday, Jun 17, 15 @ 9:26 pm
- Tone - Wednesday, Jun 17, 15 @ 1:22 pm:

Workers Comp reform is a must. Or we will continue to see jobs leave downstate for Indiana and other low cost states. With the jobs go the people. IL lost 10K people last year. Almost exclusively from downstate as the Chicago metro continues to grow.

I don’t know where you live, Tone, but as someone who grew up on a farm downstate and moved to a college town for a job, I can tell you that downstate has been declining for almost 100 years now (Deep Downstate almost since the end of the Civil War), and it isn’t going to end. Farms are becoming larger and more mechanized, requiring fewer laborers. Factories are going over to China or getting robots, requiring fewer people. If you’re a relatively sharp kid, there’s a decent chance your high school doesn’t offer AP or Honors courses, so you’re starting college academically handicapped next to peers who had those opportunities and are better prepared for college-level work.

Downstate can be breathtakingly beautiful–I tell friends the reason I live on a brick-lined street in the middle of my town is so that I can pretend the flat cornfields surrounding this town don’t exist (my home downstate had hills and forests), but if you can’t get a job and you know your kids will be in a school that offers a crappy education, you’ll get the heck out of Dodge and go to Chicago or some other large city.

WC reform may reduce the outmigration at the edges, but it will not fix the outmigration.

Comment by Lynn S, Wednesday, Jun 17, 15 @ 11:43 pm
==With regards to the trucking company==

Actually the trucking company provides good jobs for 238 employees. And looking at their Web site, it seems like a good company and an asset to Illinois. I just think that the owner uses some fuzzy math to try and lend support to the Governor.

Comment by Joe M Thursday, Jun 18, 15 @ 7:36 am