Highlights findings from three studies on the adequacy of wage-replacement benefits for workers in Canada and the United States who became disabled while on the job.

Because it is important to compare diverse wage-replacement benefit programs, the authors review the findings from three studies. The studies focused on whether the programs provide an adequate level of benefits, not so low that “injured workers will struggle to recover and perhaps become a burden on society” nor so high that “employers will bear unnecessary expense and injured workers may be tempted to malinger” (p.1). The three studies focus on different geographic areas and time periods:

  • “Reveille et al. (2001) evaluate the benefit adequacy of workers’ compensation for permanent partial disability (PPD) claimants in New Mexico” (p.1) using wage loss design.
  • “Tompa et al. (2010) have contributed a more recent Canadian perspective to this body of work … comparing] the benefit adequacy of three Canadian compensation regimes” (p.2).
  • The Workers Compensation Research Institute and the W.E. Upjohn Institute for Employment Research recently “collaborated on a study of benefit adequacy of the workers’ compensation system in Michigan” (p.3).
(Abstractor: Author and Website Staff)

Major Findings & Recommendations

The resource highlights major findings from each of the summarized studies and includes details about how adequate these wage-replacement benefit programs are, while also noting that making comparisons of these programs is extremely difficult: • The New Mexico study found that the state “had a [wage] replacement rate that was in the middle” (p.2) compared with four other states. • The resource says that the Canada study found that “all three of these Canadian regimes were substantially more generous in replacing lost earnings for injured workers than any of the U.S. jurisdictions studied previously” (p.3). • “While Michigan shows a good short-term wage replacement performance compared to other states, the workers’ compensation wage loss benefits in Michigan do not prevent the long-term earnings decline of injured workers relative to those with medical-only injuries” (p.4). In addition to comparing findings from these individual studies, the resource explains that overall, wage-replacement benefit programs need further study. “Although we have a better understanding of some of the determinants of adequacy, they are overwhelmed by the impact of methodological assumptions underlying research results” (p.4). A new study looks promising; it involves a worker-interview-based series called Predictors of Work Outcomes. This study will take place in at least eight states and is sponsored by the Workers Compensation Research Institute. (Abstractor: Author and Website Staff)