Workers and employers in the U.S. have endured 17 recessions during NCCI’s 100 years of operation.

Executive Summary

In late July, the staff of the U.S. Federal Reserve was no longer forecasting a recession in 2023. But with talk about the prospect of a recession or soft landing still circulating, Carrier Management asked NCCI to describe how recessions typically influence workers compensation results. Here, NCCI representatives focus on changes in three contributing factors: employment, industry composition and employee tenure. Beyond providing insights into how future recessions might impact the comp landscape, this look at 17 past recessions reveals that commonly held assumptions about their impact on workers comp claims may not hold up under scrutiny.

Recessions produce far-reaching consequences on the economy, and the extent of those impacts depends on the severity, length and nature of the economic downturn. While there are some similarities across recessions, each one has impacted the economy, workers and the workers compensation system in unique ways.

Employment, Industry Composition and Employee Tenure

During a recession, employment levels decline as businesses face economic challenges and reduce their workforce. The simplest impact on workers compensation is that with fewer workers, overall payroll decreases, leading to a reduction in workers compensation premium.

NCCI’s research, conducted across several decades, has explored the relationship between injury frequency and fluctuations in employment. There are two main channels by which this occurs.

First, as businesses reduce their workforces, the industry composition changes. For example, in the Great Recession, the construction and manufacturing industries suffered the largest percentage of employment losses. These industries have high injury rates per worker or per payroll.

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