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Understanding the Impact of Recessions on Workers Compensation

August 30, 2023 by Patrick Coate and Cristine Pike

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.
Executive SummaryIn 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.