New York is famous for being a high cost state for workers compensation. By any reasonable measure, New York falls within the top four states for high comp cost, sharing the dubious spotlight with California, Texas and Florida. With its unique paternalistic approach, the state requires multiple hearings during the course of a routine claim. While attorneys in most states earn their fees by negotiating lump sum settlements, in New York they just have to show up. And show up. And show up.
New York is a tough state for writing workers comp. They are in the midst of a struggle to establish new rates -- and unlike many states, this is not a question of how deep to cut current rates, but rather how steeply to raise them. The initial request from the New York Compensation Insurance Rating Board was designed to get everyone's attention: a whopping 29%. As that most quotable of New Yorkers, Yogi Berra, might say, "It's deja vue all over again." It's been over a decade since most states have seen a rate increase request of that magnitude. But that extravagent request was subsequently withdrawn by the board and replaced by a more modest -- but hardly less aggravating -- 9%. Wait a few days and it changes again. The most recent request on the table is for 16.1%.
It's hard to follow the bouncing ball, but one thing is clear. Rates are likely to go up, because costs are out of control. New York's system, one of the first in the nation, still embodies the deeply adversarial divides of labor and management. It's a system full of friction and conflict. When the ball bounces in New York, it lands squarely on the heads of New York's employers, who pay the price for a dysfunctional system. Overall, New York ranks pretty low (45th) in general friendliness to small business. It will take political will and courage to turn this situation around. That's not exactly what we see on the immediate horizon. So for the time being, when it comes to rates for comp in New York, it's like the architecture in Manhattan: how high will they go and how fast?