December 20, 2014  
 
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History of Workers Compensation

The history of workers compensation is a history of problem solving. While workers compensation is not perfect, it has allowed our economy to thrive in a way that would not otherwise have been possible.

What's the oldest insurance program in the United States?
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Many would argue that it's our workers compensation system.

To understand the history of workers compensation, it's best to understand how things worked before we had a workers compensation system.

Before We Had Workers Compensation

After the Industrial Revolution, workplace injuries became more common. A huge number of people took manufacturing jobs. While working in factories, these employees would often be injured from heavy machinery or other hazardous work conditions.

Once an injury occurred, a prototypical fight ensued. If the company owner and the employee could not come to any terms, the employee was left with one option: sue their employer. It was lose-lose. Employees did not get adequate medical attention. Employers were tied up in the legal system and risked losing everything in court.

Workers Compensation to the Rescue

Workers compensation emerged as a concept to make a workplace injury less damaging to employees and employers alike.

Like the United States itself, workers compensation can trace its roots to Europe.

In 1884 Germany was a pioneer in workplace law with its Sickness and Accident Laws, passed in 1884. Just a decade later, in 1897, England created its workers compensation system.

The United States saw the value in these European workers compensation programs. In 1908, a workers compensation system for federal workers was created. Subsequently, the states implemented their own workers compensation rules.

The first state workers comp framework was introduced in 1911, with Wisconsin being the first state to offer it. The goal was simply to ensure that workers got appropriate medical care and financial compensation for their injuries. At the same time, an equally important goal was to limit the liability of the employer, ensuring that an employer could not lose their entire company due to a workplace accident.

This was called a "no fault" solution, and it systematically structured how workplace injuries were handled. After Wisconsin, other states quickly adopted their own state workers compensation regulations.

To be sure, workers compensation solved a very large problem. Without our workers compensation system, we would be a very unproductive economy…with the exception of lawyers who would be very busy.

Workers Compensation Is Good But It's Not Perfect

While the solution above may sound simple, don't be fooled. Workers compensation is incredibly complex. In large part, that's because each of the fifty U.S. states has their own workers' compensation regulations. There's still plenty of room for controversy over a workplace accident. A huge population of lawyers make a living from worker's compensation cases. That's because what's fair is in the eye of the beholder. For a given injury payout, many parties may not be happy. It could be the company, the insurer, the hurt employee, or the injured employee's family. That's when the lawyers get involved and that's when what was supposed to be a simple system gets out-of-control complex.

Workers compensation reform is something that many people would love to see. However, serious workers compensation reform is unlikely. It's a complex issue that most people don't care much about. The costs are fairly hidden, and the lobbyists are anything but hidden, working diligently to keep the status quo in place. After all, many people own big houses and expensive cars as a result of the inefficiencies in the workers comp system.

But as frustrating as it can sometimes be, we can all be very thankful for our workers compensation system. The history of workers compensation is ultimately a history of problem solving that has been very effective. Indeed, without workers compensation, our economy would likely grind to a halt.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Five Things To Know About Workers' Compensation
Workers Compensation Consultants
History of Labor Unions


Conversation Board

Have something to add about the history of workers compensation? We welcome all comments, questions and tips. Thanks.

eagle1 9/27/2010

I have been hurt at work s1 nerves lower back .L arm tendon .also cerebrial nerve damage ...My ime said i have injuries that will most likely will be permanant ...I have two children and i am only 45 ..I dont like these meds seem addictive very strong ...I dont think this system seems fair especially for permanate damage how do i send my kids to college???? What to do now? Richard


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