Tag Archives: inflation

Increase in mileage payments necessary for injured workers in Nebraska, but inflation erodes the value of workers’ compensation benefits

Posted on June 20, 2022 by Jon Rehm

In Nebraska workers’ compensation benefits are not indexed for inflation. Further inflation can work to decrease the amount of benefits paid in addition to the value of those benefits.

The Nebraska Workers’ Compensation Court announced earlier this month that mileage reimbursement for medical and vocational travel will increase from $.585 per mile to $.625 a mile effective July 1, 2022.

The rule change should benefit injured workers – particularly those who live in rural parts of Nebraska who are often required to travel long distances to larger cities for specialized medical care. But increased travel costs are part of a broader trend of rising inflation. That trend will impact injured workers in less helpful ways.

Workers’ compensation benefits are set by an employee’s wages at or near the time of injury. Inflation is rising at a rate higher that wages. So workers are starting their claims with reduced real wages.

Inflation is bad for injured workers in Nebraska (and most places) for other reasons. In Nebraska, weekly workers compensation benefits are fixed at earnings near the time of injury. Nebraska doesn’t adjust those benefits for inflation. Even when inflation was more moderate injured workers got a raw deal because the value of their benefits declined relative to inflation. Higher inflation just further erodes the grand bargain of workers’ compensations.

But inflation doesn’t just decrease the purchasing power of workers’ compensation benefits, it can reduce the nominal or gross amount of benefits awarded.

An award of permanent disability benefits is based on how the injury effects a person’s ability to earn a living. Further, injured workers who have long lasting injuries often have their disability determined by wages at the time they healed from their injury. So even if an employee can’t increase their benefits for inflation, their earning power is based wages that have inflated while they have been healing from their injury.

Again, even during times of modest inflation workers could get nickeled and dimed a 2.5-5 percent of loss of earning power based on inflation. Higher inflation will probably mean that loss of earning power benefits will be further discounted. I’ve written about how to argue against using inflation in lost of earning power analysis. I think those kinds of arguments will be more urgent with higher inflation, but I don’t know how appellate courts will come down on the issue.

While higher inflation is an overall negative for most injured employees, there could be some positive effects of higher inflation.

One bit of good news is that higher transportation costs could increase awards of permanent disability

An award of permanent disability benefits is based on how the injury effects a person’s ability to earn a living. That hinges in part on where you live. Commute costs factor into the amount of available jobs and will be considered by Judges in how disabled an individual is for the purposes of workers’ compensation. Higher commuting costs tend to lead to higher disability awards.

Commute costs can also be a decisive factor in deciding whether an employee is permanently partially or permanently totally disabled. Permanent partial disability benefits are limited to 300 weeks while permanent total disability benefits are paid out over a lifetime. The difference can amount to hundreds of thousands of dollars.

Maximum benefit rate for workers comp. benefits in Nebraska increases unprecedented 7.5 percent for 2022

Posted on December 20, 2021 by Jon Rehm

Wages in Nebraska increased by 7.5 percent in 2021 according to the Nebraska Department of Labor. This is the largest percent increase since at least 1996. How will this impact workers compensation in Nebraska?

Increase in maximum benefit amount

The maximum benefit rate for workers compensation benefits in Nebraska increased from $914 to $983. Since 1996 the workers compensation maximum benefit rate has been pegged to the increase in the state average weekly wage.

Typically statewide average wages increase by 3-4 percent per year. The increase in 2021 is unprecedented and is consistent with labor shortages related to the so-called “Great Resignation” and the COVID-19 pandemic.

Under the new maximum benefit rate, workers earning more than $76, 674 per year without overtime will be under compensated for their work injury.

No increase in minimum benefit

The minimum benefit under for injured workers in Nebraska remained $49. That amount doesn’t increase along with the state average weekly wage. If it had, the minimum rate would be $117.76

Part-time workers should note that permanent disability benefits and eligibility for retraining are based on a 40-hour work week.

Wage inflation and loss of earning power

Earlier this year, I wrote about a Mississippi case, Chambers v. Howard Industries, that allowed courts to take inflation into account when calculating loss of earning power. Mississippi law includes a presumption of no loss of earning if an employee is back to work at the same wage. The court in Chambers allowed plaintiffs to use wage inflation to rebut that presumption.

In my experience wage inflation comes into play with overuse injuries involving multiple body parts that take years to treat. Some back surgeries can have long recovery times. Even with wage inflation of 10 percent, I’ve been able to get counselors to increase loss of earning power evaluations. I would expect greater increases if I could use a 15-20 percent increase over a multi-year period.

Some defense lawyers strongly objected to the use of wage inflation in loss of earning power evaluations. After all benefits are capped by earnings at and before the time of injury.

But using wage inflation doesn’t increase the benefit rate, it just increases the percent of the potential benefit for the worker. I would argue the proposition that loss of earning power evaluations should accurately reflect earning power weigh in favor of using wage inflation.

What renewed concerns over inflation could mean for analyzing loss of earning power in workers’ compensation

Posted on November 15, 2021 by Jon Rehm

Last week the United States Department of Labor announced inflation reached a 30 year high. Here in Nebraska, the Governor announced a $8 p/h or 40 percent pay increase for corrections officers. But how could eye popping wage increases and renewed attention to inflation impact workers’ compensation in Nebraska?

Back in February, I wrote a post about a Mississippi decision that took wage inflation into account when determining loss of earning power. Loss of earning power determines how permanent disability (and sometimes temporary disability) are paid. Put another way, the Mississippi court held that just because overall wages increase that doesn’t mean an employee’s earning power increases along with wages. After all, earning power is a measure of an employee’s ability to compete for jobs not necessarily wages earned.

The issue of wage inflation matters in workers compensation because workers are often stuck with benefit rates based on their wages at the time of the accident. In some cases, loss of earning power, or how the injury impacts their ability to work may not be decided until a few years after the accident,

Put yet another way, employers try to use wage inflation to reduce loss of earning power benefits. In times of more moderate inflation, it seemed as if some courts would adopt those arguments.

But with renewed attention to inflation and news of major wage increases, hopefully workers’ compensation courts will start raising an eyebrow when an employer argues that wages have increased for an injured worker since the time of their injury.

In Nebraska, loss of earning power is often calculated by vocational counselors who write loss of earning power assessments. I used a wage inflation argument to get a counselor to nudge up a loss of earning power assessment for a lower wage worker with a small amount of loss of earning power. I was also using wage inflation data between 2018-2020 before the post-pandemic labor shortage really took effect.

The state of Nebraska will announce wage inflation numbers 2021 shortly and those will be adopted by the Nebraska Workers Compensation Court. My educated guess is that plaintiffs should be able to use these numbers to push up the value of loss of earning power assessments further. Every 10 percent of loss of earning power is worth $12,000 to a worker making $15 p/h on a 40 hour week.

Wage inflation should become a good argument for plaintiffs in workers compensation cases.

A common sense decision on loss of earning power and inflation from Mississippi

Posted on February 15, 2021 by Jon Rehm

The Mississippi Court of Appeals found that a worker who was still employed with their employer and earning a higher wage than before the injury was still entitled to an award of 20 percent loss of earning power.

So a lot of workers comp. heads who read this blog may wonder why this decision blogworthy and why it applies to Nebraska?

The answer to those questions is 1) I think the reasoning behind Chambers v. Howard Industries is interesting and it questions some assumption behind a recent Nebraska Supreme Court case on apportioning benefits to previous injuries.

In his post on Chambers, commentator Thomas Robinson pointed out that the plaintiff proved that since his job was altered to fit his restrictions that helped prove that he had lost earning capacity which is different than wages earned. The Mississippi Court was also persuaded by the fact that average wages had increased between the time of the plaintiff’s injury and the award, so an increase in wages wouldn’t necessarily equate in an increase in earning power.

I think the Chambers decision is also fair and equitable in that workers are stuck with benefit rates based on their date of injury. Additionally, in Nebraska, workers’ compensation benefits don’t increase along with the cost of living or inflation. Fairness should dictate employers can’t use inflation to decrease benefit payments to workers under these circumstances.

Apportionment

This summer the Nebraska Supreme Court more or less ignored these arguments in the Picard case. In Picard the Nebraska Supreme Court found it was error to award an injured worker additional loss of earning power benefits for an injury to a different body parts because they were working for the same employer at a higher wage.

Chambers is distinguishable from Picard in that Chambers didn’t involve apportioning benefits paid from a prior injury. Mississippi law is also different from Nebraska law in that there is a formal presumption that an employee who is earning more after an injury does not have a loss of earning power. At least in cases where there was prior payment of loss of earning power, courts in Nebraska are still clearly looking at how an injury effects your ability to earn wages and not solely earned wages post-injury in determining loss of earning power.

I believe the Chambers decision adds some persuasive weight for employees arguing that overall increases in wages should not factor into determinations about loss of earning power. It’s not unusual to try workers compensation cases a 2-3 years after a date of injury. From 2018 to 2021, the average wage in Nebraska has increased nearly 10 percent. Chambers stands for the proposition of law that increases in wages in line with the overall increase in wages should not factor into a loss of earning power analysis.

Close cases with two member LOEP

While a 10 percent different in wages may seem relatively insignificant it may mean the difference between an employee being found to have a 30 percent loss of earning power for the purposes of a multi-member impairment and being stuck with compensation for scheduled member impairment for purposes of Neb. Rev. Stat. 48-121(3)

Loss of earning power is determined by a formula that takes wages, education, location and other factors in to account. Changes to the variables in the formula can lead to significant changes in loss of earning power. The difference between compensating and injury based on scheduled member impairments or at 30 percent loss of earning capacity can add up to 45-60 weeks of benefits which for an employee earning $15 per hour for a 40 hour week can up to between $18,000-$24,000.

This Is How Americans Spent Their Money in the 1950s

Posted on February 1, 2016 by Emily Wray Stander

Today’s post is an article that was shared by Tomasz Stasiuk, a Colorado lawyer, and comes from www.wisebread.com

Every once in a while, this blog gives a person a chance to take a step back and think about both personal priorities and philosophies and what is happening in the larger society and how those trends affect workers and their loved ones in the big picture. This blog post is one of those moments.

Were we, as persons, or we as a society better off “way back when”? As can be seen in the article below, I think it depends on whose “way back when” we’re focusing on.

There were definitely some positives from the article for many: buying power comes to mind. But it is possible that the negatives for others, such as society-sanctioned racial discrimination and limiting women to certain roles, outweigh the perceived positives. In fact, entire books, such as “The Way We Never Were: American Families and the Nostalgia Trap” are devoted to these issues.

I wish the article below explored worker safety in the decade of the 1950s, too, as I hope, being an idealist, that it has improved overall, both for society and individuals, since then. However, I was very glad to see salary information, as that definitely affects workers and their families or loved ones.

Though at first glance an “average yearly income” of “$3,210 in 1950” and $5,010 in 1959” seems small for a household, it was a different era regarding buying power.

I really do appreciate that prices from the 1950s are translated to today’s dollars, so you can see how both buying power was different and the evolution of consumer culture happened. This includes focusing on housing, autos, televisions, spare time, and discretionary spending.

The biggest takeaway I got from this article was both how much things have changed and also how they sometimes stay the same (and how for some, remembering the good is the only part of an experience they recall).

Society and individuals have a ways to go in eliminating discrimination, focusing on women workers, and improving worker safety. But it is fascinating that a consumer today would mostly understand “how Americans spent their money in the post-war 1950s.”

“That’s because the spending habits we consider normal were born in the post-war 1950s. Prior to that decade, few households could boast discretionary spending, and before television, there were not as many large-scale outlets that allowed advertisers to tempt consumers into unnecessary spending.

“We may no longer consider a 983 square foot house or a car with a rusted-through hole in the floor to be normal, but our expectations for spending discretionary income remain mostly the same.”

So is your household or family unit better off than you would have been “way back when”? And what will productivity, progress and success look like for a worker and family unit or loved ones in 50 years?

Only time will tell.

Americans tend to think of the 1950s as an idyllic time when the babies were booming, the jobs were plentiful, and the country was flourishing.

Our parents and grandparents had good reason to feel prosperous. The average yearly income rose from $3,210 in 1950 to $5,010 in 1959, and post-war Americans were enjoying access to products and services that were scarce during World War II. Finding good uses for disposable income in the 1950s began the American love affair with consumerism. That love affair that continues to this day — although our spending priorities may have changed somewhat over the years.

Here’s how Americans spent their money in the post-war 1950s, and how their spending habits compare to ours in the 2010s.

White Picket Fences

The American dream of owning a home has deep roots the 1950s. Not only were many of the 16 million returning WWII veterans looking to buy homes, but the GI Bill offered them liberal home loans, and the end of the war saw the beginning of the baby boom, all of which drove demand for affordable houses.

Large homebuilders met that demand. They began applying assembly-line methodology to home building — by using panelized construction and drywall rather than wet plaster — which allowed them to create “cookie cutter” tract housing, giving birth to the modern suburb. An amazing “three out of five families became homeowners, and suburban living became a national phenomenon.”

There was a dark side to this housing…

[Click here to see the rest of this post]

Workers' Compensation Watch

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Tag Archives: inflation

Increase in mileage payments necessary for injured workers in Nebraska, but inflation erodes the value of workers’ compensation benefits

Maximum benefit rate for workers comp. benefits in Nebraska increases unprecedented 7.5 percent for 2022

What renewed concerns over inflation could mean for analyzing loss of earning power in workers’ compensation

A common sense decision on loss of earning power and inflation from Mississippi

This Is How Americans Spent Their Money in the 1950s

White Picket Fences

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