substantial increases in the cost of workers' compensation insurance. Not surprisingly, these increased costs are beginning to cause serious affordability problems for a growing number of small businesses and employers in hazardous occupations throughout the country. In some areas, where insurance companies have pulled out of the workers' compensation market entirely, due to inadequate rate structures, availability problems are materializing as well. S. 420 continues the approach which has contributed to present problems, focusing primarily on higher benefits and expanded coverage. Enactment at this time would impose a new set of requirements on the states in the midst of efforts to balance coverage and benefit needs with improvements in administration and delivery systems. It would simply exacerbate the present imbalances which exist between increasingly liberalized benefits and the persistent abuses in the determination and adjudication of such benefits. Any attempts at comprehensive reform, we fear, would be placed in jeopardy. In our opinion, what is most needed at this time is for the states to put the workers' compensation equation back into balance; for them to undertake a comprehensive review of the total workers' compensation system. Some states are already making impressive strides in this regard, the reports of special study commission in Minnesota and Florida being recent examples. For these reasons, we believe it would be both functionally inappropriate and economically unsound to enact S. 420. While we must oppose this legislation, we do feel that the federal government can significantly contribute to efforts to improve existing workers' compensation systems by providing "technical assistance" to those states demonstrating the need for such aid. The Professional Insurance Agents will continue efforts through our state and regional affiliated associations to enact legislation at the state level designed to achieve comprehensive reform of the entire workers' compensation system-so as to maintain a workers' compensation system which is equitable, yet affordable. AMERICAN TEXTile ManufactuRERS INSTITUTE, INC., Hon. HARRISON A. WILLIAMS, Chairman, Committee on Labor and Human Resources, U.S. Senate, Washington, DC. DEAR MR. CHAIRMAN: We respectfully request that the enclosed statement be included in the record of the Committee's hearings on S. 420. Sincerely, W. RAY SHOCKLEY, Executive Vice President. Enclosure. PREPARED STATEMENT OF THE AMERICAN TEXTILE MANUFACTURERS INSTITUTE, INC. ATMI appreciates deeply the opportunity to record its objection to S. 420 and other similar bills alleged to strengthen state workers' compensation programs as set forth in the findings and declaration of purpose of S. 420. The American Textile Manufacturers Institute is the national organization for the textile mill products industry in the United States. ATMI's members constitute about 85 percent of the spinning, weaving, knitting, and finishing capacity for domestic textile mill products. Our objection may be concisely stated: S. 420 would effect substantial federalization of state workers' compensation programs; and be a radical departure in scope and effect from the history and current status of workers' compensation and employers' liability programs. I. HISTORY OF WORKERS' COMPENSATION We know that workers' compensation laws are designed to provide satisfactory means of handling occupational disabilities. They were enacted, starting about seventy years ago, to change the slow, costly and uncertain process arising from the common law principle that a master or employer was responsible for injury or death of employees only when resulting from a negligent act by the employer. Today each of the fifty states has a workers' compensation law. Federal workmen's compensation laws have also been enacted; for example, the Workmen's Compensation Law of the District of Columbia, the Federal Employees' Compensation Act, and the U.S. Longshoremen's and Harbor Workers' Compensation Act. Workers' compensation laws basically (1) provide sure, prompt and reasonable income and medical benefits to work accident victims and income benefits to their dependents regardless of fault; (2) provide a single, economical, simple and more prompt remedy; (3) relieve others of the financial drain incident to uncompensated industrial accidents; (4) encourage maximum employer safety and rehabilitation interest through appropriate experience-rating mechanisms; and (5) promote frank study to reduce preventable accidents. II. THE NATIONAL COMMISSION ON STATE WORKMEN'S COMPENSATION LAWS In 1972 evaluation by the National Commission concluded that state laws were not living up to their potential. The Commission nevertheless was convinced that workers' compensation is a fundamentally sound system and a valued institution in our industrial economy. In January_1976_ the policy group of the Federal Interdepartmental Workers' Compensation Task Force reported its findings on the need for reform of state workers' compensation programs to the President and the Congress. Essentially the Task Force found that existing programs must be reformed to bring about more effective management at the state level. We feel these programs are improving in that the U.S. Department of Health, Education and Welfare estimated that employers spent $7.8 billion in 1974 to insure or self-insure their work-injury risks. This was over one billion more than the amount spent in the previous year. In comparison the amount spent in calendar 1976 was estimated at $10.8 billion. There have been many changes in state laws since the National Commission's 1972 evaluation and the subsequent Task Force findings. In 1977 alone nearly three hundred laws were enacted by state legislatures covering almost every phase of workers' compensation such as increasing benefits, coverage, reducing waiting periods, increasing medical care and improving administration of the laws. Undoubtedly much of the legislation enacted in recent years was a result of the impact of the recommendations of the National Commission and the Task Force findings. According to the U.S. Chamber of Commerce, indemnity benefits have been increased in all states in recent years. Forty-two of the states now provide for automatic adjustment of benefits annually, based on the state average weekly wage. In forty-three states the maximum weekly benefit now equals or exceeds 663 percent of the average weekly wage for temporary total disability cases. Of these twenty-three states pay 100 percent or more. In all jurisdictions medical care benefits are now unlimited. And broad coverage of occupational diseases is now provided in all jurisdictions. Most jurisdictions now provide compulsory coverage and coverage is an elective in only three states. Most jurisdictions now require employers to obtain insurance or prove financial ability to carry their own risk and virtually all industrial employment is now covered by workers' compensation. We should note here that workers' compensation does not seek to cover all worker health problems. To make this distinction fairly uniform statutory definitions and tests have been adopted in each state. Typically the statute limits compensation benefits to personal injury caused by accident or disease arising out of or in the course of employment. III. HOW THE SYSTEM HAS WORKED In the business community and at state and local government levels there is basic agreement that the present system of workers compensation has been improved and works well for interests concerned. In the overwhelming majority of states, benefits paid have more than kept pace with increases in spendable income. According to UBA Inc. of Washington, D.C. all states but Arizona have increased their weekly benefit amounts since 1975 and in several states management and labor representatives work out so-called "agreed bills" of proposed state workers' compensation improvements. Usually these "agreed bills" are subsequently enacted into law by the state legislatures. The state methods of handling and improving workers' compensation have a long history of basic labor/management cooperation and have served the country well for over half a century. IV. THE BASIC ISSUE-WHO SHALL DECIDE We are deeply concerned over the impact of S. 420 on the entire workers' compensation program. The basic issues are the proper level of government-federal or state to make certain decisions in the workers' compensation field and whether the federal government and the Labor Department in particular will make decisions properly representing all interests. One cannot speak unemotionally of costs in discussing worker health and rehabilitation. But we cannot ignore them and Congress must not act to allow unnecessary expenditures. Inflation is the deadliest enemy of us all. It has been popular to think the country could spend its way out of economic difficulties and increase employment by boosting government required expenditures. Clearly that option no longer exists and, if it ever did exist, it only worked by injecting a bigger dose of inflation into the economy followed by a higher level of unemployment. Substantial sums must be spent in the prevention, treatment, cure and rehabilitation of job-related disabilities. However there certainly can be a real question raised concerning the identity of those making the ultimate decision in required expenditures. As one example the federal government's General Accounting Office, Congress' fiscal watchdog, has recently declared that hearing loss claims by federal workers have skyrocketed in the past decade. GAO says such claims under the Federal Employees' Compensation Act climbed to 9,000 in 1976 from 500 in 1969. The 36,000 claims in that period amount to an expected liability of about $185,000,000. GAO attributes that figure largely to a Labor Department change in the criteria for determining hearing loss. The Labor Department acknowledges a problem but does not attribute it to the criteria. The Labor Department's criteria, however, the GAO report says, result in the program paying claims to persons without sufficient proof that the hearing loss is permanent or job-related. The report recommends a return to what it considers more accurate methods for determining hearing loss. Further the rising hearing loss payments typify the entire federal employees' compensation program. This program, applicable basically to sedentary occupations, is akin to what S. 420 would now apply broadly across the full economy to all occupations. Further, OSHA now reports that work-related illness and injuries among federal civilian employees including the Postal Service increased 17% during 1976. They report 174,989 such illnesses and injuries during 1976 compared to 149,493 for 1975 and 121,052 in 1974. This is a combined incidence rate of 6.4 for 1976, 5.7 in 1975 and 4.4 in 1974. Again the federal programs appear not to encourage maximum job safety or effective effort to reduce preventable accidents. Our objections go beyond the purely financial impact, important though it may be, and go directly to its impact on the conduct of government and the federal system of government. For under S. 420, Congress will take over and pass to the executive branch (Department of Labor) more and more of the responsibility for deciding how a state shall meet the local needs of its local citizens. We recognize, of course, that under our federal system of government the national interest dictates that certain functions be controlled by the federal government. Another principle of our federal system is that the federal goverrnment should abstain from getting involved in certain local activities. Workers' compensation legislation has been before Congress for the past several years but there has been no compelling necessity for these bills to move them beyond the committee level. S. 420 has basically evolved from these previous attempts. Workers' compensation after all is the oldest form of social insurance in the United States. Since its introduction it has been state-administered. The various state programs have grown to provide employees and their dependents assured, prompt and efficient aid, financial, medical and rehabilitation in the event of a jobcaused injury, disease or death. Despite this historically sound and effective ap proach to the problem the state workers' compensation system is again being questioned. We believe that much of the criticism of the state framework evolved from the report of the National Commission on State Workmen's Compensation Laws; but that Commission expressly rejected the suggestion that federal administration be substituted for state programs. A current review of the progress made by the states will not support the drastic substitution of federal administration as contemplated by S. 420 Congress has heretofore declined to nationalize the workers' compensation system and has left to the states the final decisions on financing benefits, etc. This arrangement has worked well and there is no compelling reason to change it now. Benefits have increased regularly both in weekly amounts and duration. Rehabili tation and safety have also received considerable attention. State autonomy has permitted relatively rapid adjustment to local conditions (given the normal routines in the legislative process). Some states, to permit even more rapid adjustment than the normal legislative processes permit, have adopted provisions for automatic adjustments in certain conditions. State autonomy has led to healthy differentials to reflect the various states' and localized industries' conditions and philosophies and even when some mistakes were made, they were less serious since they occured on state level and had only limited effects. Probably the most important effect of state autonomy has been the active participation by those directly affected, employers and employees, in the development of state programs generating a sense of responsibility for local affairs. Thus most every session of most state legislatures consider several proposals to amend the state workers' compensation law and all parties affected pay close attention to the proposal. This way the administration of these important laws is conducted in a goldfish bowl. This interest in legislation administration assures that local affairs are conducted in accordance with local needs and that local citizens take full responsibility for their local affairs. Conversely important decisions with important local effects are not decided by federal bureaucrats many miles away with little idea of local health or industry problems. For many years now the original separation of function between the federal government and the states has been under attack by those who for their reasons want to see the system nationalized. These advocates of nationalization have harassed state administrators by unfair criticism and by proposals which would undermine the roles of the states. It may even be suggested that certain of the states having embarked on unwise experimentation in workers' compensation benefits may now extract themselves only by the leveling affect of federal standards. This is not the type of equality the constitutional framers had in mind when they granted to Congess the power to regulate commerce with foreign nations and among the several states. . . V. THE FALLACY THAT BENEFITS ARE INADEQUATE As the Congress known, there is no universally accepted standard of what is adequate or inadequate workers' compensation benefits. What may be adequate in a rural community may be inadequate in a metropolitan community in the same state. What may be adequate in Virginia may be inadequate in California. What may be adequate for a single man in his early years may be inadequate for a middle-aged married man with a family to support. What may be adequate for a married woman who is a secondary wage earner may be inadequate for her husband. Each state is the best soure for determination of these questions. We recognize that what was adequate in 1949 would not be adequate in 1979 and what is adequate today may be inadequate in 1989 or thereafter. State legislatures have periodically reviewed the benefit structures and we are confident that they will continue to make changes necessary to meet changing needs as it has been in the past. This brings us to the second fallacy in this thesis of proponents; VI. THE FALLACY THAT STATES HAVE NOT KEPT PACE We have addressed the criticisms of the National Commission on State Workers' Compensation Laws and the healthy adjustments that have been made therefrom. Such commissions from time to time serve a very helpful purpose and there is no reason to believe that future commissions will not likewise bring about future healthy adjustments. The National use of state weekly wage averages and base years and other measurements of benefits are all statistical measures with flaws. We feel that the state is its own best judge of the benefits amounts needed to care for its people and with the highest incentive to keep injured employees from being a general charge to the state. VII. CONCLUSION At the very least S. 420 seems to charge that the present workers' compensation system hasn't kept up to date or is obsolete, etc. ATMI on the contrary feels that the present worker's compensation system is a credit to the state legislatures who have enacted it. It is a credit to those who have so diligently acted over the years with the assistance and advice of employers, state and local union representatives and others to keep it up to date. And it is a credit to the state and local officials who have administered it. The present state operated system for handling workers' compensation has worked well, will work well in the future, and should not be changed by imposing federal benefit standards. DARRYL ANDERSON, NATIONAL ASSOCIATION OF FARMworker OrgaNIZATIONS, Senate Labor and Human Resources, U.S. Senate, Washington, D.C. Dear Darryl: I have enclosed a copy of our comments regarding S. 420. We wish to submit this statement to the record of recent testimony before the Senate Committee on Labor and Human Resources. Should you have any questions or wish additional information, please don't hesitate to call me. Perhaps we can get together sometime, at your convenience, to discuss it further. Thank you for your consideration. Sincerely, PAMELA BROWNING. PREPARED STATEMENT of the NATIONAL ASSOCIATION OF FARMWORKER ORGANIZATIONS Mr. Chairman and members of the committee, the National Association of Farmworker Organizations (NAFO) is a nonprofit, national coalition of farmworkergoverned, community-based organizations committed to protecting the rights of migrant and seasonal farmworkers. Through our daily contact with these workers NAFO has found that occupational hazards present a serious threat to the lives and well-being of farmworkers today. It is for this reason that Workers' Compensation is of particular importance to the workers whom we represent. NAFO applauds the purpose of S. 420 to establish federal minimum standards for state programs of workers' compensation. However, it is with great dismay that we find that the historical reality of discrimination still persists against farmworkers. the neediest of our country's working poor. S. 420 would perpetuate the exclusion of farmworkers from the same basic rights and protections enjoyed by other workers. While we have no choice but to struggle to correct the injustices of past legislation which discrminates against farmworkers in such areas as minimum wage coverage, child labor protections, collective bargaining and influxes of temporary foreign workers, it is imperative that new legislation guarantee equal protection to agricultural laborers. While the National Commission on Workmen's Compensation recommended that farmworkers be provided coverage equal to other workers. S. 420 denies coverage to: Any individual employed as an agricultural laborer by any employer who did not during any calendar quarter during the preceding calendar year employ more than thirty work-days of agricultural labor. This discrimatory exclusion will arbitrarily result in the unnecessary suffering of many farmworkers and their families. According to Department of Agriculture statistics, twenty percent of all farmworkers will be excluded from the protection extended to other workers under S. 420. And yet, there is no data which remotely suggests that workers on small farms do not need the basic protection offered by workers' compensation laws. In fact, the need for workers' compensation coverage in the agricultural industry cannot be disputed. While occupational accidents and illnesses go severely underreported in agriculture, existing data reveal farm accidents to be increasing in fre quency and severity. According to the National Commission on State Workmen's Compensation, farm fatalities have more than doubled between 1949 and 1967. Nonfatal accidents in agriculture increased from 306.9 per million work hours in 1961 to 375.2 per million work hours in 1967. The rate of farm accidents considerably exceeds the rate of accidents in the workforce as a whole: the latter having only 266.4 accidents per million work hours. "National Safety Council data show farming to be the sixth ranked industry group by frequency of accident and second only to mining by severity of accident." (Supplemental Studies for the National Commission on State Workmen's Compensation Laws, p. 148). Data regarding occupational diseases demonstrates an even greater vulnerability among agricultural workers. In California, the rate of occupational disease is 8.5 per 1,000 farmworkers, as compared to 2.6 for all industries. In agricultural spraying and pest control, the rate was 16.2, or nearly seven times greater than the rate on all industries (Supplemental Studies, p. 149). Clearly there is a need for federal standards ensuring coverage of farmworkers by state programs of workers' compensation. The National Commission on State Workmen's Compensation Laws, proposed in its 1972 report that "as of July 1, 1975, |