As you already know, the cost of living varies significantly depending on where you live, right down to your street address. The same goes for the cost of doing business – your location affects everything from your tax rates to your insurance premiums. (For more on that, check out the post "Find Insurance Where You Live.")
So wouldn't it be interesting if you could see how your state measures up? Lo and behold, when it comes to Workers' Compensation Insurance rates, you can, thanks to the 2014 Oregon Workers' Compensation Premium Rate Ranking report. This study is conducted every two years and offers an overview of the median Workers' Comp payroll rates by state.
Before we get to the highlights, let's recap on how Workers' Comp premiums are calculated. Your rates are based on:
- Your payroll.
- Claims history.
- Worker classifications.
For a more in depth look at what affects Workers' Comp costs, check out our Workers' Comp Insurance Cost Analysis page. This particular study is concerned with each state's payroll rates, and the results are illuminating.
Putting a Number on State Workers' Comp Rates
The study, as reported by Insurance Journal, shows that Workers' Comp payroll rates hit a record low in 2014. The median cost? A mere $1.85 per $100 of payroll. For the sake of comparison and helping you appreciate just how low that is, here are the median rates (per $100 of payroll) for previous years:
- 1994: $4.35
- 2004: $2.58
- 2010: $2.04
You must be thinking that 1994 was a tough year to have employees, at least for your wallet. But the report shows that rates continue to drop, and some states are paying less than a dollar for every $100 of payroll these days.
According to the study, in 2014…
- California's rate was $3.48 (per $100 of payroll), the highest of all states.
- New York's rate was $2.75.
- Illinois's rate was $2.35.
- Ohio's rate was $1.74.
- North Dakota's rate was $0.88, the lowest of all states.
In short, California, Connecticut, New Jersey, New York, Alaska, and Oklahoma had the highest rates, and North Dakota, Indiana, Arkansas, Virginia, Massachusetts, and Nevada had the lowest rates. For the complete ranking, download the full report.
So what is your business supposed to do with this information? Well, if you plan on relocating to a new state, maybe it's not such a bad idea to consider Workers' Comp payroll rates when weighing your options. (Learn about other relocation concerns in "When Is It Time for New Business Insurance Quotes?")
And even if you plan on staying put, Workers' Comp trends affect your bottom line because most employers are required to carry the coverage no matter where they live. You can learn more about your state's laws in our Workers' Comp guide.