We’ve zeroed in on four issues that frustrate a broad spectrum of San Diego businesses, and have dubbed them The Four Horsemen.
Here’s the first one.
Dale Watkins wanted to hand out more raises to his workers in 2015.
A 65 percent spike in Watkins’ workers’ compensation insurance bill from 2013 to 2014 derailed that plan, kicking his bill up to nearly $100,000.
It’s not because Watkins’ company, Sheffield Platers in Sorrento Mesa, has a bad safety record. In fact, it has a stellar one, Watkins said — with a safety rating that’s more than 20 percent higher than the average California electroplating company.
“There’s no reward,” Watkins said. “It’s just penalty no matter what you do.”
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The cost for workers comp insurance as a % of payroll;
1% for the lowest cost states to a California average of 2.93% , to the worst case scenario 6%+ shows a HUGE variance in the cost of this type of insurance. At it's highest Workers Comp insurance costs more for 8 hours of work coverage, than standard health insurance does for the remaining 16 hours in the day.
Why would this be? I believe it is because of the rights granted to the workers comp claimant, and a total lack of control on the costs charges for treating a workers comp injury. And that is a direct result of giving this type of insurance claim special status.
California's workers comp laws and requirements are the root cause of this unusually high cost. It can be fixed but it will require the ability to stare down some very powerful labor groups.
A single payer insurance plan (a single plan for both health and workers comp) might be a way to start. With employers now the dominate checkbook for health insurance, and the only checkbook for workers comp insurance , this should be an easy step to take to combine these two insurance costs get some savings.
I know this article aims to answer why the cost of doing business in CA is so high, but it brought up more questions than answers. Maybe that's VOSD's intent. Why are CA claims for worker's comp so high? Why are the medical bills higher than other states? Do we have lots of unsafe workplaces in this state? Are the benefits really good compared to other states? Insurance cost could be high, but are we getting more for our money? It's difficult to just debate (or whine) about the price alone without any context. Also, the article seems to be biased toward the electroplating shop and Ace Hardware. What about that insurance broker from Barney & Barney? What about the insurance companies that provide their services? Aren't these people middle-class workers too? Aren't they benefiting from this particular system, however justified they may be?
Oh yea. and here's your codes
" The director of California’s Department of Industrial Relations criticized the study’s methodology and said it failed to properly consider California’s unique mix of industries."
“I think there are a lot of things happening at the same time,” Baker said of the ongoing SB 863 reforms. “We’re hearing from the judges that cases are settling a lot quicker. It will take time to balance all of this out. It will take another two to three years I think.”
Truly an Alfred E. Newman moment........."what, me worry?
Our big state's GDP is indeed impressive -- until you look at the population of CA vs. the other 49 states.
Per capita GDP, we rank only 17th best compared to the other states. Well, at least in the upper half.
But adjusted for COL, CA's per capita GDP rank is 39th -- only 11 states are lower.
@Richard Rider Adjusted for COL, surely an irrelevant statistic. One of the major, if not THE major component of COL in California is the cost of housing and or land. How are you going to lower that, make more land?
@Rick Smith @Richard Rider We have LOTS of land, but we heavily restrict building. You may think that's good policy, but the net result is that housing prices are high because government severely restricts the availability of land for housing. Then there's the major costs and delays in getting permits and approval, far greater than others states.
Moreover, CA governments tack on major fees that drive up the price:
Average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!
@Richard Rider @Rick Smith Now you are being just silly. Surely you know the government on its own does not restrict building. The people, or voters, or NIMBY's (take your pick) have demanded down zoning, reductions in density, and that "development pay its own way." See the controversy in Bay Park or Grantville, for example.
As for the governments east of the Sierra, they don't have Prop. 13, so their property tax rates are in many instances higher than those in CA. You pay up front or later on.
@Rick Smith @Richard Rider I'm not saying the policy is unpopular, or not the "will of the people." "We've" chosen to restrict land use.
All I'm saying is that such harsh restrictions have a price -- and we all pay it when we buy real estate. Our short supply of buildable real estate is not a shortage of land. It's not some natural phenomenon.
As for Prop 13, that's not starving CA government. Common misconception.
The median CA property tax per owner-occupied home was the 10th highest in the nation in 2009 (latest year available).
Our property tax RATE is lower than many states, but the DOLLARS PAID per home are more than all but 9 states.