There are different ways to assess business robustness, each revealing a different aspect of corporate health. One way is renumeration. A new study attempts to do this by examining the states with the highest workers’ compensation costs for workplace injuries. This is a smaller measure, but one that equally provides an assessment of the state of the U.S. economy.
This established that New Jersey companies face the highest workers’ compensation expenses in America, paying $1,621 annually per employee. Furthermore, businesses in the Northeast bear the largest employer insurance premiums, with half of the 10 costliest states found in this region.
The analysis has been provided byAffordable Contractors Insurance, who examined workers’ compensation expenses across all U.S. states to identify where employers face the greatest financial burden. The analysis evaluated workers’ compensation costs per $100 of payroll, average hourly earnings, yearly compensation expenses per employee, hourly compensation costs, and a cost efficiency index that measures how well states balance insurance costs with worker earnings and safety. Each state received a score from 1 to 99, with higher scores indicating more expensive workers’ compensation systems for businesses.
The research examined several labour expenses for each state: insurance costs per $100 of payroll, average hourly earnings, what employers pay per hour and per year to cover injured workers, and how well states balance costs with earnings and safety. States received scores from 1 to 99, where higher numbers mean businesses pay more relative to wages and productivity.
The top 10 states with the highest workers’ compensation costs
| State | Average Workers’ Compensation Costs (per $100 of payroll) | Workers’ Comp Cost per Hour ($) | Cost Efficiency Index | Final Score |
| New Jersey | 2.44 | 0.82 | 15.54 | 99 |
| Hawaii | 2.27 | 0.74 | 16.44 | 92 |
| Louisiana | 2.13 | 0.76 | 13.95 | 91 |
| California | 2.26 | 0.75 | 18.18 | 90 |
| New York | 2.15 | 0.71 | 18.12 | 86 |
| Vermont | 1.98 | 0.67 | 17.75 | 80 |
| Wyoming | 1.86 | 0.65 | 17.05 | 77 |
| Maine | 1.67 | 0.55 | 19.31 | 67 |
| Wisconsin | 1.67 | 0.56 | 20.43 | 66 |
| Connecticut | 1.64 | 0.55 | 23.76 | 64 |
Based on the above table, New Jersey has the most expensive workers’ compensation system in the U.S. Employers here spend $2.44 on insurance for every $100 they pay in wages, the highest rate in the country. This amounts to about $1,621 per employee each year, or roughly 82 cents for every hour worked. On average, companies in New Jersey pay their employees more than $66K annually, meaning workers’ compensation costs account for nearly 2.4% of total payroll.
Hawaii comes second to New Jersey. Local companies spend slightly less on coverage here, but still a premium of USD 2.27 for every USD 100 they pay out. This adds up to USD 1,445 annually per worker, or about 74 cents for each hour an employee is on the clock. With workers earning an average of USD 64K per year, employers must dedicate roughly 2.3% of that amount to coverage.
Louisiana holds third place with a compensation system that drives up costs for local businesses. Businesses pay USD 2.13 for every 100 dollars in wages, equivalent to USD 1,181 per employee over the course of a year. The hourly cost reaches 76 cents, one of the higher rates nationally, despite Louisiana having lower average salaries at USD 55K. This makes it the least cost-efficient state, as businesses here pay nearly as much in insurance as wealthier regions.
Next up is California at fourth place. Similar to Hawaii, employers in the state face USD 2.26 in workers’ comp costs for every USD 100 of payroll. Annual expenses come to USD 1,603 per worker, or 75 cents per hour. With average earnings of USD 71K, California workers make more than those in Hawaii, which drives up the total yearly insurance costs for employers here, even though the rate per $100 of payroll is nearly identical.
New York ranks fifth among states with the costliest compensation systems. Workers here earn an average of USD 66K annually, and employers must spend about 2.2% of that payroll on insurance coverage, making New York one of the most expensive states in the Northeast for businesses to operate. On average, New York companies spend USD 1,429 per employee each year, or roughly 70 cents for every hour worked.
Vermont takes sixth as another Northeastern state with high coverage expenses for smaller businesses. Employers here shell out USD 1.98 for every USD 100 they pay workers. While it may sound modest, with USD 62K annual salaries, the rate adds up to USD 1,219 per employee over a year. This means companies must set aside a full 2% of their payroll budget just to keep insurance coverage.
Next on the list is Wyoming. The companies in the state pay USD 1.86 per USD 100 of payroll despite workers earning only USD 58K per year, below the national average. Maine comes in eighth as businesses here also face high insurance bills. Maine-based companies have to budget USD 930 on coverage per worker each year. In the ninth place is Wisconsin. Employers pay the same rate as in Maine at USD 1.67, but because workers here earn slightly more at USD 59K annually, the total bill climbs to USD 987 per employee. Connecticut completes the top ten states with the highest workers’ compensation costs.
