Declining Earnings Capacity - A Retrogressive Penalty for Ill Workers

The decline of the earning capacity of ill workers prior to stopping work has an impact on both workers' compensation benefits as well as Social Security disability benefits. It is  a retrogressive penalty for chronically ill workers.

The Social Security Administration in a recent report objectively reports this phenomena.


"Data from the 2014 Disability Research File show that the earnings of individuals who apply for Social Security Disability Insurance benefits decline rapidly in the years prior to application. This article presents statistics on the average “decline period”—the time from the year of maximum earnings to the year of application—by general and specific primary diagnosis, sex, and age, for individuals who filed applications during 2004–2013. On average, denied-claim applicants experience a longer decline period than do allowed-claim applicants, and those with mental impairments experience a shorter decline period than do those with physical impairments. Differences across general diagnosis groups are typically small; differences between certain specific diagnosis subgroups are greater. Men experienced longer decline periods than did women, and older applicants experienced longer decline periods than did younger ones."

Even though no reported data has been published for workers' compensation claims, it would appear to be logical that the data would mirror the Social Security Administration report. The impact on workers' compensation claims results in a reduction of hourly wages with that reflects a reduction in the payable rate for total disability compensation benefits.

Aging workers,  especially those with latent occupational disability claims, would appear to be most impacted by this result. When workers compensation was crafted in 1911 social security claims did not exist and most occupational disease claims were not deemed to be compensable. If the remedial intent of Workers' Compensation Act is to be observed this will be another area to consider when reforming been the benefit structure.

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). 

For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.