"They say they care about these vulnerable populations yet they're not passing a budget”
On this edition of Illinois Rising, Dan Proft and Kristina Rasmussen, President and COO at the Illinois Policy Institute, talk with IL Comptroller Leslie Munger about possible delays in payments for 911 call centers, lottery etc., Rahm’s proposed 4% tax on Airbnb stays (and being required to track all rental guests), AFSCME’s latest antics and more.
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Dan Proft: Dan Proft back with Kristina Rasmussen, Executive Vice-President at the Illinois Policy Institute, on this edition of Illinois Rising; you can catch my act with Amy Jacobson as well, as you do on this show, Monday through Friday, 5am to 9pm… 5 am to 9 am – yeah, 9pm, that would be a long show – a four hour morning drive show with Amy Jacobson called Chicago’s Morning Answer, and Kristina, one of the issues that Governor Rauner has made part of his turnaround program is workers’ comp reform. If you’re not an employer, this is a bit of an esoteric issue. And so it’s been difficult to translate for the electorate, I think, but it turns out to be a real cost savings, a real way – without jeopardizing workers safety or compensating those workers who were hurt on the job - to reduce the cost of doing business in Illinois. Kristina Rasmussen: Absolutely. You walk onto any manufacturing floor in Illinois and you talk to management, and they’re trying to make this work and stop the jobs from fleeing to Indiana, or out of the country, and they say “We need workers’ comp reform, we need relief; we want to hire more people; we want to spend this money by giving out more jobs, not necessarily playing these overinflated costs that Illinois State Government has forced upon us”, and they’re crying out for a relief, and they have been for some years, and we’re just not seeing the change that they deserve out of Springfield. Dan Proft: And it’s one of these things where relief, lowering the costs of people doing business, would be a better way to go, perhaps, than subsidizing people to locate their jobs here. I mean, all you’re doing is essentially conceding that the cost of doing business in Illinois is too high, so we’re going to give you money to come here to locate your business, to grow jobs, but we would achieve the same thing without transferring money from somebody’s pocket to somebody else’s pocket if we just reduced the cost. Kristina Rasmussen: Absolutely, and instead of giving out crony deals that benefit a few companies who happen to have a good lobbyist and good connections, you could treat everyone fairly and make Illinois just a more generally well liked place to do business. Dan Proft: The fairness argument; yeah, that’s a good one. Zach Mottl, he’s the Chief Alignment Officer of Atlas Tool and Die Works in Lyons, there, in west-central Cook County, and he knows what it’s like to deal with the workers’ comp system in Illinois, because he runs a manufacturing company, and Zach joins us now. Zach, thanks so much for joining us, appreciate it. Zach Mottl: Well, thanks for having me, Dan, great to be here. Dan Proft: So just explain, from your first person account, what the impact of the current workers’ comp regime is in Illinois, and perhaps in comparison to other states to the extent that you can compare and contrast, and what some kind of reform that, again, protects the workers generally hurt on the job so that they’re made whole, but also made it a little bit more competitive to be here in Illinois, particularly as a manufacturer? Zach Mottl: Absolutely. From my perspective, as a manufacturer, the system, it’s not working here for anyone in Illinois. It’s a system that’s designed to protect injured workers and employers in a no-fault system, and really get injured workers treated properly and back to work quickly, especially in a costeffective manner. But what we have in Illinois is a system that has higher costs than surrounding states and much slower outcomes. So it’s not working for anyone. We’re not getting injured workers back on the job quickly, and what we are doing costs a lot more than it does in any other state around us. And so, as a manufacturer, we have to compete both locally, nationally and globally, and when we have costs that are three times higher than what our competitors in other states are paying for workers compensation, it really is a drag on our ability to grow and export more product from Illinois. Kristina Rasmussen: You mentioned three times higher; I have a steel manufacturer near where I live and he’s looked at the cost in Indiana, and if he moved his company across the state line, he could cut his costs by two thirds. It’s really quite incredible. Why is it that Illinois is so much higher? I mean, surely the money is going somewhere. Where is it going and why do we have such higher costs compared to everyone else? Zach Mottl: I think it’s a great question. There’s been a lot of finger-pointing around the issue as to who’s making all this money off of it, but I’ll tell you, I’ve talked to companies that self-ensure, and that means that they don’t have an insurance company; they pool their money and save it, and when they have a claim they pay it themselves, and some of these companies operate in multi-states. And what I’ve heard from these folks is that Illinois, our claims cost more, the system goes longer. You can’t get an injured worker back to work. It requires more treatment to get the same exact outcome as what happens in other states. So I think we have kind of a perverse system that’s been set up here in Illinois, that is incentivizing the wrong kind of thing. It’s incentivizing care that goes on longer and longer, and it’s not incentivizing getting the worker back to work quickly. To me, there’re a lot of players involved in the system here, but I think we really need to address – people all [loath? 00:05:12] to talk about it – but the causation standard, I don’t blame my injured workers for following the system through, because that’s what it’s set up to do. We have a system that is set up the wrong way, and we need to really look at the causation; because right now, an injury that happens at home and employee comes to work, if the workplace is 1% responsible, does anything to aggravate that injury, it’s a workers’ comp claim. That’s not the right way to have it here in Illinois. Dan Proft: One of the issues is the gaming of the system, and I would suggest not just the costs of it, but it probably doesn’t do too much to advance employee morale if you see your colleagues gaming the system and being compensated not to work effectively. We’ve heard stories – being seen your personal experience – not just about the “I play basketball on the weekend and I got hurt and then I went to work and I got hurt a little bit more or I just claimed that what happened playing basketball over the weekend actually happened on the job’ and then you’re embroiled in this back and forth in the workers’ comp system, or even going so far as people injuring themselves while they’re under the influence of illicit substances, or legal substances, but they shouldn’t be under them at work. That’s how wild and wacky the workers’ comp system is in Illinois. Zach Mottl: And it goes beyond that. We, in manufacturing, are certainly dealing with an aging workforce. You’ve heard about the skills gap and the shortage of manufacturing workers and skilled workers. We have workers that are working longer and getting older and staying on the job longer, and I am seeing things that are absolutely related to the aging process. They claimed their workers’ comp, because you come to work and your shoulder hurts you, it’s a part of the aging process, but your job aggravates it and it goes into a workers’ comp claim. And these soft-tissue claims, they just go on and on and on; they’re very nebulous, so it’s everything you’ve talked about, plus, our system is such a loose standard in Illinois. The workers aren’t wrong. They’re not gaming; they are following the law, but our law is set up so poorly in Illinois, it has actually no restriction for what it should be, for a health insurance claim versus a workers’ comp claim. Dan Proft: I guess a better way to put it is, are the politicians gaming the system? Zach Mottl: There you go. Somebody’s winning off of it, Dan, but it’s certainly not the employers and it’s certainly not the employees, the injured worker, either. They’re definitely not benefiting. Kristina Rasmussen: And of course, this is not only a manufacturing issue, right? The state government, local government also pays work comp on its employees. And so you have taxpayers paying for these inflated work comp claims, the insurance costs, so it does directly hit everybody in this state in some former fashion. But speaking of the laws down in Springfield, you know, work comp has finally gotten to a point where people on the left and right say, “Okay, we need to do something”, right? But the deal that was trying to be offered out of Springfield this spring was, “Okay, we’ll give you a little bit of a work comp reform in exchange for a massive tax increase on businesses in Illinois. From your perspective, Zach, does that sound like a good deal? A little bit of work comp reform in exchange for a massive tax hike? Zach Mottl: If they said a massive workers’ comp reform for a little tax hike, you might have my attention. Kristina Rasmussen: Done, deal! Zach Mottl: But I think they’ve got the cart in front of the horse here. I will say this, that for manufacturers, and again, you touched on the government, police, fire department, all of these people are paying workers’ comp. For me, in manufacturing, if we can get significant workers’ comp reform, if we really saw our rates go down, maybe not a third, but a half, I would be saving six figures a year. And I’m a small business. Those six figures are not going to go into my pocket. I’m going to buy another machine; I’m going to buy another employer. My company is growing right now, and so are a lot of other manufacturers. We are growing, we have opportunity, and we will create the jobs and the growth, but we need an environment that supports us, and when I can move 15 minutes over the border and realize these savings that can help me grow my company, I would be foolish not to do that. So we really need the people in Illinois. It’s not their issue, it’s not of our issue, it’s the state of Illinois’ issue. We need to move beyond the politics and focus on the solutions that are going to bring us the jobs and the growth that we need. Dan Proft: And for manufacturers, this isn’t just idle chat or an unserious threat. I assume you find colleagues in your sector that are moving 15 minutes across one of our Illinois borders to another state to reduce their costs of doing business and taking their jobs with them. Zach Mottl: All the time, and you know, it’s not that hard to do. I don’t want to do it. This is not my desire; I love being here; I love Illinois; I think it’s a great sate, but between property taxes and workers’ comp, there are some things that cost me six figures in a variety of areas to stay in Illinois. And again, as a small business owner, you scratch your head and you say, “Is that making sense?” And when times are tight, boy, a little cushion would go a long way, so I just think, I hope that politicians in Illinois will move beyond the politics and really get some solutions and not just window dressing. We need, in workers compensation, to really get at the causation, get at some of the costs, and there are a lot of good proposals out there. People know what the answers are. We just have to move beyond the politics. Dan Proft: Well, a boy can dream. Zach Mottl, Chief Alignment Officer of Atlas Tool and Die Works in scenic Lyons, Illinois. Zach, thanks so much for joining us, appreciate your time. Zach Mottl: Pleasure to be here, thank you.