State Wage Subsidy Gets Injured Employees Back to Work

Oregon is one of the few states that encourages employers to find ways to help employees who sustain on-the-job injuries make a quicker transition back to work.

The state pays a generous subsidy to employers that accommodate their injuries or provide them with other tasks they can do until they recover. The subsidies, which are funded through a payroll tax, are equal to half of injured workers’ wages for up to 66 work days.

The program is highly effective, a new study found. Workers in the firms that are frequent participants in the program are far more likely to be employed a year after their injuries, and they were earning more per quarter than the injured workers in firms that were infrequent participants or didn’t take advantage of the program.

Oregon’s subsidy leads to “a significant increase in employment and earnings a year later,” the researchers said.

They said the workers are able to bounce back because the policy essentially preserves their employability. The danger for people who miss work for an extended period of time due to injury is that they may have difficulty reacclimating to their jobs. The purpose of Oregon’s program is to cover some of the employer’s costs for physical or other modifications so injured employees can resume working effectively. If they can no longer do the job that resulted in the injury, the subsidy defrays the cost of training workers for a new position that they can do.

The researchers demonstrated the subsidy’s effectiveness by looking at injured workers’ employment and wages after the state reduced the subsidy in January 2013 from 50 percent of the worker’s wages to 45 percent. Although the 50 percent subsidy was restored a few years ago, the temporary reduction provided a window for them to estimate the subsidy’s impact on whether employers accommodated their injured workers and got them back to work.  

The program does more than just defray the employer’s expenses in the short term, the researchers concluded. It “may also serve as a human capital investment in the long run.”

To read this study by Naoki Aizawa, Corina Mommaerts, and Stephanie Rennane, see “Firm Accommodation after Disability: Labor Market Impacts for Social Insurance.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.