Workers’ Comp Makes Way to the L.A. Summit

One of the most spontaneous and revealing exchanges of the California Economic Summit Tuesday took place on a chilly Grand Avenue sidewalk outside the Biltmore, the downtown Los Angeles site of the meeting.

The subject was workers’ compensation, the system of providing benefits for on-the-job illness and injury. On the attack were a group of owners of medium and small businesses looking a bit silly in their “Stop Workers Comp Fraud” T-shirts slipped over their suits and dresses. They were arguing with a mild-looking man sitting on the edge of a big, square marble plant holder. He was Chairman Steve Peace, (D-Chula Vista) of the Assembly Insurance Committee, Speaker Willie Brown’s point man in the workers’ comp fight. Brown called the economic summit.

Peace explained to the demonstrators that next week his committee will begin writing key portions of a workers’ comp reform bill. He understood their problems, he said, because “I owned my business for 20 years” and assured them that his colleagues finally understood their problems as well. But his reasonable manner failed to impress the demonstrators. “Why are we on the streets?” shouted one man, miffed because he hadn’t been invited to the summit. “It’s hard to be tolerant,” said another.

Even if the argument ended inconclusively, the fact that Peace came out to talk to the demonstrators reveals much about the changing politics of workers’ comp reform.

Workers’ comp has been criticized for high costs to employers, low benefits to workers and big profits for doctors, therapists, insurance companies and lawyers. Legislation to tighten the system, sponsored by Republican Gov. Pete Wilson, was killed by the Democratic-controlled Legislature last year.

As the fight intensified, workers’ comp reform became a test of state government’s ability to pass laws to stir California’s sagging business climate. For the issue struck a chord with the owners of small and medium-sized companies, which have become the business community’s silent majority.

These people were seldom seen in Sacramento before the workers’ comp crisis. But sharp increases in insurance rates, beginning a few years ago, sparked a wave of activism in the small business community. The activism was strong in Los Angeles County, where modestly sized manufacturers and other businesses provide most of the jobs.

Wilson and his business supporters, including the insurance companies, organized the small business people to pressure the Legislature. That explains the demonstrators outside the hotel. Last year, when Wilson was pushing his bills, planeloads of them flew to Sacramento, including a large contingent from the San Fernando Valley.

By mobilizing them, Wilson aimed to counter the influence held by organized labor and by the physicians, therapists and lawyers who earn their livings from workers’ comp cases. All these groups are big campaign contributors, mainly to Democratic lawmakers who have opposed reform.

Although they’re not part of the Sacramento power gang, these small business people encounter legislators on the lawmakers’ visits home and during political campaigns. They see them in barber shops, beauty parlors, markets and at the Kiwanis Club. If not big shots in state politics, they’re sometimes well known on the local political scene and legislators don’t like to cross them.

When Assemblyman Peace engaged them in serious debate, I could see the grass-roots campaign was working. It’s usually pretty hard for a demonstrator in a funny looking T-shirt to catch a legislator’s attention.

Another sign of grass-roots activity came earlier in the year when Chairman John Vasconcellos (D-Santa Clara) of the Assembly Ways and Means Committee concluded after 30 hearings that workers’ comp was a major irritant to business. He told the summit Tuesday that his interest in economic revival had been sparked by conversations with business leaders in his district.

As the day went on at the Biltmore, workers’ comp occupied a substantial part of the discussion. At a press conference, Wilson insisted on reform. Peter Ueberroth, chairman of Rebuild L.A., repeatedly referred to workers’ comp revision as the key to California’s economic recovery. Labor chief John Henning defended the system.

It was clear that Wilson has succeeded in making workers’ comp reform a symbol of recovery. By doing that, and by assembling large and spirited grass-roots support from small business, he has increased the odds of pushing a bill through the Legislature.