The Big I Virginia Winter 2022-23

in Transportation and Warehousing employment. Recall
Introduction
that Transportation and Warehousing incidence rates per
worker are more than twice as high as those in Leisure and
The Great Reshuffle is reshaping the US labor market. Unemployment is historically low, but labor force
Hospitality.
participation is still lower than the pre-pandemic rate. Labor shortages have led to wage growth, especially
Worker payroll is determined by the number of workers
strong among low-wage workers and in sectors like Leisure and Hospitality.
and their average pay. Transportation and Warehousing
Quit rates jumped in the middle of 2021 and remain high workers at the have time higher of this hourly writing—about pay than Leisure 50 million and Hospitality quits a
workers, but not nearly twice as high. Therefore, like
year, almost 10 million more than pre-pandemic averages. Many workers are new to their jobs. Some of these
incidence rates per FTE worker, injury frequency per
are moving from one similar job to another, but others are changing industries or occupations. At the same
payroll is much higher in Transportation and Warehousing
time, there are a large number of new remote workers. than Many Leisure people and left Hospitality. the office Thus, at COVID’s the shift onset; in industry there mix has
been a trickle back, representing a massive change in the pushes amount frequency of remote up. This work upward compared pressure to before is shown the by
pandemic.
the blue bar for industry mix.
• State 2 experienced the largest employment losses in However, Transportation and Warehousing injuries
How Leisure do and such Hospitality large changes as well in as the meaningful labor market losses impact in workers compensation injury frequency? The magnitude
have higher average severity than those in Leisure and
of Construction these impacts and relies Manufacturing. on the interaction of three factors: Hospitality. Recall that high severity classes have low
º In State 2, Transportation and Warehousing frequency per premium, whether or not they have high
• How much more or less likely are short-tenured or remote workers to be injured than other workers?
employment was stable rather than increasing. frequency per worker or per payroll. Thus, the shift to
• How much has the share of such workers changed? Transportation and Warehousing (a high-severity class)
What was the effect on frequency? In the chart below, we
• How has the sector mix of the workforce changed puts during downward the pandemic? pressure on frequency per premium,
break out impacts on each state from each of the three
shown by the orange bar.
channels, both on a per payroll and per premium basis.
What happens when we put all three effects together? The
The impacts of short-tenured and remote workers are of
impacts of short-tenured workers and remote workers do
similar magnitudes in the two states because the states’
not depend on the choice of frequency measure. More
overall mix of business is broadly similar (in pre-pandemic
short-tenured workers will always push frequency up and
levels, not in the changes experienced during the
more remote workers will always push frequency down.
pandemic). Thus, we see the size of the blue bar for shorttenured
workers for State 1 is similar to the size of the blue
Only the impact of mix changes can differ based on the
selected metric.
bar for short-tenured
workers for State 2. The
same holds for crossstate
The magnitude of the
first two effects depends
comparisons of
on our estimates of
the two orange bars for
how many more shorttenured
and remote
short-tenured workers,
as well as for both the
workers there are and
blue and orange pair of
on such workers’ relative
bars for remote workers.
risks. The size of the
bars show that in both
Within each state, the
State 1 and State 2, we
blue and orange bars
estimate the magnitude
for short-tenured and remote workers are identical to each
of the upward pressure from more short-tenured workers
other. This occurs because that part of our calculation is
is about the same size as the downward pressure from
meant to isolate the change in incidence rates due to
remote workers.
changes in short-tenured or remote workers for the state’s
pre-pandemic mix of business.
Because these effects are partially offsetting, the impact of
mix changes play a large role in our estimate of the total
The effect of industry mix is the third element. Here the
effect on aggregate frequency. In State 1, the growth in
chart shows that frequency change depends critically on
Transportation and Warehousing and decline in Leisure
both the state’s experience and choice of metric.
and Hospitality leads to a slightly upwards total effect
The first panel of the chart shows the frequency change for
State 1. Here the most important mix shifts were a decline
in Leisure and Hospitality employment and an increase
on frequency when measured per payroll. The combined
increase due to short-tenured and sector mix effects is
slightly larger than the downward pressure from more
WINTER 2022-23 THE BIG I VIRGINIA 21