The Big I Virginia Winter 2022-23

emote work. But the net impact on a premium basis is for on-site workers. Remote work was widespread at the
downwards
Introduction
because the changing mix toward high severity onset of the pandemic, but the largest and most lasting
classes in Transportation and Warehousing puts downward increases in remote work have been in the office-based
The Great Reshuffle is reshaping the US labor market. Unemployment is historically low, but labor force
pressure on frequency per premium.
sectors Professional and Business Services, Financial
participation is still lower than the pre-pandemic rate. Labor
In State 2, the large employment decline in the low Activities, shortages and Information. have led to wage growth, especially
strong among low-wage workers and in sectors like Leisure and Hospitality.
frequency per payroll sector of Leisure and Hospitality
Changing industry mix
roughly offsets the declines in high frequency per payroll
Quit rates jumped in the middle of 2021 and remain high at the time of this writing—about 50 million quits a
sectors Construction and Manufacturing. The tiny blue The impacts from industry mix changes are more varied.
year, almost 10 million more than pre-pandemic averages.
bar indicates a small net impact of mix on frequency In both Many sign workers and magnitude, are new to frequency their jobs. effects Some from of these mix
per are payroll. moving The from net impact one similar of all job three to another, effects is but slightly others change are changing depend industries critically on or both occupations. the nature At of the changes same
downwards. time, there However, are a large Construction number and of new Manufacturing remote workers. are and Many the people choice of left frequency the office metric. at COVID’s All states onset; lost there a lot of has
high-severity been a trickle classes back, like representing Transportation a and massive Warehousing, change in the Leisure amount and of Hospitality remote work jobs during compared the pandemic, to before but the the
and thus they have low frequency per premium. The loss of total mix effect on a state (or an insurer’s book of business)
pandemic.
jobs in these sectors puts significant upwards pressure on depends on what happened in other sectors.
frequency How do per such premium, large changes illustrated in the by the labor orange market bar impact for For workers example, compensation a shift from injury Leisure frequency? and Hospitality The magnitude to
State of 2—the these impacts opposite relies sign as on in the State interaction 1. of three factors: Transportation and Warehousing employment puts
These two examples demonstrate the complex nature of upward pressure on frequency per worker or per payroll
the overall • frequency How much impacts more of or the less Great likely Reshuffle, are short-tenured as well but or downward remote workers pressure to on be frequency injured than per premium. other workers? When
as the need • How for researchers much has the and share practitioners of such to workers carefully changed? Construction and Manufacturing employment declines
understand • How their has change the in sector mix relative mix of the to their workforce intended changed along during with the Leisure pandemic?
Hospitality, as in our State 2
measurement before analyzing frequency impacts of example, frequency per payroll is barely affected, but
mix changes. NCCI will continue to analyze industry mix there is sharp upward pressure on frequency per premium.
changes and the impact on frequency and severity.
CONCLUSION
FINDINGS AND CONCLUSIONS
These frequency effects are probably short-term anomalies.
Three aspects of the Great Reshuffle have important The Great Reshuffle is a unique event, following the largest
implications for workers compensation frequency:
and most sudden decline in employment ever to strike the
• More short-tenured workers
US labor market. Some industry mix changes are likely
to be permanent, such as a lower employment share in
• More remote workers
Leisure and Hospitality and a greater concentration of
• Changing industry mix
remote work. However, the rate of change in short-tenured
workers, remote workers, or industry mix will not be as
large in 2022 or any future year as the sweeping changes
during 2020 and 2021.
More short-tenured workers
The increase in short-tenured workers puts upward
pressure on injury frequency. While the increased share
of short-tenured workers has been modest, their relative
risk compared to full-tenured workers is high. Sectors
with both a large increase in short-tenured workers and a
high relative risk for such workers experienced the largest
impacts, especially Transportation and Warehousing.
Short-tenured worker share grew the most in Leisure
and Hospitality, but its impact was muted because shorttenured
workers’ relative risk in the sector is less than
average. In office-based sectors, there has not been much
change in short-tenured worker share.
More remote workers
Increased remote work puts downward pressure on injury
frequency. The share of remote workers rose dramatically
from pre-pandemic levels, but our selected estimate of
remote workers’ relative risk is not much lower than that
22 THE BIG I VIRGINIA WINTER 2022-23
Through midyear 2022, new hire rates remain high, indicating
that the share of short-tenured workers has stayed near
2021 levels. Eventually, hiring will slow down, but this return
to normal will be a gentle decline compared to the huge
shocks from pandemic layoffs and subsequent rehiring
during the Great Reshuffle. This lesser rate of change will
have correspondingly smaller frequency impacts.
Our Transportation and Warehousing scenarios provide
examples of how frequency effects can still be substantial
in sectors where short-tenured workers have relatively
high injury rates and their share continues to rise. This is
especially relevant to a book of business that emphasizes
new or growing firms.
Remote work will likely never fall back to pre-pandemic
levels and no changes in remote work will be as large or
rapid as the explosion of remote work in 2020. A large