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At issue of course is why employers adopted a defensive strategy in one sector but not in
the other. Fishback’s answer exploits the disparate nature of manufacturing vis-à-vis
mining (such that a common set of laws may have left many parts of the manufacturing
sector unaffected); the more adversarial nature of industrial relations in coal mining,
coupled with the fact that the reform proposals emanated largely from organized labor;
and the virtual absence of women in coal mining (it being easier to ‘sell’ regulation for
women and harder to obstruct regulation).
Workers’ Compensation. State workers’ compensation plans provide for employer-
mandated no-fault insurance covering workplace injuries, coupled with limits on liability
from lawsuits. The passage of workers’ compensation laws in several states during the
1910s constituted one of the earliest and most important government interventions in the
workplace. Currently, workers’ compensation is compulsory in all but three states (New
Jersey, South Carolina, and Texas).10 Workers are eligible for medical and partial
indemnity (lost wage) benefits when disabled by job-related injury or illness. Employers
are liable regardless of fault but may dispute the severity of an injury or illness or
challenge whether it is work related. Workers compensation costs are nominally paid
through employer payroll taxes (but see below). A few states require that employers
insure through a state-operated insurance system. Many states operate a state system but
permit insurance through private insurance companies or self insurance. (The system
exhibits close to full experience rating in the case of larger firms.)
Prior to workers’ compensation a system of common law negligence liability obtained.
Employers were obligated to exercise “due care” in protecting their workers against
hazards at the workplace. Employees bore the burden of proof, however, and had to
demonstrate that the employer’s negligence was the cause of the injury. A negligent
employer might nevertheless rely on one of three legal escape routes, including
contributory negligence.
The change from negligence liability to a no-fault system is well described by Fishback
and Kantor (2000). They give chapter and verse on the high transactions costs (in money