The American Way of Distributing Industrial Accident Losses
In 1908, sociologist Crystal Eastman presented a paper at the American Econimic Association. It was about employers' liability and compensation for industrial accidents in America. She criticized the system for distributing the burden of industrial accident losses. Only a small percentage of compensation came from employers, and community assistance was minimal. Eastman saw that the burden ultimately fell on the injured workers and their dependents, causing significant economic hardship for these individuals. This, according to Eastman, did not align with principles of national economy, as it resulted in unnecessary hardship for individuals. Eastman argued that the system was unjust, not only because it departed from traditional legal theories, but also because it didn't account for the fact that accidents are a cost of production and should be paid for out of industry profits.
Therefor, Eastman suggested the then current system could not be defended on grounds of individual or social justice. The operation of the system had several issues, including the cost of litigation, the heavy tax imposed on employers, delays in compensation, and it encouraged mistrust between employers and employees.
Employers' liability insurance was not insuring workers and often relieved employers of moral responsibility, Eastman wrote. Relief associations were primarily for the benefit of employees but were sometimes used by employers to advance their interests and weaken unions. These associations often required membership as a condition of employment, which could restrict workers' freedom and interfere with union insurance benefit schemes.
Eastman concluded that the then current legal penalties for employers were insufficient to encourage caution and care, as they were rarely and unevenly imposed. She recommended new legislation to make compensation for industrial accidents compulsory for employers, to ensure uniform and sufficient compensation, and not to depend on contracts between employers and employees to protect workers' rights and freedoms.
Eastman, C. (1909), The American Way of Distributing Industrial Accident Losses: A Criticism, in: American Economic Association Quarterly, Apr., 1909, 3rd Series, Vol. 10, No. 1, Papers and Discussions of the Twenty-First Annual Meeting. Atlantic City, N.J., December 28-31, 1908 (Apr., 1909), pp. 119-134.