A Prelude to the Welfare State: The Origins of Workers' Compensation.

• Author: Margo, Robert A.
• Position: Review

Price V. Fishback

Shawn Everett Kantor.

Chicago: The University of Chicago Press, 2000. Pp. xii, 316. $37.50.

The "Progressive Era" in the early 20th century is legendary in American history for its championing of social, political, and economic reforms. Yet of all the major reforms proposed at the time to combat problems in the workplace only workers' compensation--the provision of benefits to individuals who suffer workplace accidents--became a reality. Traditionally, workers' compensation has been viewed as a triumph of labor (and reformers) over capital. One of the many merits of Price V. Fishback's and Shawn Everett's Kantor's new book is its demonstration of how misleading the conventional wisdom really is. Workers' compensation legislation was passed because all interest groups--workers, employers, insurance companies, politicians--viewed it as preferable to the status quo. But the passage of the legislation was delayed in some states, and specific aspects heavily shaped the distributional conflicts that arose over the sharing of net benefits.

A Prelude to the Welfare State is divided into an Introduction, eight substantive chapters, and ten appendices detailing the specifics of the empirical analysis. Tables rarely intrude upon the text, and when they do, they are usually very simple. Thus the mathematically--or econometrically--challenged can read this book with far fewer than the usual headaches.

Following a brief Introduction and an initial chapter ("Framing the Issues") that set the scene and describe the plan for the book, Chapter 2 ("Compensation for Accidents Before Workers' Compensation") examines the status quo prior to the passage of workers' compensation legislation, when compensation for accident victims was governed largely by the common law of negligence. Using a variety of data, Fishback and Kantor show that accident victims often received little or nothing; a comparatively small number received large awards that, in the end, did not necessarily cover legal or medical expenses. Workers were not wholly at the mercy of employers, however, for Fishback and Kantor also show that wages were higher in more dangerous occupations. Institutional structure mattered: hiring a lawyer, for example, greatly increased the likelihood that accident victims would be compensated. Overall, while the negligence liability system "worked" to some extent, it was beset with problems arising from transactions cos ts and private information.

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