MISSOURI'S FAILURE TO SUPPORT A LOCAL INDUSTRY

Jobs -- the capacity to create and sustain them -- are the key to economic prosperity. And the key to making and keeping jobs is an enterprise's ability to make ends meet. If the business community can properly ask anything of government, it is to not conceive obstacles that hold back commercial viability, hence stalling the creation of jobs. In its current setup regarding workers compensation insurance and the establishment of premium rates, the government of Missouri needs to do a better job for the sake of its businesses and its citizens.

This newspaper recently published the story of a Cape Girardeau business owner who employs more than 90 people in a manufacturing concern. Business is good, and the business owner believes the market might allow him to expand his operation to take in another two dozen employees. Everybody wins in this scenario: an entrepreneur prospers, people are put to work, more taxes are paid by business and employees, and so on. It is the type of success story dreams are made of.

But the dream turned nightmarish for the business owner when a Florida-based organization called the National Council on Compensation Insurance paid a visit to his manufacturing facility. With no warning from NCCI, the manufacturer's workers compensation classification was changed and his insurance rates shot up 40 percent, a draw of $35,000 from the company's bottom line. Those who believe that an unplanned expenditure of $35,000 can be easily absorbed by a commercial venture probably don't know much about the profit margins of small businesses.

In seeking relief from this, the business owner found that a body for settling classification disputes was established with workers compensation reform legislation in 1992. However, no one has ever been appointed to serve on the appeals board, effectively rendering the process useless.

This story points out many of the frustrations business people feel about government. The business owner in this case, contending with already escalating workers compensation costs, did everything in his power to hold down insurance premiums, including the adoption of worker safety programs. Then, at the caprice of a state-authorized rate-setting group, the business finds itself hit with an even higher bill and left with no opportunity to appeal. The options: Defy the market factors and curtail expansion in order to satisfy the higher premium payments, or move the operation to a state where the workers compensation situation is more accommodating.

Neither of these strikes us as a very good choice. Missouri should work to make the business climate amenable to hard-working business people, particularly those entrepreneurs whose efforts are putting others to work. Some things can be done in this regard. First, the appeals body as established by the 1992 legislation should be filled, appointments to be made by the governor. Second, the legislature, though taking strides in recent years to address workers compensation, should continue work in the direction of easing the burdens businesses face from rising insurance rates. We believe a bipartisan bill sponsored by Sens. Franc Flotron, R-Creve Coeur, and John Scott, D-St. Louis, holds promise. The measure is backed by a coalition of 17 major business organizations in the state, including the Missouri Chamber of Commerce and Cape Girardeau Chamber of Commerce.

At least one legislator in a leadership position wants the state to end its relationship with NCCI and set up a rate-setting panel that deals solely with Missouri. We don't know enough about the Florida-based association to support that, but the state should, at the least, ensure that NCCI is more accountable to the businesses affected by its judgments.

Businesses are still facing problems meeting the demands of workers compensation costs. Since businesses owners can't relax in this regard, lawmakers and other state officials should not allow themselves to relax either.