'Kudos for Spitzer' — Bizarro World Edition of Wall Street Journal?

The paper's editorial page mercilessly flayed New York Governor Eliot Spitzer during his years as New York attorney general for everything he did, said or thought.

Now comes this editorial on March 3, 2007, headlined as above.

Kudos for Spitzer

Eliot Spitzer has debuted to mixed reviews as New York Governor, with our favorite episode being his recent remark to one legislator that "I'm a f------ steamroller." Such charm isn't news to our readers. But he's also moved a brick or two in the right direction in corrupt Albany, most recently in this week's deal to reform workers' compensation.

New York's current workers' comp system, with its combination of high costs and low benefits, is one of the nation's worst. Its average cost per claim of $19,737 leads all other states, according to the National Council on Compensation Insurance. At the same time, benefits paid to injured workers are capped at $400 a week, an amount that hasn't increased since 1992.

Along with onerous taxes, workers' comp costs have been a ball and chain on the state's economy, particularly in manufacturing. The Business Council of New York State reports that manufacturing employment fell by 41% — more than double the national average — between 1990 and 2005. Delphi CEO Steve Miller has called New York "about the worst state from a workers' comp standpoint. We have a finite ability to pay our labor costs to operate a plant in New York in competition with plants that could be in other states."

Mr. Spitzer's reform would attack the system's destructive costs by imposing limits on what are inelegantly called "permanent partial" disability payments, which typically go to someone who's sustained a head or back injury. More than 40 other states have a cap on the number of weeks you can collect workers' comp once you've been "permanently partially" disabled. But not in New York. Once that status is conferred, you collect 'til you depart this mortal coil. Though only 15% of all claims, they're 70% or more of costs. The Governor's plan would end these payments for more than 90% of cases after eight years or less, under the theory that this is plenty of time for a person to be compensated, rehabilitated and retrained.

Mr. Spitzer also wants to increase the weekly benefit for injured workers to $600 over three years. Thereafter, the benefit would be indexed at two-thirds of the average weekly wage in the state. All told, the Governor says his reforms would cut workers' comp costs for employers by up to 15%.

Any deal was always going to hinge on whether the AFL-CIO would agree to reform in return for a benefit increase. And under Mr. Spitzer's predecessor, Republican George Pataki, the unions had refused to compromise. It's nice to see them finally realize that the status quo is hurting businesses while benefiting only a small subset of workers at the expense of all others.

One important reform not included in the agreement would implement some objective medical guidelines to determine the level of impairment sustained in an injury. Mr. Spitzer says he will pursue this administratively, and we hope he will. The Governor has much more to do if he wants to reverse the Francofication of New York's economy, but his workers' comp fix is a welcome start.