OSHA Inspections: Protecting Employees or Killing Jobs?

[mahatmakanejeeves]

Last edited Tue May 29, 2012, 03:49 PM - Edit history (1)

From the Harvard Business School newsletter:

OSHA Inspections: Protecting Employees or Killing Jobs?

Published: May 21, 2012
Author: Michael Blanding

With an election looming and the economy continuing to struggle, the effectiveness of government regulation has become a political football. While advocates hold regulations up as necessary to protect public health and safety, critics see them as arbitrary and costly to business, reducing wages and killing jobs at a time when the United States can ill afford to lose them. Few regulatory agencies have a more direct effect on businesses than the Occupational Safety and Health Administration (OSHA), the federal agency responsible for enforcing regulations to keep workplaces healthy and accident-free.
....

Surprising findings
The results of their analysis, published in Science last week, are definitive: inspections worked. Compared with uninspected firms, the companies subject to random inspections showed a 9.4 percent decrease in injury rates. What's more, the findings were consistent for both large and small accidents. "We thought our results might have been driven by fewer big problems, like preventing storage racks from collapsing and other major accidents; or perhaps by a particularly dramatic decline in smaller injuries prevented by workers more regularly wearing personal protective gear," says Toffel, who worked as an environment, health, and safety manager in the private sector before pursuing his doctorate. "But we found it to be an across-the-board effect."

Just as important are the findings about the costs to companies of complying with regulations. Testing every measure they could find—jobs, wages, sales, and credit ratings among them—the researchers found no evidence (within the margin of error) of any cost to businesses that had been inspected. In fact, quite the contrary: the decrease in injuries led to a 26 percent reduction in costs from medical expenses and lost wages, translating to an average of $350,000 per company. While those costs would be felt most immediately by the firms' workers' comp insurance companies, over time that would translate to lower insurance premiums for the employers.

In other words, those who charge that OSHA regulations cost business money have it completely wrong. In fact, the regulations save money. The magnitude of the results surprised even Toffel and Levine, who expected perhaps a small savings if any. But the strength of the findings, they say, should persuade even skeptical antiregulatory critics.

Randomized Government Safety Inspections Reduce Worker Injuries with No Detectable Job Loss

David I. Levine, Michael W. Toffel*, Matthew S. Johnson
*To whom correspondence should be addressed. E-mail: [e-mail]

Abstract
Controversy surrounds occupational health and safety regulators, with some observers claiming that workplace regulations damage firms’ competitiveness and destroy jobs and others arguing that they make workplaces safer at little cost to employers and employees. We analyzed a natural field experiment to examine how workplace safety inspections affected injury rates and other outcomes. We compared 409 randomly inspected establishments in California with 409 matched-control establishments that were eligible, but not chosen, for inspection. Compared with controls, randomly inspected employers experienced a 9.4% decline in injury rates (95% confidence interval = –0.177 to –0.021) and a 26% reduction in injury cost (95% confidence interval = –0.513 to –0.083). We find no evidence that these improvements came at the expense of employment, sales, credit ratings, or firm survival.

OSHA Saves Lives and Jobs

OSHA Saves Lives and Jobs
by Dr. David Michaels on May 21, 2012

“OSHA doesn’t kill jobs; it helps prevent jobs from killing workers.”

I have been promoting that message since I became head of the Occupational Safety and Health Administration almost three years ago. It is supported by empirical evidence—and now—it’s been confirmed by a peer-reviewed study published in Science, one of the world’s top scientific journals. Not only that, the new study, conducted by professors at the University of California and Harvard Business School, shows that OSHA inspections save billions of dollars for employers through reduced workers compensation costs.

The study, “Randomized Government Safety Inspections Reduce Worker Injuries with no Detectable Job Loss,” found that workplace injury claims dropped 9.4% at randomly chosen businesses in the four years following an inspection by the California OSHA program, compared with employers not inspected. Those same employers also saved an average of 26% on workers’ compensation costs, when compared with similar firms that were not inspected. This means that the average employer saved $355,000 (in 2011 dollars) as a result of an OSHA inspection. The effects were seen among small and large employers.

[The Magistrate]

1. But It Restricts Liberty, Sir!

What is freedom if not the right of a boss to maim and kill workers because he thinks it will make him a bit more money?

[EC]

2. It should increase jobs

since there is a need for inspectors and office employees - those are jobs too. I have never worked anywhere - where OSHA increased expenses by more than $100. or so. For things like ladders, safty cones, fire protection wear, etc. and the workers were happy to have the stuff. The companies that make the stuff (safty equipment, ladders, cones, etc.)are also jobs.