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Published: August, 2012; Vol 9, Num 3

 

Study Reveals:

Enforce Safety Regulations, Bolster Business

"The anti-regulatory lobby's line is pretty simple," says LHSFNA Management Co-Chairman Noel C. Borck, noting its three points:

  1. Safety regulations cost money to implement.
  2. Money spent on safety means less money for new work opportunities.
  3. Therefore, safety regulations harm workers.

Alternate description

LHSFNA Management Co-Chairman Noel C. Borck

"By this questionable logic," says Borck, "the lobby asserts that whatever the other virtues of safety regulation – for instance, improved on-the-job safety – its social costs in terms of lost jobs should be the most important or only concern both for workers and for society in general. Now, we have a study that tackles this logic head-on."

Published in the May 18, 2012, issue of Science, Randomized Government Safety Inspections Reduce Worker Injuries with No Detectable Job Loss challenges this anti-regulatory rationale with a well-planned investigation of the facts.

"Of course, facts will not dissuade the opponents," says Borck. "They're far more interested in securing business subsidies, lowering taxes and reducing government oversight than they are in creating real jobs or making real jobs safe. However, contractors will find the facts relevant because they struggle to make a profit in the real world, not in the world of Washington politics."

To test the lobby's claim, researchers at Harvard, UC Berkeley and Boston University compared the experience of 409 randomly inspected businesses with at least ten employees in high-injury industries in California with 409 similar (matched-controlled) establishments that might have been inspected but were not. They used the state's workers' compensation system to track injuries over the five years following the inspections. Finally, to ascertain business outcomes unrelated to injuries that might have occurred after the inspections, researchers looked into whether companies survived and whether their employment, compensation and sales rose or fell.

The study found that five years after the Cal/OSHA inspections:

  • The inspected businesses experienced a 9.4 percent decrease in injury rates compared to businesses that were not inspected.
  • Inspections reduced the rate of both minor (less than $2,000 in workers' compensation) and major injuries.
  • Inspected businesses experienced a 26 percent reduction in injury costs relative to those that were not inspected.
  • On average, inspections lowered employers' medical costs and lost earnings due to workplace injuries by about $350,000 over the next few years.
  • Inspected businesses failed to survive at a rate of 4.4 percent while 5.6 percent of uninspected businesses failed, rates considered a statistical dead heat.
  • Because very few businesses actually failed, impacts on creditworthiness were checked. Inspected businesses saw a slight improvement in creditworthiness relative to their uninspected peers, but the difference was statistically insignificant.
  • With regard to total employment and payroll, inspected businesses saw slightly more growth than uninspected ones. Sales were also somewhat higher among inspected than uninspected establishments.

The researchers conclude, "[T]hese calculations imply that employees almost surely gain from Cal/OSHA inspections."

"In summary," says Borck, "the study's result is inconsistent with the view promoted by anti-regulatory lobbyists that OSHA inspections reduce employment or earnings so much that, on average, employees are worse off because of them. Indeed, the data show that employers as well as employees benefit from safety regulation."

[Steve Clark]