The evidence is in: Safety really does pay
The evidence is in: Safety really does pay
Study: Inspections lead to cost savings
The role of government is the political question of our time. Do we have too much or too little? Is it a force of good or an obstruction? At least when it comes to occupational health and safety, two studies provide an answer: OSHA inspections reduce injuries, save money and don’t hurt employment.
“One of the reasons it’s so political is that there’s a lack of solid evidence about the effects of [the U.S. Occupational Safety and Health Administration],” says Michael Toffel, PhD, associate professor of business administration at Harvard University. “If some thinks it hurts jobs and others think it improves safety, there’s been little evidence to demonstrate who’s right.”
Toffel and economists at Boston University and University of California, Berkeley, compared 409 businesses that had a random inspection in California between 1996 and 2006 with 409 matched businesses that had no inspection. In the four years after their inspection, those businesses had 9.4% fewer injuries and 26% lower workers’ compensation costs than the uninspected controls. There was no impact on employment, sales or survival of the inspected businesses.1
“Cal-OSHA inspections in California seem to add value to organizations,” says Toffel, who notes that they looked at high-hazard industries that were single-location firms. Their sample included hospitals.
A study in Washington state mirrors those findings. An analysis of 10 years of enforcement and workers’ compensation data found that workers’ compensation claims declined by about 25% among businesses that had one or more citations compared with a 5% decline in businesses that did not have any enforcement activity. (That decline was for “fixed-site” businesses, which excluded construction and trucking, and involved non-musculoskeletal disorder injuries.)2
“The perception is that the [occupational health and safety] regulations are onerous and are inhibiting to businesses,” says Michael Foley, MA, epidemiologist and economist with the Safety Health Assessment and Research for Prevention (SHARP) program in the Washington Department of Labor and Industries in Olympia.
“What we’re saying is that, in fact, even from the standpoint of businesses themselves, that’s actually not the case,” he says.
‘OSHA saves lives and jobs’
OSHA Administrator David Michaels, MD, MPH, touted the Toffel study gleefully on an online posting: “The findings should finally put an end to the criticisms that OSHA inspections make running a business more expensive without adding value. The results are in: OSHA saves lives and jobs!”
By how much? Toffel and colleagues found that the average employer saved $355,000 in reduced medical costs and lost earnings, in 2011 dollars.
Inspections may have an effect that is similar to the police officer who catches a speeder. The experience inspires a greater focus on safety and following the rules. But the effect isn’t only from the cost of a citation, notes Foley.
“From an economist’s background, this enforcement effect is surprisingly strong given how weak OSHA penalties are,” he says, noting that the average OSHA penalty is about $500 or $600. The maximum OSHA penalty is $7,000.
OSHA inspections also provide education and awareness. “In the subsequent conversations we’ve had with Cal-OSHA inspectors, they’ve told us that part of the enforcement process ... they’re identifying concerns and highlighting them to management,” says Toffel. “Management has an obligation to fix them. But also they’re talking about how companies have resolved these issues in other locations.”
Yet consultation and compliance assistance does not seem to be as effective as enforcement. In the Washington study, consultation was not consistently associated with reductions in costs.
Toffel didn’t include consultation because it is not random, as inspections often are. “Firms that seek consultations may be different from firms that don’t seek consultations,” he says.
New safety rules take years
Creating a new safety regulation is notoriously difficult, as detailed in a 2012 report from the Government Accounting Office (GAO).3 It takes OSHA an average of seven years — and as long as 19 years — to create a new regulation, the GAO found.
Opposition often builds even before a draft standard is released. For example, the U.S. Chamber of Commerce and the National Federation of Independent Business have expressed concerns about an Injury and Illness Prevention Program (I2P2) rule. OSHA announced that it would release a draft rule for review in June 2011, but it now seems unlikely that a proposed rule will be issued before the presidential election.
In a position paper, the U.S. Chamber of Commerce said that “the current regulatory process allows agencies to craft regulations based more on ideology than on substantial factual and scientific evidence and leaves agencies effectively unaccountable to the public.”
One result of the recent study may be an evidence-based methodology to assess regulations, says Toffel.
“In a vacuum of evidence, there’s nothing to do but debate philosophy rather than effectiveness,” he says. “I would hope that effectiveness plays a bigger role than it is today in deciding what it is that government should do.”
Regulators could conduct a pilot test by randomly selecting companies and matched controls, and measuring the impact after six months or a year, Toffel says.
“Imagine if we used politics to decide which medicines were effective and you just based it on philosophy,” he says. “We decided that’s not an acceptable approach. We use controlled randomized trials and learn what works. There’s similar logic to be applied to a whole host of regulatory measures.”
Will politics change?
But will research on OSHA’s effectiveness change the political paradigm? That is yet to be seen.
“The idea that [occupational safety and health] regulations kill jobs is pretty silly when we have this research that documents exactly the opposite,” says Bill Borwegen, MPH, occupational health and safety director of the Service Employees International Union (SEIU) in Washington, DC. “We need more OSHA inspections, not less. If we had more, employers would save more workers comp costs.”
The studies reveal that employers who do not face enforcement action from OSHA are not as compliant or as vigilant about preventing injuries, Borwegen notes.
But to Brad Hammock, an attorney with Jackson Lewis, a Washington, DC law firm that represents employers, the studies are not a game-changer. It’s not surprising that OSHA enforcement leads to fewer injuries, he says. After all, that’s the point of enforcement.
“OSHA has been enforcing its rules now for 42 years. The bigger story would be if it wasn’t having an effect in the workplace,” he says.
References
1. Levine DI, Toffel MW and Johnson MS. Randomized government safety inspections reduce worker injuries with no detectable job loss. Science 2012; 336:907-911.
2. Foley M, Fan ZJ, Rauser E and Silverstein B. The impact of DOSH enforcement and consultation visits on workers’ compensation claims rates and costs, 1999-2008. SHARP Technical Report 70-5-2011, May 2011. Available at www.lni.wa.gov/Safety/Research/Files/OccHealth/DoshEnforce19992008.pdf. Accessed on June 21, 2012.
3. U.S. Government Accounting Office. Multiple challenges lengthen OSHA’s standard setting. GAO-12-602T. April 19, 2012. Available at http://www.gao.gov/products/GAO-12-602T. Accessed on June 21, 2012.
The role of government is the political question of our time. Do we have too much or too little? Is it a force of good or an obstruction? At least when it comes to occupational health and safety, two studies provide an answer: OSHA inspections reduce injuries, save money and dont hurt employment.Subscribe Now for Access
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