The OSHA Regulatory Burden: New Study Debunks Job Killer, Anti-Competitive Theories

The OSHA Regulatory Burden: New Study Debunks Job Killer, Anti-Competitive Theories

It is a truth universally acknowledged that OSHA workplace regulations are unduly burdensome, negatively impacting an employer’s competitiveness and destroying jobs for workers.

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The U.S. Occupational Safety and Health Administration is one of the most controversial regulatory agencies in our country. A debate has raged for years over whether workplace safety regulations and inspections correlate with a decline in injury rates and with lower productivity.

A new study by economic experts, headed by David I. Levine at the Haas School of Business at UC Berkeley, has been published in the latest issue of Science, finding there is no evidence that workplace safety inspections of 409 California employers, which resulted in a 9.4% decline in injury rates and a 26% reduction in injury costs, also resulted in a loss of sales or jobs, or harmed the employer’s credit rating and survival.

Levine et al. analyzed (1) California’s Division of Occupational Safety and Health (Cal/OSHA)’s randomly inspected workplaces in high-injury rate industries from 1996 to 2006, as well as a control group of similar facilities that were eligible for randomized inspections but not selected by Cal/OSHA; (2) injury data from the workers’ compensation system (i.e., WCIRB’s Uniform Statistical Reporting Plan database) that would be less likely to be affected by improved recordkeeping by OSHA inspections; and (3) employment, company survival, and compensation as tracked by Dun & Bradstreet, Standard Industrial Classification (SIC), North American Industry Classification System (NAICS), and the National Establishment Time-Series (NETS) database.

Key findings of the Levine study include:

1. Workplaces randomly inspected by Cal/OSHA subsequently experienced substantially lower injury rates and workers’ compensation costs compared to the control group.

2. The estimated benefits of a randomized safety inspection appeared to be substantial, thereby debunking the theory that OSHA regulations and inspections offer little in improving health and safety overall. Specifically, the researchers found that the reduction in injuries five years after the inspection reduced medical costs and lost earnings by roughly $355,000, which was approximately 14% of the average annual payroll for the employers studied.

3. There was no evidence that the safety inspections resulted in negative outcomes for employees or employers in terms of jobs, wages, sales, credit ratings, and firm survival.

4. Employees stood mainly to gain from Cal/OSHA inspections; the research indicated a 95% certainty of payroll growth or decline of less than $221,000 over a five-year period.

In the Supplemental Materials to their report, Levine et al. provide detailed explanation of their analysis and study by presenting a stylized model to illustrate the effects of OHSA randomized inspections using the assumptions underlying a perfect-competition model as well as those held by OSHA critics and proponents. Here, you will also find 12 tables detailing the results of their studies. You can purchase the full study, “Randomized Government Safety Inspections Reduce Worker Injuries with No Detectable Job Loss”, at the Science website.

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Print Version: Occupational Injuries and Illnesses, Brian Caveney, MD, JD, MPH, Editor-in-Chief

eBook for Mobipocket readers, including Amazon® Kindle™: Purchase here

eBook for e-readers, including Adobe® Digital Editions, Apple® iPad®, SONY® Reader”: Purchase here

Occupational Injuries and Illnesses

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