Business & Economics

Government regulation that actually works

David Levine

The federal Occupational Safety and Health Administration (OSHA) is back in the news after the Government Accountability Office criticized the agency for taking too long to adopt new safety regulations. The GAO report says the delays compromise worker safety.

OSHA has a long history of being attacked from all sides. While some criticize it for being too lenient, others routinely refer to it as a job-killer whose regulations stifle job creation, increase labor costs, and erode America’s competitiveness.

But don’t be fooled. OSHA workplace inspections protect the health and safety of America’s workers. We now have the data to prove it.

Workplace inspections not only improve safety, they cause no discernible damage to employers’ ability to stay in business and no reductions in sales or credit ratings, according to our research. Nor did we identify any effects of workplace inspections on wages, total payroll, or employment.

Our analysis* focused on the inspections that California’s Cal/OSHA conducted at random in dangerous industries, so our results are like those of a true randomized experiment — the most convincing type of evidence when evaluating a program.

Cal/OSHA’s randomized inspections did what they were supposed to do. They reduced the number of injuries leading to workers’ compensation claims by around 9% and lowered the medical expenses and wage replacement paid from those claims by 26%. On average, inspections lowered employers’ medical costs and lost earnings due to workplace injuries by about $350,000 over the next few years.

Now think nationally. While more research is needed to understand whether our results apply to all 50 states, if what we found in California is representative of what’s occurring elsewhere throughout the country (and also for inspections triggered by worker complaints and accidents), workplace safety inspections lower the cost of injuries by roughly $20 billion a year. And this dollar cost doesn’t consider reductions in pain and suffering.

Managers should welcome OSHA inspections. Randomly inspected establishments improve worker safety and reduce employers’ premiums for workers’ compensation insurance. And we found no evidence that these establishments suffer any of the competitiveness problems suggested by political rhetoric — like disruptions leading to lost sales or solvency concerns, or any effects on wages — compared to our control group. The differences are small but telling: OSHA inspections offer substantial value to workers, companies, and society.

Why has it taken 40 years to generate robust evidence of the effects of OSHA inspections? OSHA typically inspects companies most likely to have problems, often following accidents and complaints, but while this targeting approach sensibly focuses on risky establishments, it hinders evaluation. Thanks to California’s legislature requiring Cal/OSHA to randomly select a portion of its inspection targets, our results are solid.

The government — and taxpayers — would have a much better understanding of which policies and regulations work well if policymakers and regulators built rigorous evaluations into many more regulatory programs. And rigorous evaluations should lead to a more informed debate among both proponents and critics.

Note:

* “Randomized Government Safety Inspections Reduce Worker Injuries with No Detectable Job Loss” is co-authored by Michael Toffel, associate professor of business administration at the Harvard Business School and faculty fellow of the Harvard Environmental Economics Program, and Matthew S. Johnson, Ph.D. candidate at Boston University and former research associate at Harvard Business School. To read the published paper in Science for free, follow the links on David Levine’s research webpage

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Comment to "Government regulation that actually works":
    • Dina J.Padilla

      According to Workercomo exe internet article, there are 14,000 claims a day.

      Employers are on the “honor” system. Why would there be so many injuries if employers were doing their best to keep their employees safe and healthy?

      The injuries now include exposure to toxic sites such as Downey, CA., and now in bio labs that are totally unregulated. Also, these labs can now claim on the job deaths because of exposures to bacteria & molds.

      If there was ever a time to have inspections, the time is now before these injuries, illnesses, deaths are not exposed to general public — which the way things have happened, that has already happened, where our air, food, water & soil are now making people sick and or dead.

      I know there are scientists who now have joined the blue & white collar employees with the facing of serious injuries and or illnesses or death. There is is no excuse for these horrible workplace & OSHA isn’t even ready for the latest, toxins & bacteria. What about our children, what do they do & where do they go to stay safe & healthy?

      God go & be with all of us. We need it!

      (See kaiserpapers.org, biotechawareness.com watchdogforscience.blogspot.com katysmoldexposure.blogspot.com)

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