Sun editorial:

Adding insult to injury

Poor worker safety costs injured workers, taxpayers and the economy billions each year

Wednesday, Dec. 3, 2008 | 2:06 a.m.

One of the standard objections to workplace safety regulations is money. The U.S. Chamber of Commerce, for example, calls the Occupational Safety and Health Administration’s rules “a significant burden” for small businesses and it intimates that any more regulation would end with thousands of companies shutting their doors.

This argument has had great success in Washington for decades, as business groups have been able to fend off regulation in the name of the economy. Over the past eight years, aided by the Bush administration, business has either killed or delayed regulation on ergonomics, personal protection equipment for employees and the industrial chemical hexavalent chromium, a carcinogen best known to America from the Erin Brockovich case.

But the argument is little more than a scare tactic to avoid the cost of preventive safety and health programs. The result is that workers suffer avoidable injuries and illnesses, taking a significant toll on the economy because the bulk of the costs are paid by the public.

Professor J. Paul Leigh, a leading health economist at the University of California, Davis, conservatively estimates that workplace injuries and illnesses tallied $163.3 billion in costs in 2005. (In comparison, cancer was estimated to cost $210 billion.) But only 34 percent of the total cost of injuries is picked up by workers’ compensation insurance.

The remaining $108 billion in costs, Leigh notes, “are then shifted to society.” Injured workers and private insurance companies pay about $70 billion of that with Medicare, Medicaid and Social Security Disability Insurance covering the rest.

The total bill may be significantly higher than estimated. Experts note that the way the Labor Department collects injury and illness numbers, which are used to determine costs, fails to record millions of cases. And chronic injuries and illnesses are rarely, if ever, counted, much less paid for under workers’ compensation programs. For example, a carpenter may need a knee replaced after years of work. Or it may take decades for silicosis to develop in a construction worker exposed to silica dust for years from sandblasting, demolition or concrete work. The public often picks up the tab in those cases.

Economists also note that workplace injuries place a heavy burden on welfare and unemployment programs because injured workers and their families often receive those benefits.

For years advocates have fought for strong health and safety programs by making a moral argument that the cost is outweighed by saving human lives. But experts admit that argument doesn’t work well in the business world, particularly because the cost of a human life under the current law is cheap. A company found to be negligent in a workplace death may be fined a few thousand dollars. And even such fines, as the Las Vegas Sun’s reporting has found, have been routinely negotiated away in Nevada.

“It’s far more effective if you can show employers the savings to their workers’ compensation premiums,” said Joseph Dear, an OSHA administrator during the Clinton administration.

Advocates correctly argue that good safety programs can save companies many times what they cost — from lower workers’ compensation and health care insurance premiums to higher worker productivity.

With American employers paying $88 billion in workers’ compensation premiums every year, business groups should be encouraging good safety programs, which in turn help employees, companies’ bottom lines and the economy.

Congress should also make this a priority. Taxpayers would be much better served if federal dollars weren’t going toward workplace injuries and illnesses that could have been prevented. Safety regulation and oversight have a great payoff, for all of us.

Discussion: 5 comments so far…

By KDR81

12/3/08 at 8:38 a.m.

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...actually the regulatory compliance costs billions upon billions more.

SO if your goal is to improve the economy you'd actually eliminate OSHA...but you'd only reach that conclusion if you actually presented some facts.
By KDR81

12/3/08 at 8:52 a.m.

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Lets assume that workplace injuries cost the economy $163 billion.

We already have government management of workplace safety to the tune of $500 million a year.

Lets assume we double spending on OSHA. But when OSHA's power is increased so does the regulatory compliance costs.

Lets assume the average company has to buy $5,000 in new safety equipment etc to comply with new regulations and do another 100 hours of paper work to comply each year (Lets say that costs $2000...assuming their HR or safety compliance officer makes around $20 an hour).

With 8.8 million work places that would cost $61.6 billion a year in compliance costs plus the extra $500 million in new expenditures for OSHA.

That is $62.1 billion in new costs to solve a $163 billion problem. Then you'd have to add in the current compliance costs and realize that unless we outlawed people from working there are still going to be work place injuries.

How many work place injuries would be reduced? Certainly not all of them.

What if we reduce 100,000 injuries extra a year? Well that cost us $616,000 per injury reduced.

You can't say that improves the economy unless you can prove the average worker would have reduced their productivity by $616,001 because of that injury.

OSHA retards our economic development and it does very little to improve worker safety. However, it does make things more expensive and it does reduce worker salaries. Improved working conditions have come in this last century despite OSHA and the government not because of it.
By AKSafety

12/3/08 at 9:55 a.m.

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Your very first number is woefully wrong to start with. It doesn't include the cost of first aid incidents and it does not factor in the indirect costs of work stoppage, work slowdown (workers typically work at a slower pace when a co-worker is injured), incident investigation, injury reporting and recordkeeping, increased workers' compensation premiums that can affect payment levels for up to five years, etc. It is estimated that the indirect costs of an injury can amount to three times that of the injury itself.

Then you need to take into consideration that companies with a strong safety program typically have a lower deficiency rate in their products and services. Quality and safety improvements usually go hand in hand.

Even an industry that you wouldn't normally think of had a positive cost result from the implementation of a strong safety program; the Los Angeles Greater School District lowered overall costs while improving student test scores. The savings more than covered the cost of additional staff, training and equipment.

OSHA only exists because many companies are only doing the absolute minimum (or less) to comply with the law/regulations. OSHA wouldn't need to exist if every company voluntarily did what was necessary to provide a safe, healthy, productive and profitable work place.
By KDR81

12/3/08 at 10 a.m.

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And often the bare minimum (OSHA standards) is enough to reduce the maximum number of injuries at the lowest cost. So yes, OSHA does increase economic costs, retard growth and lower salaries.

But what I'm really on here to say is that the real insult to injury is the IRONY with Greenspuns censorship.

I posted a note on the article about his families ugly building http://www.lasvegassun.com/news/2008/dec...

and they deleted it and removed all comments.

All I asked was why the Greenspuns care more about having their name on a building rather than starting a scholarship fund for low-income students. THey could have sent 500 students a year to school for free for the amount they paid to have their name plastered on a building.

And Brian the censor deleted it. Irony.
By Mokesmith

12/4/08 at 9:52 a.m.

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KDR81: "We already have government management of workplace safety to the tune of $500 million a year."

This perspective misses a central aspect of human nature. Economics tells us that we will spend the least amount of money we can get away with, on workplace safety just as other business costs. The presence of government health and safety regulation prompt most legitimate businesses to pay attention to the issue, preventing untold already-avoided injuries, deaths and costs to business that are not accounted for in your calculations. Even the current regulatory burden is a joke in many industries: go work for a week in a meatpacking plant and then report back to us how inefficiently safe those OSHA regs made your work.

If your business cannot efficiently prevent injuries that externalize harm onto society, you should get out of that particular business and make way for those who can.

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