A new study, co-authored by Harvard Business School Professor Michael Toffel, Professor David Levine of the Haas School of Business at the University of California – Berkeley and Boston University doctoral student Matthew Johnson, examines workplace safety inspections conducted by California’s Division of Occupational Safety and Health (Cal/OSHA). The authors carried out the first evaluation of a "clinical trial" of the state's mandated randomized inspections to discern their effect on both worker safety and companies' bottom lines.
The study, “Randomized Government Safety Inspections Reduce Worker Injuries with no Detectable Job Loss,” concluded workplace inspections do reduce on-the-job injuries and their associated costs, and they could not detect any harm to companies' performance or profits.
"We spent several years collecting data, not just on injuries, which is very important, but also on other indicators to see whether inspections led to problems they are often accused of causing – like whether they increased costs and led to the elimination of jobs,” said Levine. “We looked at company survival, employment, sales and total payroll to see if inspections were detrimental to the employers.”
By studying the inspections Cal/OSHA conducted at workplaces selected at random, the researchers were able to overcome this problem to learn the actual impact of inspections. The study found that within high-hazard industries in California, inspected workplaces reduced their injury claims by 9.4 percent and saved 26 percent on workers' compensation costs in the 4 years following the inspection, compared to a similar set of uninspected workplaces. On average, inspected firms saved an estimated $355,000 in injury claims and compensation for paid lost work over that period. What's more, there was no discernible impact on the companies' profits.
"Across the numerous outcomes we looked at, we never saw any evidence of inspections causing harm," Toffel explained. "If OSHA inspections conducted in all 50 states are as valuable as the ones we studied, inspections improve safety worth roughly $6 billion to employers and employees, ignoring pain and suffering. The overall message of our research is that these inspections worked pretty much the way one would hope. They improved safety, and they didn't cost firms enough that we could detect it."
The news was greeted with glee by OSHA Administrator David Michaels, whose mantra has become: “OSHA doesn’t kill jobs; it helps prevent jobs from killing workers.”
In a blog post on the OSHA Web site, Michaels noted, “I have been promoting that message since I became head of the Occupational Safety and Health Administration almost three years ago. It is supported by empirical evidence and now, it’s been confirmed by a peer-reviewed study published in Science, one of the world’s top scientific journals. Not only that, the new study, conducted by professors at the University of California and Harvard Business School, shows that OSHA inspections save billions of dollars for employers through reduced workers compensation costs.”
On average, inspected firms saved an estimated $355,000 in injury claims and compensation for paid lost work over that period. What's more, there was no discernible impact on the companies' profits. The results were true for both large and small companies.
“This is not a surprise to me,” said Michaels. “I regularly hear from employers, both large and small, that they value OSHA inspections and treat the inspector as an additional, expert set of eyes. 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!”