New research is challenging the conventional business wisdom that safety inspections lay a “job-killing” burden on employers and do little to protect workers.
In fact, the research asserts, random government safety inspections are associated with fewer injuries and cost savings. The oversight does not harm—and may even enhance a company’s overall welfare.
|The study found 26 percent lower injury costs for up to five years in workplaces that had been inspected.|
That is the conclusion of a detailed review of more than 800 California workplaces over a 10-year period.
Inspected workplaces showed a 9.4 percent decline in injury rates, a 26 percent decline in injury cost, and “no evidence that these improvements came at the expense of employment, sales, credit ratings, or firm survival” when compared with similar businesses that were not inspected, concludes the study, published in the journal Science.
The study comes from researchers at Harvard Business School, Haas School of Business at the University of California - Berkeley, and the Department of Economics at Boston University.
The team notes that the Occupational Safety and Health Administration “is one of the most controversial agencies in the United States”—partly due to “widely varying results” in earlier research about OSHA’s benefits vs. its requirements.
Those mixed results have been due to several factors, the authors say, including data skewed by the inevitable preponderance of federal inspections after an accident or targeting companies with a history of safety problems.
The problem has been compounded by reliance on company record-keeping, which tends to improve after an accident. That may inaccurately create the perception of more injuries, rather than stricter record-keeping.
In contrast, the new research focuses on data from randomized inspections by California’s Division of Occupational Safety and Health (Cal/OSHA). The authors compared 409 randomly inspected workplaces in high-hazard industries with a control group of 409 workplaces that were eligible, but not chosen, for inspection.
All of the potential workplaces had at least 10 employees and a single location.
The researchers also analyzed data from California’s workers’ compensation system and studied employment, company survival and compensation data “to look for unintended harms from inspections.”
Their conclusion: “Inspections statistically significantly reduced injuries in the random inspection year” and three and four years later. (Marginal improvement was found in the year after inspection, and no significant changes in either direction were seen in Year 2).
The reductions extended to both minor and major injuries, defined as less or more than $2,000 in workers’ compensation claims per incident.
Moreover, the team said, “inspections consistently reduced injury cost,” with a 26 percent overall decline measured in the inspected group.
In addition, the team found no bottom-line damage in the inspected group. Indeed, 4.4 percent of the inspected group went out of business during the study period, compared with 5.6 percent of the uninspected group (a higher percentage, but not a statistically significant difference, researchers said).
Nor was creditworthiness affected—”inspections, if anything, increased creditworthiness,” authors reported. And employment, payroll, sales and total earnings were either about the same or slightly higher among inspected workplaces.
The team calculated that the inspected companies saved about $355,000 in the five years after an inspection—about 14 percent of the average annual payroll in the sample. If that effect held up nationwide, the authors said, it could save businesses about $6 billion and ease the loss in productivity from absenteeism and downtime.
“Thus, although admittedly imprecise, the estimated benefits of a randomized safety inspection appear to be substantial,” the authors wrote. “These results do not support the hypothesis that OSHA regulations and inspections on average have little value in improving health and safety.”
The authors note the limitations of their sample population and say more study is in order.
On the other hand, says co-author Michael Toffel, a professor at Harvard Business School, “These inspections ironically appear to be creating value for the firms that they are visiting in terms of reduced workers’ comp costs and frequency of injuries.”
Toffel says his interviews showed that inspections lead to fewer injuries because inspectors talk with operators about hazards and discuss how to address them.
“It focuses the minds of managers to create solutions like installing blade guards around a saw or railings on elevated walkways,’’ Toffel said.