Workplace safety advocates and opponents of further government regulation have long argued wither workplace safety requirements improve the safety and productivity or the workplace, or create a drain on a company’s resources.
A new study may have finally answered that debate.
The 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, states workplace inspections reduce on-the-job injuries and their associated costs without causing any harm to companies’ performance or profits.
To arrive at their conclusions the authors of the study looked for workplaces inspected between 1996 and 2006 for which they could find similar companies that were eligible for inspection but hadn’t yet been selected. They ended up with 409 matched pairs of inspected and uninspected workplaces.
The researchers then used workers’ compensation claims over the period ranging from 4 years before through 4 years after the inspection to determine illness and injury rates. They also examined injuries during the same block of time for the companies that weren’t inspected.
“The randomized inspections provided a perfect natural experiment that uses the power of randomization just like a medical clinical trial,” Toffel said. “Because Cal/OSHA typically inspects facilities following complaints or recent accidents, you can’t study those inspections to get an unbiased understanding of whether they make a difference. By studying the inspections Cal/OSHA conducted at workplaces selected at random, we 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 four 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.
“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. We looked at company survival, employment, sales and total payroll to see if inspections were detrimental to the employers,” said Levine.
“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.”
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