Harvard, University of California, Boston University Co-Author Study
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, concludes workplace inspections do decrease on-the-job injuries and their associated costs, and they could not detect any harm to companies’ performance or profits.
The study,“Randomized Government Safety Inspections Reduce Worker Injuries with no Detectable Job Loss,” involved several years of compiling information.
“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.”
Reduce Injury Claims 9.4% and save 26% on Workers Comp
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 said. “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.”
Average Savings of $355,000 per Company
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,” remarked OSHA Administrator David 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!”
Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: [email protected].
WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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