The "Job Killers," Part 2

The American Association for the Advancement of Science was kind enough to send me a free issue of Science last month, in the hope that I'd subscribe. I didn't—too much “hard” science, in both senses of the word—but I found an interesting evaluation research study by economists David Levine, Michael Toffel and Matthew Johnson on the effect of government safety inspections on worker injuries. Unfortunately, the study is gated.

As noted in Part 1 of this post, corporate spokespersons and conservative politicians often label government-enforced health and safety regulations—along with environmental protections, health insurance, and taxes—as “job killers.” Opponents claim that these laws seldom actually prevent injuries, and their implementation is so expensive that they make companies unprofitable, leading to plant closures and layoffs, and hurting workers in the long run.

There is a large existing literature on the subject, but it is inconsistent and inconclusive. Studies usually look for changes in injury rates from before to after an inspection. But workplaces are not randomly chosen for inspection; they are usually chosen due to recent accidents or safety complaints. If some of these accidents are actually random events, there could be an apparent improvement that is merely regression to the mean. In addition, inspectors often find incomplete safety records and require better record keeping. This can lead to the false perception of an increase in accidents after the inspection.

Fortunately for research purposes, between 1996 and 2006, California's Occupational Safety and Health Administration, lacking the resources to inspect all workplaces, randomly selected 409 workplaces from high injury industries for inspection. The authors matched them with 409 control firms, each one from the same industry and region of California as an inspected plant. They counted the number of injuries and the cost of these injuries during the period from four years before the inspection to four years after. They also looked at several measures intended to determine whether inspections had the unintended effect of being job killers: firm survival, credit ratings, total sales, number of employees, and payroll.

They found that the inspections reduced injuries by an average of 9.4% in comparison to the control group—not a trivial difference, especially if you work at one of these plants. Workers' compensation costs were reduced by 26%. The difference was significant for both major injuries (costing more than $2000) and minor ones. The improvement was not just temporary. The reduction in injuries was greater in the third and fourth years after the inspection than in the first two years.

There was no evidence of job loss or any other negative effect of the inspections on the competitiveness of these firms. The plants selected for inspection were no more likely to go out of business, and they did not have lower credit ratings, sales, numbers of employees, or payrolls, when compared to the control plants. In fact, all five of these measures favored the treatment group over the control group, although none of the differences were statistically significant.

This is just one study, but it appears to be a good one. It's worth bearing in mind the next time some lobbyist or politician claims that health and safety laws, and their enforcement, are “job killers.”