Sea Bright Enterprises, Inc.

From: Center for the Study of American Business (CSAB)

By any measure, occupational safety and health were improving rapidly before the major increase in government regulation of the work place, according to a report released by the Center for the Study of American Business at Washington University in St. Louis. While the trend toward greater safety has continued, the report finds that this is due in large part to shifts in the nature of work resulting from technological change.

In Technology and a Safe Workplace, economist Richard Vedder says that, while policy analysts have put forth several rationales for federal occupational safety and health regulation, the American workplace has steadily become much safer, diminishing any such rationale. This has been aided by the macroeconomic effects of technology on increasing productivity and real income per capita, changes that have implications for the nature of work and worker safety.

Vedder notes that, in 1960, the government spent very little on regulating the health and safety of American workers. Today, four decades later, regulatory efforts have expanded exponentially, with a whole new bureaucracy, notably the Occupational Safety and Health Administration (OSHA), created to enforce workplace practices. In the related area of worker standards and benefits, government spending has also risen sharply. These efforts, however, appear to have had little impact on worker safety. Technologically induced structural change has solved many of the problems envisioned at the time of OSHA's creation in 1970.

Employers have a significant incentive to carry out safety improvements, Vedder says, and workers themselves consciously choose risk levels of employment. "Workers who are risk takers and/or want high incomes will gravitate toward jobs where the workplace is relatively dangerous, while risk-averse workers will trade lower wages for greater safety," he says. "The wage differential foregone by workers in the lower-risk job is like an insurance premium paid to reduce the probability of occupational injury, sickness, or even death."

Annual Workplace Deaths per Million Workers

Source: Department of Commerce, Bureau of the Census.

s in the economy, many of them at least partly technology-based, have led to increased importance of comparatively safe jobs in the service industries. The robust economy has also increased real per capita incomes. As incomes rise, people feel they can afford to avoid risky jobs.

Vedder notes that, while spending on worker safety regulations is at an all-time high, it is not clear that regulatory expansion had any positive impact on the reduction in death rates in the American workplace. From 1945 to 1970, deaths per 100,000 workers declined by nearly one-half. While the decline has continued in the regulatory era since 1970, the rate of absolute annual decline (0.60 deaths per million workers) in the period 1945-70 was greater than in the post-regulatory era 1970-96 (0.54 deaths per million workers. Similar trends are observed for occupational injuries, Vedder reports.

"Summing up the historical evidence, the trends seem to suggest that, in the absence of OSHA and similar agencies, workplace safety today would probably be similar to what is actually observed," Vedder says. "The benefits of regulation, if any, are comparatively small. However, the costs are considerable." He notes that the actual budgets of OSHA and related agencies are small in comparison to the business costs of complying with regulations, estimated to be about $33 billion a year.

The Center for the Study of American Business is a nonpartisan, nonprofit research organization at Washington University in St. Louis that conducts scholarly research on issues affecting the American business system. Please contact the Center at (314) 935-5676 if you would like a copy of Technology and a Safe Workplace or visit the CSAB web site at http://csab.wustl.edu. Richard Vedder is an adjunct fellow of the Center and Distinguished Professor of Economics at Ohio University.