A study of random Cal-OSHA inspections on California businesses by Associate Professor Michael Toffel of the Harvard Business School shatters some popular myths about safety and health inspections.
One myth is that companies will find and correct safety hazards and other workplace issues just as well on their own as they would if inspected and informed of corrective actions needed. In other words, for their own sake, companies would self-inspect and self-police. The other myth is that OSHA inspections end up costing American companies money and in turn are a job killer.
Toffel began his study of Cal-OSHA in 2005 while a graduate student at the Haas School of Business at UC Berkeley when he learned that that state's safety and health agency was conducting randomized inspections for which no accident or safety violation had been reported.
Toffel and associates just concluded the analysis of the data this year and published their findings in the journal Science this past week. Their findings, according to a Harvard Business School announcement:
Compared with uninspected firms, the companies subject to random inspections showed a 9.4 percent decrease in injury rates. What's more, the findings were consistent for both large and small accidents.
Just as important are the findings about the costs to companies of complying with regulations. Testing every measure they could find—jobs, wages, sales, and credit ratings among them—the researchers found no evidence (within the margin of error) of any cost to businesses that had been inspected. In fact, quite the contrary: the decrease in injuries led to a 26 percent reduction in costs from medical expenses and lost wages, translating to an average of $350,000 per company.
"If people are skeptical of OSHA, it's likely based on anecdotes," Toffel says. "The difference in our study is we are looking at hundreds of companies over a long period of time, and we find that those anecdotes are not typical. If they know of a company that has been shut down, that is not typical."
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