By: Thomas H. Welby Published: April 2015

OSHA Issues Report Tying Income Inequality to Workplace Dangers; Calls Workers' Comp System "Broken"

The Occupational Safety and Health Administration recently issued a study sure to occasion much controversy.  Entitled “Adding Inequality to Injury:  The Costs of Failing to Protect Workers on the Job,” this report sounds an alarm that, despite the OSH Act being in place for more than 44 years, and it having long been the law and national policy that employers must provide workplaces free of serious hazards, each year more than 4500 workers die on the job, and at least 3 million (and perhaps many more) are seriously injured.

The National Safety Council estimated the cost of fatal and non-fatal work injuries at $198 billion for 2012.  That figure can be compared with the Rand Corporation’s estimate of the annual cost of dementia, including Alzheimer’s, at between $159 billion and $215 billion (2010), and the American Diabetes Association’s 2012 estimate for the annual cost of diabetes, $245 billion.

Persistent levels of workplace mayhem generate enormous costs (chiefly, medical expenses and lost income) for the affected workers.  No less troubling, according to the report, is that only about 21% of the costs are defrayed by employers, chiefly through Workers’ Compensation insurance, required under state law.  Half of the costs are paid out-of-pocket by the injured workers and their families.  Thirteen percent of the costs are paid by private health insurance, and the remaining 16% are covered by federal, state and local government components of the social safety net.

Workplace injuries and illnesses exacerbate, the OSHA report claims, the burgeoning issue of income inequality.  Injured workers often fall into a trap, leaving them less able to save for the future, or to invest in skills and education that will permit them to advance.  Working families are pushed out of the middle class and into poverty, and low-income workers, often made to bear the greatest part of the cost of their job-related injuries and illnesses, are thwarted in efforts to enter the middle class.

According to the new OSHA study, the current, real-life benefits to workers from Workers’ Compensation are slight, and slipping.  Several studies have shown that fewer than 40% of eligible workers even file claims.  In Massachusetts, more than half the workers with work-related amputations receive any Workers’ Comp benefits; in California, one-third of the amputees received no benefits.

Many low-income and immigrant workers are deterred from even filing Workers’ Comp claims by language difficulties, or fear of losing their jobs.

And, even where workers do receive benefits under Workers’ Comp, it seldom offsets lost income.  A recent study in New Mexico found that workers receiving Workers’ Comp benefits in that state lose an average of 15% of the earnings (on average, more than $30,000) they would have been expected to earn in the ten years following their injuries. 

Individuals with work-related illnesses fare even worse under Workers’ Comp than workers injured in workplace accidents:  one study estimated that as many as 97% of workers with occupational illness are uncompensated.  Most cases of work-related chronic disease are never diagnosed as such; when linkage is made, the diagnosis generally comes long after employment ends.  Workers with job-related illnesses may get compensation, but it is more likely to be via private insurance, Medicare, Medicaid, or the Veterans’ Administration than Workers’ Comp.

 The OSHA report notes another factor at play in heaping the losses from workplace accidents and sickness onto employees.  Notably, by misclassifying employees as “independent contractors,” employees evade both OSHA coverage and Workers’ Comp premiums.  Employees engaging in this practice, unconcerned about the consequences of injuries, will seldom invest money or effort to ensure worker safety.

The presence of employees of multiple employers at a single worksite (typical of the construction industry) and the increased use of temporary employees are additional structural changes of employer-employee relations that the OSHA study points to as increasing workplace hazards, and increasing the share of accident burdens borne by the workers themselves.

OSHA’S report concludes that the most effective solution is greater efforts to prevent work injuries and illnesses.  In principle, of course, that has long been required by the OSH Act and other federal and state laws.  As the report notes, improvements in prevention would spare workers and their families from needless hardship and suffering, as well as from the loss of income and benefits associated with job-related injuries and illnesses.

While OSHA has probably been much less effective in combating job-related illnesses (which may develop only over many years) OSHA has produced respectable results in reducing accidental deaths.  In 1970, an estimated 18,000 workers were killed on the job, or about 38 a day, or 18 per 100,000 workers.  Today, with a much larger workforce, the gross number of deaths has been reduced by three-fourths, and to an annual rate of about 3.4 per 100,000.

However, the new OSHA report refers to studies that show that, each year, roughly 50,000 deaths in the U.S. are the result of past workplace exposure to asbestos, silica, benzene, and other hazardous agents.  In comparison, about 33,000 people died in traffic accidents in the U.S. in 2013.

The report stresses prevention over, among other things, requiring greater payment amounts under Workers’ Comp. As a matter of practicability, since Workers’ Comp is a state, rather than a federal, program, reform would be a drawn-out, politically laborious and uncertain process.  Even those state legislatures inclined to aid injured workers would no doubt be hesitant to act, since employers could effectively resist higher premiums, by threatening to shutter local operations, and take their businesses across a state line. 

Even if you’re a business owner, however, or think of yourself as a political conservative, you should keep in mind that, as a responsible, safety-conscious employer, your taxes (and Workers’ Comp premiums) are unfairly subsidizing your less-conscientious competitors.  Forth-four years after the passage of the OSH Act, it’s only fair to ask whether injured workers and taxpayers should pay so great a portion of the medical and income-loss consequences of workplace accidents.

The OSHA report mentions, and we should keep in mind, that studies based on statistics fail to account fully for the human costs of job-related injuries and illnesses.  These include physical suffering; inability to take part in recreational activities; marital stresses (and damaged relationship with children, friends, colleagues, and bosses); loss of self-esteem; the necessity to hold down multiple jobs (compounding the impact on family life); and worker fatigue (and resulting increases in work and traffic accidents).

This new OSHA study should provoke a needed discussion as to what we, as a society, ought to be doing about workplace dangers, and the burdens they now impose disproportionately on workers and taxpayers.  The report in its entirety can be read online at http://www.dol.gov/osha/report/20150304-inequality.pdf.

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