Workplace Safety Policy: Past, Present, and Future

With an annual budget of about $400 million, the Occupational Safety and Health Administration (OSHA) is about 5 percent the size of the Environmental Protection Agency, another federal agency created by President Richard M. Nixon in 1970, the "Year of the Environment." Nearly all workers in the United States come under OSHA's juridction, with some notable exceptions, including miners, transportation workers, many public employees, and people who are self-employed. OSHA is currently responsible for ptoecting over 100 million workers at 6 million work sites with the help of only about 2,000 workplace health and safety inspectors. Nevertheless, suppoers of OSHA argue that it has significantly improved worker safety over the last 30 years and that a beefed-up enforcement effort would produce even greater improvements. We examine the available evidence and find little support to the notion that OSHA has effectively reduced accidents and diseases in the workplace or that a more vigorous enforcement campaign would be likely to do so. Other policy instruments--tort laws, state Workers' Compensation insurance programs, and research and public education on the causes and consequences of work hazards--now keep workplace deaths and injuries low and can reduce them even more. The wage premiums, estimated at $210 billion per year, that workers receive for accepting job-related health hazards give employers a stronger economic incentive to eliminate workplace health and safety hazards than the $132 million per year in fines imposed by OSHA and its state counterparts for violations of workplace safety standards. Because of the heterogeneity of workers and firms, we argue that public policy should expand the economic incentives for workplace safety while allowing firms and workers freedom to discover on their own the best ways to improve workplace safety.