In 1970, Congress passed the Occupational Safety and Health Act whose stated purpose was to " ...assure so far as possible every working man and woman in the Nation safe and healthful working conditions... "Nearly 25 years later, some would argue this mandate has not been fulfilled. The government estimates that more than 6000 injury deaths, 50,000 illness deaths and 7 million non-fatal injuries occur each year caused largely by exposure to preventable workplace hazards.Many approaches have been taken by both Democrats and Republicans to combat this problem such as increased numbers of inspections, higher penalties, cooperative programs, employer exemptions, special emphasis programs, focused inspections, targeted inspections, free federally funded on-site consultation for small employers, criminal prosecutions, crack downs, leniency, more regulation, less regulation, ad nauseum. Clearly, a new approach is needed!
It is our firm belief that market forces, not government intervention, will be most effective in creating long term and permanent improvements in workplace safety conditions. How? By creating an environment where a safe workplace is profitable for employers and gives them an economic advantage, not an overhead expense. A frequently heard complaint by employers is "why must I comply with OSHA regulations when you have not imposed similar requirements on my competitors?" With fewer than 1100 federal compliance personnel to cover 6.2 million workplaces, it simply is not possible for OSHA to inspect even the most hazardous locations more than once or twice per decade. But what if the government mandated that employers with poor safety records would be disqualified from receiving publicly funded contracts while simultaneously giving preferential consideration to those with exemplary records? We suspect there would be a "large sucking sound" (to borrow a phrase from Ross Perot) made by employers rushing to outdo one another with workplace safety improvements. Much ado has been made about OSHA’s recent inability to revise the "Z" tables in their air contaminants standard. Most companies fail to comply with the existing standards let alone meet the more stringent requirements of the proposed revisions. We do not need more regulations - simply enforce and enhance the deterrence of those laws already on the books! Mandating a carrot and stick approach to contractor screening would have greater impact, at least in the construction arena, than increased regulation and would have little cost to tax payers.
New Jersey State Assemblyman Harry McEnroe introduced legislation November 1994 which embodies the concepts discussed above. Connecticut and Maine are the only two states that currently have such laws on their books. Presumably, OSHA is in favor of a such an approach since it is reported they have requested an Executive Order than would debar unsafe construction contractors on federal projects greater than $1 million. It has also been our experience that federal procurement officials support such an approach. Many would like the ability to prequalify contractors on the basis of their safety records but have been unable to do so in the absence of a specific law which gives them the authority.
Opponents to contractor screening, not surprisingly from within the contracting industry, have raised several objections.
OSHA inspections are so infrequent, absence of violations is not a reliable indication of an employer’s safety record. This is quite true in the same way that absence of a criminal record may not be a reliable indication of a person’s character. But prudence suggests any background check of the person you are considering as Treasurer should include a search for prior embezzlement convictions.
Increased worker’s compensation premiums paid by unsafe contractors is a market force that serves as "self debarment." Worker’s compensation premiums are initially based on payroll and class of business with a "zero" experience modification factor. Only later, after three to four years of loss experience do insurance actuaries perform the calculations necessary to adjust the mod factor. Therefore, such a market force would only affect businesses that have been around for long periods of time. In the contracting industry, businesses are constantly going bankrupt and reforming. Most contractors are not in business long enough for such a market force to have effect. Even if this market force existed, one could argue that contractors with higher worker’s compensation premiums are more desperate for work and will actually bid lower on projects. Low bidders do not have the lowest costs - they have the lowest profits! A good number of managers believe it is cheaper to maintain an unsafe workplace and consider any increased insurance premiums (if compensable injuries or illnesses do occur - and are reported) as the cost of doing business rather than incur the greater costs of complying with OSHA requirements. Furthermore, a common financial model within the contracting industry is to bid below cost and gamble to make a profit on change orders - thus the high rate of bankruptcy and reformation. If you doubt this to be true, simply ask any exasperated contracting officer.
Actively tracking bidder’s safety records would require additional personnel and increase government costs. There may be far greater costs to the public if federal or municipal governments fail to meet their fiduciary responsibility to exercise due diligence when awarding publicly funded contracts. The cost of contractor screening is virtually insignificant when considering the legal issues or potential losses resulting from a contractor that may cause a serious accident or fatality on a public contract. We are aware of one instance where poor safety performance played a significant part in a 12 month delay of a $51 million construction project for which a bond had been issued. The unnecessary interest payments alone were enough reason to prequalify contractors for safety, not even considering the liability issues. And what about the costs to the economy from decreased productivity, lost work days, poor morale, human suffering and all the other problems passage of the OSH Act was designed to combat? If none of the above counter arguments convince opponents, then let us say only this. One either believes that employees have a fundamental right to a safe workplace or they do not. Statisticians and risk analysts can work both sides of this and any issue. New Jersey Governor Whitman recently suggested that removing light bulbs from every other street light along New Jersey highways would save taxpayers over $1 million per year. What she failed to consider is the jury award that will be paid by the state from one fatal car accident due to poor lighting. Not too long ago, someone in Washington suggested that increased costs to employers for safety improvements would translate into lower salaries and therefore employees would be less able to afford healthy lifestyles like seeking medical attention or eating well. One can also hear arguments like if OSHA were abolished, the money could be better spent by fighting cancer, enforcing proper auto tire pressures or improving security screening at airports. As the saying goes, there are lies, damn lies and then there are statistics.
If we are an enlightened society that places a high value on human life and limb, there can be no justification for government to tacitly support employers who knowingly endanger the safety of their workers. Awarding publicly funded contracts (or private contracts for that matter) to such companies is wrong at face value, end of discussion. If government coupled contractor screening laws along with some other radical ideas (i.e. penalties to or firing of employees who fail to follow established reasonable safety policies, generic exposure assessment/medical monitoring, mandatory electronic submission of OSHA Log 200 data with crucifixion of anyone caught falsifying their records) we might see some real improvements in workplace safety.
Copyright 1997 OSHA DATA (tm), Maplewood, NJ.
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