The cries for less government have become more frequent these days, including in reader comments on this website when OSHA ramps up enforcement or rulemaking. One frequent argument is that OSHA’s regulations hurt the U.S. economy.
A recent article in the Idaho Statesman by an economist takes a look at the question: Would we be better off if we got rid of “job-killing OSHA?”
Economist Ed Lotterman sums up the situation this way: We don’t want people to be killed at work. But many people are willing to take certain risks in their personal lives every day. And companies often don’t have difficulty finding people willing to do dangerous jobs.
Therefore, should government intrude into the private agreement between employer and employee?
Lotterman suggests an answer to his own question. First, he admits that OSHA regulations raise the cost of labor, at least somewhat. That could cause some companies to hire fewer workers.
The costs to business vary greatly, according to Lotterman, and are smaller than many people think.
For Lotterman, the question then becomes, what is the value of lives saved and injuries avoided relative to the cost of regulation?
While it’s difficult for most to put a price on human life, Lotterman suggests it is neither small nor infinitely large.
Coming up with the exact figure may be difficult, but Lotterman says society clearly is better off if a life is saved for every $10,000 spent on workplace safety. However, should that amount rise to $10 billion per life, we would be worse off.
But, what about the free-market argument that it’s up to employees to decide whether the risks involved with a particular job are worth the offered wages? If it becomes difficult for employers to hire workers to do dangerous jobs, they either have to raise wages or reduce the risks.
Lotterman says there’s one problem with that viewpoint: an information gap. Many employees don’t have accurate information about the risks involved. With bad or incomplete information, they can’t make reasoned decisions when comparing risks to wages.
Lotterman concludes that the free market doesn’t lead to “a social optimum.” He says government action may make things better.
For those who think, “OSHA is out of control,” Lotterman offers these thoughts. He’s not saying that everything the agency has done in the past 40 years has made total sense. Example: He doubts requiring dairy farms to post signs that manure may make floors slippery has generated any “net benefit for society.”
On the other hand, Lotterman cites shoring requirements for trench walls as a worthwhile OSHA regulation. Requiring trench walls or boxes has greatly reduced the number of construction worker deaths each year, and that’s worth the cost to business, according to Lotterman.
And he concludes that, no matter which candidates are elected to office, OSHA isn’t going anywhere anytime soon.
Is the new leadership at OSHA going too far? Where do you draw the line between good OSHA regulation and bad? Let us know what you think in the Comments Box below.