Relief From OSHA : Safety Put in Hands of Employers

Midway through construction of the giant nuclear power plant at San Onofre, California job safety officials decided to see what would happen if they were not around. They halted routine safety inspections, and by prearrangement workers and the contractor, Bechtel Corp., began inspecting themselves. Over the next two years, injuries declined 40%.

Reagan Administration policy-makers were enthralled. They had a goal: to make the Occupational Safety and Health Administration less confrontational without sacrificing workers’ lives. And California’s cooperative self-inspection program seemed a way to go.

Complaints About OSHA

Federal officials patterned their own program on California’s, offering large manufacturers and construction companies exemptions from routine OSHA inspections as inducements to develop tough inspection programs of their own. Government inspectors, it was promised, would show up only to investigate very serious accidents and complaints that management and labor were unable to resolve. Otherwise, OSHA would bow out, unless it was asked for advice.

Since business people had complained fiercely about OSHA’s meddling for a decade, some officials expected wide interest in the federal program. But, in three years, only 66 companies have asked for limited regulatory relief through the federal program, and only 19 have been granted it. As a group, these companies have reduced their accident rates, OSHA officials said.

Most companies, however, apparently felt that the cost of officially sanctioned, do-it-yourself inspections was not worth the relief offered.

Incentive Termed Small

“The policy’s logic was that firms would value relief from routine inspections . . . so highly that they would institute safety or health programs that they otherwise would not establish,” said David P. McCaffrey, a sociologist at the State University of New York at Albany who studies how organizations respond to regulation. “ . . . My sense was that the incentive was just miserably small.”

For one thing, OSHA inspects very few firms. “Federal and state programs together inspect maybe 4% of all businesses. Even in manufacturing, the risk of inspection is only once every six or seven years for any given plant,” said Karl Kronebusch, an analyst who studied OSHA for Congress’ nonpartisan Office of Technology Assessment. “And the average penal ty for a serious violation, threatening death or serious physical harm, is about $180. (Maximum fines are $1,000.) So if you have a one in six chance of getting a $180 violation, you’re not going to do very much to avoid it.”

In addition, during the Reagan Administration OSHA has reduced the frequency of inspections as part of its effort to be less adversarial. Thus, it devalued relief from inspections at the same time it was using relief as an incentive to participate in the voluntary protection program.

But perhaps most important, OSHA made it clear from the beginning that it would accept only companies with good safety records who “want to be outstanding. . . . ‘I protect my employees; I don’t need surprise OSHA inspections.’ Those kind of employers are not all that common,” said Peggy Richardson, chief of OSHA’s division of voluntary programs.

Regulatory relief for such companies was “more of a symbol. Now you have a changed relationship with OSHA. OSHA’s not coming in as a policeman unless it has good reason to,” Richardson said. Because OSHA aims its inspections at firms with poor safety records, some participants had been inspected infrequently or not at all. “If it were a program where the main motivator was getting out of inspections, it wouldn’t work.”

Richardson said participating companies were motivated by pride and a desire to get government recognition for jobs well done. To allow a company to participate, OSHA first had to be convinced that its management could be trusted to carry out inspections and accident investigations on its own. Top management had to agree to hold line managers accountable for safety as well as productivity and involve workers in identifying and correcting hazards, usually through some type of joint safety committee.

To go to this much trouble, management had to be persuaded that safety pays.

In the federal program’s first three years, from 1982 to 1985, participating companies improved already low accident rates. “We find that after they become participants in the program, they continue to lower an already low rate,” said David Bell, an OSHA economist.

Savings Reported

Mobil Chemical Co., for example, reported cutting its rate by 11% and saving 48% on its worker’s compensation bills. Hensel Phelps Construction Co. reported saving $1.5 million in worker’s compensation costs in one large project. Georgia Power Co. reported increased morale and productivity.

Armed with such success stories, policy-makers pressed to expand the program.

At the behest of OSHA officials, Labor Secretary Labor William E. Brock recently wrote a letter--not yet mailed--to chief executive officers of the Fortune 500 corporations, telling them how well the program has worked and encouraging them to join.

In California, where OSHA is administered as a state agency under federal supervision, a staffer was hired eight months ago to work full time promoting the state’s version of voluntary protection.

Three companies are participating in Cal/OSHA’s program: the Pepsi-Cola San Joaquin Bottling Co. of Fresno and FMC Corp., a pesticide manufacturer, also of Fresno, both of which signed up in December, and International Light Metals of Torrance, which joined in late 1984.

At the sprawling International Light Metals factory, where 1,700 workers make aircraft wings and tank wheels, among many other products, there has been a 25% reduction in lost workdays and a 45% reduction in accident cases requiring doctor’s visits, said Larry Brown, safety director, since workers were given the opportunity to call in top management if a foreman does not act quickly enough to correct a hazardous situation. “The program really drives home the front-line foreman’s responsibility for safety,” Brown said.

Despite upbeat results, expansion of the program has been difficult.

Resistance to Red Tape

One reason is resistance to red tape. In 1979, the agreement between Bechtel Corp., builder of the San Onofre nuclear plant, Cal/OSHA and the state building trades council was only five pages, recalled Joe Barton, U.S. safety director for Bechtel. “It was a signature and a handshake.” Now it takes Cal/OSHA 33 typewritten pages to explain its program.

The idea for cooperative labor-management inspections came from construction company safety officials, such as Barton, who were dissatisfied with OSHA’s adversarial thrust and were looking for a better way of monitoring the constantly shifting hazards that come with erecting buildings. They agreed with construction unions that they could do a better job themselves.

“We had a four-member committee, two from among employees and two from the employer, and this committee was responsible for assuring that the project was maintaining compliance with the Cal/OSHA requirements,” Barton recalled. “I think one time I was making a presentation and at that time Cal/OSHA’s response time (for complaints) was 17 days, and I think I offered that we could be on a problem in 17 minutes.”

It took two years to persuade OSHA to give permission for the pilot project, which was ultimately expanded to include seven construction sites in California involving five companies.

“It was quite a success,” said Joseph Rees, a regulatory expert at Texas A & M University who did his doctoral dissertation on the program. Participating contractors had to have exemplary safety records. “The idea was, ‘We’re going to choose the good apples. Why waste our regulatory effort on these good apples if they’re willing to take responsibility themselves?’ ” Even so, each of the contractors improved his own safety record for comparable projects.

The contractors did not find their major incentive in regulatory relief, Rees said. “One of them said OSHA is nothing more than a bothersome gnat from a financial point of view. They said the real driving force was (reduced injuries leading to reduction in) worker’s comp costs.”

But when OSHA began requiring lengthy application forms and reviews, Barton and other safety managers said their enthusiasm for the program dimmed.

Reagan Administration officials broadened the program in 1982 to include non-union employers and manufacturers. Manufacturers were given a choice between a “management initiative” approach and use of the labor-management safety committee. Employees no longer had to participate in inspections, as long as management gave them reports when asked.

Unions, where they were present, were given the right to veto an employer’s participation in the voluntary program. Unions were not all behind the program. “My personal opinion of voluntary compliance is that it’s a system where you’re going to let the company decide when they’re in compliance or not,” said Dan Kyle, a Southern California field representative for the International Chemical Workers Union.

Such resistance has come as no surprise to some regulatory experts who believe that the voluntary protection programs have not been popular because they were offered prematurely--before there was widespread commitment in industry and among employees to the idea that safety should be made a priority.

OSHA was created out of a conviction that there were not enough incentives in the marketplace for businesses to operate safely, said McCaffrey, the regulatory expert from the State University of New York. The theory was that OSHA inspections and fines would make it unprofitable for firms to violate safety rules and that injury rates would fall.

‘Recognize the Importance’

The argument that it is now time to deemphasize enforcement in favor of voluntary compliance is that “managerial safety and health staff are reportedly far stronger today than in pre-OSHA times, and other managers now--even though grudgingly--recognize the importance of occupational safety and health concerns,” McCaffrey wrote in a 1984 article. The argument is also that “workers’ ability to negotiate for health-safety resources has increased substantially in the last 10 years.”

McCaffrey said, however, that he could find only “quite limited” evidence to support those notions.

Last year, analysts in Congress’ nonpartisan Office of Technology Assessment set out to find whether OSHA, a relatively small agency with a budget of about $200 million a year, had reduced injury rates.

They reported finding “a general belief that the presence of OSHA has increased manager and worker awareness of occupational health and safety.”

But they concluded: “It appears that OSHA activity has, thus far, not had a very large effect on injury rates.”

The analysts said injury rates were tied more to fluctuations in the business cycle--upswings, for example, leading to the hiring of more untrained and younger workers who are more likely to injure themselves--than to the ups and downs of OSHA’s standards-setting-and-enforcement activities, which were most intense during the Carter Administration.

They based their conclusions on a series of academic studies--some of which found that OSHA had no effect and others of which found that OSHA had a limited effect, mainly in preventing injuries caused by fixed hazards, detectable during inspections, as opposed to the transitory conditions (forklifts traveling too fast, for example) that are the cause of most workplace accidents.

Several other factors may contribute to the lack of wide interest in a program that seems to greatly reduce injuries:

- Some companies may think they do not need to participate because they believe they have terrific safety records, when they do not. “Firms in general have incredibly over-optimistic views of their accidents rates,” said Robert Sims, an economist at Merrill Lynch Valuation Services who recently surveyed 775 firms in hazardous industries, asking about their attitudes toward safety.

- Some firms may believe it is sufficient to rely on insurance companies to make inspections.

- Some firms may be skittish because they are concerned that their good reputations will not stand the scrutiny that OSHA brings to safety plans before approving a company for participation.

(“Why should an employer . . . go through all the bureaucracy to have Cal/OSHA come in and start it up (and find things) that Cal/OSHA, in the normal course of things, would never get around to (finding),” asked Andrew Schaefer, consultant to the state Senate Committee on Industrial Relations.

(Schaefer has done computer studies of Cal/OSHA inspection patterns and found that the agency is so busy that it often takes longer than statutorily allowed to respond to complaints and, particularly in heavily industrial areas of the Southland, rarely gets around to making routine inspections.)

- And, perhaps most importantly, there is continuing debate about whether safety pays. Among safety professionals, there is considerable sentiment that the marketplace really does offer enough incentive to operate safely, but that the savings are hard to discern.

Richard Victor, an economist, lawyer and executive director of the Worker’s Compensation Research Institute, a Cambridge, Mass., think tank largely funded by manufacturers and insurers, listed worker’s compensation, damage to equipment, downtime on the assembly line, medical costs, overtime and perhaps recruitment and training for replacement workers as costs of an injury to a large company, which is typically self-insured.

‘The Conventional Wisdom’

“No one’s got a good estimate as to what they add up to,” Victor said, “but the conventional wisdom is they’re up to three to 10 times the worker’s comp cost,” which, for a large manufacturing plant, can be 5% of payroll.

But Rees of Texas A & M said Victor’s point sounded like “the safety professionals’ basic argument (that) ‘given the total cost of accidents, safety pays.’ They want to be taken seriously as safety managers and they want their role viewed as an important element of production,” Rees said. “But I have a feeling sometimes in talking to them that they wonder themselves. They’re not entirely sure what the bottom line is. But, they hope it does.”

Unions also are not sure. For example, the State Building and Construction Trades Council of California, a party to the original experiment at San Onofre, now has its own separate effort, funded by an OSHA grant, to develop joint labor management safety committees at construction sites. It has one site.

William Ward, the council’s secretary-treasurer, said the program is vital. Most serious accidents are preventable because workers know of the hazards that cause them, he said. But workers usually keep silent. Or, if they speak up, he said, they are threatened with losing their jobs. The labor-management committee approach to safety addresses that problem by encouraging workers and supervisors to feel that they have both the right and the duty to speak out when unsafe things are going on. It changes the atmosphere on the job site.

But Bud Mathis, executive secretary of the Los Angeles County Builing Trades Council, said his affiliates “just haven’t seen the urgency or the necessity to pursue that. . . . It’s been brought up; people are knowledgeable of it. But it’s always been put on the back burner. . . . There’s always another priority.”