Asphalt Contractor - OSHA or the Stock Market? -
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Published on: 10/15/2008
Last Visited: 8/24/2002
By Tara Templeton Hart
Many employers have told me that the Occupational Safety and Health Administration (OSHA) is not effective. Some say it does not adequately address industry at large, but targets a small group of employers - especially those in the construction industry. On the other hand, OSHA has promoted many different partnering programs with employers in recent years - and most recently the OSHA Partnership Program aimed at construction contractors with superior safety records. Since the agency's inception 32 years ago, has OSHA really made a difference? And what other factors have made a difference in worker death rates?At the time OSHA was created in 1970, the worker fatality rate was 19 worker deaths per 100,000 workers. Today, according to the Bureau of Labor Statistics (BLS), that rate is approximately 9 worker deaths per 100,000 workers*. According to BLS charts, the 50-percent reduction was achieved by 1989 and has leveled off since then, with no worker death rate improvement in the last 12 years. In fact, in the construction industry, the rate has increased. In 1995, construction accidents accounted for 16 percent of worker deaths. In 2000, that number had grown to more than 19 percent. This failure to improve the worker death rate is in spite of OSHA partnering programs, additional regulations, improved regulations, clarified enforcement directives, more performance-based regulations, and outreach training programs.In researching this issue, I looked back through BLS statistics all the way to 1933 and found some very interesting data. It seems that between 1933 to date, our worker death rate peaked last century in the year 1937, at 43 deaths per 100,000 workers. Then, in 1970, when OSHA came along, the rate had already fallen to 19 worker deaths per 100,000. This means we enjoyed more than a 50-percent reduction before OSHA was created. The big questions are, why, and how do we continue that reduction?To find the answer to this question, I looked back at what else was going on in the business world during the peak worker death period and the ensuing reduction in worker death rates. Interestingly enough, 1937 was the height of the adoption of worker compensation legislation. In fact, the first worker compensation legislation to withstand legal challenge hit the books in 1912, and, by 1948, only eight states did not have such legislation. By 1949, all 50 states had enacted worker compensation laws that made the employer responsible to pay worker death benefits. So, employer expenditures and corresponding insurance expenditures appear to have played a role in the reduction in worker death rates that began in the late 1930s and continued on through 1989.If we keep on this line of reasoning, then what happened in 1989 that changed the dynamics and caused the improving worker death rate to plateau? Go to the Internet and conduct a search for "stock market history," and you'll get the answer. In 1989 we saw the breakthrough in the stock market of the long-standing performance ceiling that resulted in astronomical earnings in the equity market for the next 10 years - the biggest, best, bull market in this century. Insurance companies were making so much money that the market went soft while they negotiated premiums for premiums sake, just to have more investment money. The income generated by their financial portfolios far surpassed any losses they were paying. Relaxed insurance companies led to relaxed employers, and ultimately to a static worker death rate.But the world turns; times change. The equity difficulties of last spring led to the prediction in the April 2001 Wall Street Journal article that insurance was going up a minimum of 15 percent for companies with excellent performance records, and premiums would climb much higher for companies that did not have impeccable records. My experience was that premiums went up much more than 15 percent. In some cases, I had clients with impeccable records who were still faced with 300-percent increases in premiums. Add the World Trade Center disaster and you have a formula for insurance crisis.
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Tara Templeton Hart is the Founder and chief executive officer of The Compliance Alliance (TCA), Houston.
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