John Hood is publications and research director for the John Locke Foundation in Raleigh, North Carolina, and a columnist for Spectator (N. C.) magazine.
One of the hottest issues on the social activism circuit is “repetitive motion injury.” It refers to any of several workplace hazards of the modern economy: stress on arms and shoulders from working on computers, muscle pulls and injuries related to sorting mail or gutting chickens. A host of interest groups has sprung up across the country to organize class-action suits and push for legislation regulating “repetitive motion” workplaces. Late last year, San Francisco enacted the nation’s first comprehensive ordinance regulating video-display terminals (computers), mandating certain work-station designs, and guaranteeing aid to workers injured by constantly working on VDTs.
At first glance, the problem seems real enough. The Bureau of Labor Statistics reports that repetitive motion injuries made up 48 percent of 241,000 workplace illnesses in 1988, up from 18 percent of 126,000 illnesses in 1981. Thus both the actual number of such injuries and their share of total workplace illnesses rose significantly during the 1980s.
The culprit, say the pro-regulation forces, is automation, which has replaced heavy-lifting, manual-labor jobs with high-speed tasks. Indeed, automation is a symptom of other trends, according to Peter Kilborn of The New York Times: “Experts say the actual number of injuries are proliferating because people are being pressed to work hard—in private industry to keep up with foreign competition, in government to hold down spending.” If competitive markets and fiscal restraint are the problem, then regulation and government spending must be the solution.
The flaw in this analysis is a familiar one: static thinking. If automation changes the demands of a job from heavy lifting to speedy typing, simply documenting the harms of speedy typing won’t prove the existence of a new workplace hazard. The true measure of safety would be to compare accident and fatality rates of heavy lifting with those of speedy typing. As it turns out, the National Safety Council reports that during the 1980s, the chance of dying from a workplace injury fell almost 30 percent. It’s not hard to see why. Operating the levers of a crane at a construction site may put significant strain on the fingers, but carrying dirt and gravel on your back is liable to cause more serious injury. Similarly, keeping copious corporate records on computer may cause hand and eye strain, but it reduces the number of times heavy boxes or cabinets must be lifted and moved.
Even if modernity has increased overall danger to workers, the idea that government regulation is the answer should be viewed with great skepticism. First of all, workplace safety regulations disproportionately affect small firms because there is a fixed cost to implementing design changes or other measures that are beyond their means. Moreover, one reason small businesses haven’t striven to reduce repetitive motion injuries is that state-regulated markets for workers’ compensation insurance don’t encourage such changes. Insurance companies generally have the expertise and the incentive to identify design and operation changes that would reduce injuries, but they have no incentive to compare the costs of those changes with their benefits to workplace safety.
That’s the job of the firm. In a free market, firms would implement only the most efficient changes—those for which the safety gains exceed the costs of implementation. If they implemented every change insurers suggested, insurers could gain from fewer claims but firms would pay exorbitant and unwarranted costs. If they implemented no changes, insurance firms facing potentially numerous and expensive claims might withhold coverage.
State-Regulated Insurance Harms Incentives
But in state-regulated insurance markets, all firms must have insurance. Even if firms completely ignore safety concerns, they still retain their coverage—and in most states their rates are no higher than those of safety-conscious firms, since rates are also regulated. Because firms cannot benefit economically by experimenting with safer workplace designs, they don’t experiment. Thus the problems activists attribute to competitive forces are actually caused at least in part by a lack of competition in workplace safety insurance.
Another problem with regulation is that it imposes a “one-size-fits-all” mandate on situations that by their very nature are varied and unique. One firm might reduce repetitive motion injuries most effectively by Changing shifts, production timetables, or other schedules. Other firms might redesign work stations and pass some of the costs along to workers in the form of delayed pay raises or reductions in other benefits. There is no single solution to a dilemma generated in the give-and-take of economic actors—workers, firms, insurers—in a free market. Workers can, after all, choose not to work for a firm that doesn’t care about their safety—and whose poor Safety record has made it uninsurable for workers’ compensation (assuming, of course, that a free market exists for insurance).
There is another strong argument against the regulatory response. Study after study has documented that unemployed people are less healthy, more prone to injury (especially serious injury), and more prone to mental illnesses than their employed counterparts. So if regulation were somehow to cause workers to lose their jobs, there would be no net gain in safety, and instead a net loss.
In general, researchers have found that the costs of government regulation of the workplace—including unemployment—far exceed its benefits. University of Alabama economist Harold W. Elder found that “all increases in safety are paid for through lowered output and factor employment.” Examining the case of regulating asbestos exposure, University of Toronto researchers Donald N. Dewees and Ronald J. Daniels concluded that “the amount of asbestos to which a worker may be exposed yields a cost per life saved far in excess of the costs for occupational accidents.” On balance, such regulations cause decreased output, consumer price hikes, and unemployment, without significantly increasing worker safety.
Pro-regulation activists question such analyses by stating that economic costs should never be compared dollar-for-dollar with “human costs” such as injuries. But even if that were true (though it’s hard to see any other way of assessing the desirability of regulation except by counting the number of lobbyists on each side), the fact is that regulation can decrease safety if it leads to unemployment and thus to the harmful effects of job lessness. And a related fact is that innovation and automation, when driven by the competitive market, tend to reduce the most serious dangers to workers—by replacing relatively hazardous tasks with non-hazardous ones.
4. Ann P Bartel and Lacy Glenn Thomas, “Predation Through Regulation: The Wage and Profit Effects of the Occupational Safety and Health Administration and the Environmental Protection Agency,” Journal of Law and Economics, October 1987, p. 257.