Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘labor markets’

Do Fewer OSHA Inspectors Matter?

Wednesday, January 17th, 2018

One sign that anti-OSHA conservatives are getting nervous about articles (and television appearances) highlighting the declining number of OSHA inspectors are articles questioning whether government plays a useful role in protecting workers. In this case, the Reason Foundation, which “advances a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law,” has concluded that reducing the number of OSHA inspectors has no effect on workplace safety.

When I see an article entitled Will Deregulation Kill Workers? by Reason Magazine assistant editor Christian Britschgi, normally I wouldn’t bother to give them any undeserved attention, but some of the arguments he uses are, unfortunately, still commonly used by conservatives in the media and Republicans in Congress, and from time to time we need to expose them.

Based on writings by Bentley University economist John Leeth, Britschgi is basically saying that OSHA isn’t needed because “Employers have much stronger incentives than OSHA to provide a safe workplace.” What are these “stronger incentives” that make OSHA enforcement superfluous?

Workers Compensation: Workers comp, they note, grows more expensive with new injuries and accidents.  And it’s much more significant than OSHA penalties because “workers comp policies cost employers $91.8 billion in 2014…. Total OSHA penalties in that same year totaled only $143.5 million.”

OK, well first, if those numbers are relevant, then that sounds like a great argument to increase OSHA penalties significantly. But the fact is, because State legislatures and courts have undermined workers compensation benefits for injured workers, workers comp covers less and less of the real cost of workplace injuries and illnesses, according numerous studies cited in a 2015 OSHA report, Adding Inequality to Injury:

workers’ compensation payments cover only a small fraction (about 21 percent) of lost wages and medical costs of work injuries and illnesses; workers, their families and their private health insurance pay for nearly 63 percent of these costs, with taxpayers shouldering the remaining 16 percent.

Moreover, most workers injured or made ill on the job don’t even receive workers compensation and vulnerable and low-wage workers fare even worse.  Finally, compensating workers for occupational disease is almost non-existent. One study estimates that as many as 97 percent of workers with occupational illness are uncompensated.

Labor markets: Workers would rather work where it’s safe, so they will naturally take jobs working in safer companies rather than unsafe companies. Unsafer companies will therefore be forced to pay workers more to attract them to their unsafe workplaces.  This will provide a natural incentive for employers to make their workplaces safer because if their workplaces are safer, they won’t have to pay workers as much.

Now I’m not a credentialed economist, but even I can find major holes in this theory.  First, such a theory relies on workers having perfect information about which companies are safer than others. Now, this is interesting, because that’s exactly the theory the Obama administration used when issuing its electronic recordkeeping standard. Companies would be required to send their injury and illness information to OSHA and OSHA would post that information, allowing workers to choose safer companies. What’s interesting is that corporate America and Trump’s OSHA has done everything it can to ensure that employer safety records are not made public, from discouraging press releases to opposing the OSHA recordkeepign regulation, claiming that such information unjustly “shames” employers.

The “labor market” theory also assumes that workers would be able to simply and easily move from one (unsafe) employer to another without any loss of income –even assuming there is a safer employer down the street. Obviously that’s often not possible and in any case, that’s easier for high wage workers to lose a little income by changing jobs than lower wage employees who may be living paycheck to paycheck.  And if there are enough desperate workers who need a job, any job, that higher paying, unsafe job isn’t going to pay more for very long.  You’ll have the more common race-to-the-bottom, rather than a race to the top.

Finally, this equation puts workers in a position of choosing between safe jobs or better pay. If you happen to be in a post-Obamacare world with no health insurance and have a sick kid, you might be inclined to take the unsafe, higher paying job.  This is not a choice that we want workers to be forced to make — either from the viewpoint of morality, or the general public welfare. The whole point of the Occupational Safety and Health Act was to eliminate the need for workers to ever have to choose between their jobs and their lives, or better pay and their live.

The ability to sue over workplace injuries and health hazards: Huh? Employees don’t have the ability to sue over workplace injuries. The deal when workers compensation laws were first created is that this would be a “no-fault” system; workers give up the right to sue their employer, in return for relatively certain access to benefits following their injury. (Or at least that was the theory.) Britschgi would have known that (and taken safety and health more seriously) if he had read this article and listened to the accompanying video.

That fact that Britschgi, an assistant editor of Reason Magazine (and presumably his superiors) don’t know that workers can’t sue their employers should have sent this article directly to my Trash folder, so why am I bothering to even address it? I mean, for all I know, he’s 18 years old and this is his first job. Give the kid a break.

Because, as I said above, clearly he is not alone in his ignorance. There are undoubtedly lots of other people out there who think that workers can sue their employers. And easily move to safer jobs. And just rely on workers comp if they get hurt.

The bottom line is that more cops on the beat will make drivers drive more safely, just as more OSHA inspectors will make employers provide safer workplaces. It’s as American as law and order.

This blog was originally published at Confined Space on January 16, 2018. Reprinted with permission.

About the Author: Jordan Barab was Deputy Assistant Secretary of Labor at OSHA from 2009 to 2017, and spent 16 years running the safety and health program at the American Federation of State, County and Municipal Employees (AFSCME).

Full Employment: The Recovery’s Missing Ingredient

Tuesday, November 4th, 2014

Image: Dean BakerBy Dean Baker and Jared Bernstein

Federal Reserve Chairman Janet Yellen gave a speech a few weeks ago that was doubly unusual.

First, she provided a welcome and trenchant analysis of inequality, focusing on the stagnant income and wealth of middle- and low-income families relative to the top few percent. For the nation’s chief economist to elevate this issue is an important contribution in its own right.

Second, she declined to mention the critical role of slack labor markets in these outcomes. In what is a rare case for her, the word “unemployment” was not even mentioned in the speech. The omission was especially noticeable as Yellen, to her credit, has so consistently pointed out the extent of remaining slack in the U.S. job market.

Unemployment is down and gross domestic product is up, yet there isn’t much progress in real wages and incomes of most working families. While many reasons have been set forth to explain this unfortunate disconnect, including globalization and technological change as well as unmet skill demands and the Federal Reserve’s asset-buying program, our research suggests that the main factor behind both stagnant real wages and rising inequality is the absence of full employment. Truly tight labor markets — an unemployment rate closer to 4 percent than 6 percent — would not only boost real wages, but would give a larger lift to the lowest-paid workers and those with the least bargaining clout, pushing back on stagnation and inequality.

It’s true, as noted, that the unemployment rate has fallen quite sharply, from 10 percent in late 2009 to just below 6 percent now. This decline is partly due to job creation, but it’s also a function of people giving up looking for work and therefore not being counted as unemployed.

That’s important because it means there’s more slack in the labor market than we would usually associate with a 5.9 percent unemployment rate. And when there is lots of slack, most American workers lack the bargaining power they need to press for wage gains. With wages growing close to the rate of inflation — about 2 percent — since 2009, most workers have been stuck with stagnant real earnings.

By contrast, corporate profits have risen sharply in the recovery, with the profit share of national income hitting the highest level in many decades and the stock market also has hit new highs. Meanwhile, real median household income is still down 3 percent since the current expansion began in the second half of 2009.

To use a seasonal analogy, growth has been doing an end run around most households.
The impact of a falling unemployment rate on real wages at different points in the wage scale demonstrates why this relationship is so germane right now. Looking at a large data set with observations across all 50 states for more than 30 years, we find that a sustained 10 percent drop in the unemployment rate, say from 6 percent to 5.4 percent (10 percent, not 10 percentage points) does not have a uniform effect on real wages.

Instead, it leads to real wage gains of 10 percent for low-wage workers, 4 percent for middle-wage workers and does nothing for high-wage workers. That’s why full employment is such an important antidote to earnings inequality. By forcing employers to bid compensation up to get and keep the workers they need, it re-channels growth away from the top and back toward the bottom and middle of the pay scale.

But don’t both wage stagnation and inequality predate the recession? Does the fact that these are ongoing phenomena diminish the explanatory power of labor market slack?

Not at all, because a broad look over our history shows that the income stagnation period generally matches the slack period (we’re switching to income here because our wage data don’t go back far enough). From the late 1940s to the late 1970s, the job market was at full employment 70 percent of the time and incomes doubled for low, middle, and high-income families. Working families at all points in the income distribution shared in the gains of growth.

Since then, we’ve been at full employment only 30 percent of the time, and all that slack has been accompanied by periods of wage stagnation and rising inequality.

Of course, the absence of full employment is not the only difference between these periods of growing together and growing apart. For example, we engaged in much less and much more balanced global trade in the earlier period, a point we will return to in a moment.

So, let’s not make this any more complicated than it needs to be. We must plot a policy course back to full employment ASAP. Given Washington’s partisan fever, here are three ideas that might plausibly be enacted, even in these divided times.

1.) A deep dive into infrastructure investment is warranted to replenish our deteriorating stock of public goods and to absorb slack among the underemployed in production and building occupations. Historically, such investments have garnered bipartisan support.

2.) The trade deficit, a serious drag on employment growth in our factory sector, should be reduced by pushing back on competitors who deliberately keep down the value of their currencies to get a price advantage in global markets. Again, joining this fight is favored by both parties, although the White House tends to get squeamish on the issue.

3.) With fiscal stimulus sidelined by gridlock, the Fed is the only game in town. Yellen’s slack attack has been strong and consistent, but the central bank is facing pressures to tighten sooner rather than later. Given the striking absence of inflationary pressures and wide room for non-inflationary wage growth, Yellen and Co. should continue to tack toward full employment.

Economists tend to come up with all kinds of complexities when sometimes a shave with Occam’s razor is all that’s needed. The bargaining power of most American workers is at a historical low point. The best way to restore it is to get the economy back to full employment.

 

This blog originally appeared on CEPRE.net and on OurFuture.org. on November 3, 2014. Reprinted with permission. http://ourfuture.org/20141103/full-employment-the-recoverys-missing-ingredient

About the Author: Dean Baker is an American economist whose books have been published by the University of Chicago Press, MIT Press, and Cambridge University Press. 

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