Proposed Standard for Walking and Working Surfaces

user warning: Table 'search_index' is marked as crashed and should be repaired query: SELECT SUM(i.score * t.count) AS score FROM search_index i INNER JOIN search_total t ON i.word = t.word LEFT JOIN node n ON n.nid=i.sid WHERE i.sid != 1001118 AND n.status = 1 AND n.language = "en" AND n.type IN ('50_states_state','50_states_sub_page','agency','aggregated_item','appearance','direct_post_donation','expert_commentary','events','feed_fast','feature','feed','feed_item','front_page','front_page_feature','hidden_publication','job_posting','media_clipping','news','page','panel','person','podcast','program','publication','publication_subpage','regulatory_report_card','search_stub','video') AND (i.word = 'surfac' OR i.word = 'propos' OR i.word = 'work') AND i.type = 'node' GROUP BY i.type, i.sid HAVING COUNT(*) >= 3 ORDER BY score DESC LIMIT 0, 1 in /var/www/vhosts/mercatus.org/httpdocs/modules/search/search.module on line 945.

Proposed Standard for Walking and Working Surfaces

Score
32 / 60
53%
Proposed Rule
RIN Number:
1218-AB80
Release Date:
May 24, 2010
Closing Date:
August 23, 2010
Agency:
Department of Labor

RULE SUMMARY

OSHA proposes to revise the walking-working surfaces standards and the personal protective equipment standards in our regulations. The proposal is estimated to reduce the number of fall-related employee deaths and injuries by updating the rule to include new technology (including personal fall protection systems) and industry methods. OSHA believes that the proper use of personal fall protection systems can protect employees from injury and death due to falls to different elevations. The proposal reorganizes the rule in a clearer, more logical manner and provides greater compliance flexibility. The proposed rule is written in plain language to make it easier to understand, thereby facilitating compliance. Additionally, the proposal increases consistency between construction, maritime, and general industry standards, and eliminates duplication.


MONETIZED COSTS & BENEFITS (AS REPORTED BY AGENCY)

Dollar Year
2008
Time Horizon (Years)
Discount Rates
3%
7%
Expected Costs (Annualized)
$168.8 Millions
$173.2 Millions
Expected Benefits (Annualized)
NA
$328.5 Millions
Expected Costs (Total)
Expected Benefits (Total)
Net Benefits (Annualized)
NA
155.4 Millions
Net Benefits (Total)

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
In regulations.gov, the proposed regulation can be found easily via a RIN or keyword search. The RIA is in the Federal Register notice. Another key document, a report by consultants Eastern Research Group, is mentioned in the RIA and included in the docket. The Federal Register notice can also be found two clicks from the department's home page; just click on "OSHA," then "Federal Register notices" and find it in the list.
5/5
2. How verifiable are the data used in the analysis?
Where the RIA uses actual data, sources are given. The cost analysis has an extensive list of references that include data sources. About half of the references have web links. Others are in the docket and hence available via regulations.gov. Sources are given for fatality and injury data. A separate appendix explains how the contractor estimated the number of fixed ladders in various industries, with links included for most of the sources that could have links.
4/5
3. How verifiable are the models and assumptions used in the analysis?
A minority of assumptions underlying the cost calculations are based on research studies. Many assumptions are simply stated with no documentation. The Eastern Research Group (ERG) study and the RIA reference a survey of empirical literature that finds workplace training improves safety, but the empirical magnitude cannot be estimated. Most assumptions about the percent of fatalities and injuries that could be prevented are simply sourced to the ERG's judgment with no further documentation. The ERG study similarly says these numbers simply reflect its judgment. With one exception, OSHA provides no more documentation when it adopts assumptions that differ from ERG's. Virtually no peer-reviewed studies are cited to justify the economic analysis.
2/5
4. Was the analysis comprehensible to an informed layperson?
The RIA is long but mostly an easy read. The main exception is the discussion of cost baselines, which seems needlessly complicated to explain a simple idea. Graphs showing interaction of factors that affect cost baselines are more confusing than enlightening. At lot of the tables could have gone into an appendix. The RIA provides a pretty good example of how to write an economic analysis with minimal use of acronyms. However, it could have been done with less jargon.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
3/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The principal benefits are reduced fatalities and injuries due to falls in the workplace. These are clear outcomes with obvious effects on the quality of life. But the RIA also includes this statement: "An additional benefit of this rulemaking is that it will provide updated, clear, and consistent safety standards for walking and working surfaces and personal fall protection equipment." This confuses the means -- clear standards -- with the end -- workplace safety.
4/5
Does the analysis identify how these outcomes are to be measured?
Fatalities and injuries resulting in lost workdays prevented by the regulation are estimated and monetized. The RIA notes that less serious injuries that do not result in lost workdays are not estimated. But this methodology does not address the difference between accidents for which employees are not compensated through wages or workers comp (externalized costs) and those for which they are (internalized costs).
5/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
OSHA claims the proposed regulations are "reasonable and necessary" to prevent the harms. Safety standards will create a minimum standard which is closer to the perfectly competitive equilibrium amount of safety. However, OSHA's methodology does not identify what that equilibrium actually is.
2/5
Does the analysis present credible empirical support for the theory?
The RIA cites, but does not extensively discuss, a literature survey that concludes workplace training improves hazard awareness and safety, noting that the quantitative relationship is unclear. The agency says its analysis of accidents that occurred in the past shows that many would have been prevented if these regulations had been in place. But this is something of a black box; the reader simply has to take OSHA's word for it. OSHA could have provided evidence from success of previous rulemakings but does not.
2/5
Does the analysis adequately assess uncertainty about the outcomes?
Because the quantitative relationship between workplace training and reduced accident rates is uncertain, the RIA assumed the regulation would produce only modest improvements in safety. But these assumptions simply reflect the authors' judgments, so it is not clear if they really reflect lower-bound estimates. The RIA presents a few examples showing how much some of the assumptions would have to change in order to reduce the net benefits to zero.
2/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
2/5
Does the analysis identify a market failure or other systemic problem?
OSHA contends that a "significant risk" of harm exists. The RIA contends that employees have imperfect information about long-term risks of injuries, imperfect information about the risks at different employers, and significant job search and switching costs. Employers may also be unaware of risks or cost-effective options. As a result, preventable accidents continue to occur and wage premiums do not reflect these risks. The discussion of non-regulatory alternatives also mentions that some costs are not internalized because they are shifted to taxpayers via welfare, Social Security disability payments, and Medicare.
4/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
OSHA argues that imperfect information creates market failure, disregarding difference between necessary and sufficient conditions. Nor is there any explanation of why this would not lead to equal examples of over provision of safety. Agency could have (but did not) argue asymmetric information but this leaves open the question of why safe work places cannot advertise the fact (a Google search turns up just under 1 billion hits for "safest places to work".) But the RIA admits that greater compliance with existing standards would prevent a lot of accidents, which suggests that the systemic problem is related to compliance rather than a need for tighter standards.
1/5
Does the analysis present credible empirical support for the theory?
The RIA cites no empirical support for any of the theoretical claims about market failures, except for one footnote that compares raw wage figures in two industries without controlling for other factors that might influence these wages. The Federal Register notice says OSHA has concluded that slips, trips, and falls are a significant risk because they account for a large portion of work-related deaths and injuries, but it does not provide context to show whether these figures are large or small compared to all types of deaths and fatalities. Under "Reasons why the proposed action is being considered," the RIA lists four anecdotes. So it is not clear if the problem really is "big." Also, some data could support alternative theories. For example, variations in worker compensation for risk could just as easily be attributed to over-compensation as under-compensation (suggesting a maximum safety standard is required).
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
No relevant discussion. In OSHA's view, the existence of the problem is certain.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
2/5
Does the analysis enumerate other alternatives to address the problem?
The RIA considers three regulatory alternatives: the proposed regulation, an alternative that would require training for fewer categories of fall hazards, and a more stringent option that would require all fixed ladders to have more built-in safety features. It also discusses market incentives, information dissemination, tort liability, and workers' compensation. Some additional small alternative tweaks are mentioned in the Regulatory Flexibility Act analysis.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
A relatively wide range is considered -- from nothing but market incentives all the way to a somewhat more stringent regulation. But the disparity in analytical rigor suggests that the non-regulatory alternatives were not considered very seriously.
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The RIA implies that OSHA calculated costs and benefits for the three regulatory alternatives, but only explains the estimation methods and presents full figures for the chosen alternative. It does not estimate benefits for the non-regulatory alternatives. Instead, it presents mostly theoretical discussion of why the non-regulatory alternatives fall short of the "perfect market" outcome.
1/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
Analysis cites OMB's definition of a baseline and claims to establish a cost baseline that takes two factors into account: (1) voluntary compliance with national consensus standards, and (2) grandfathering provisions that delay required compliance until firms replace equipment. A flow chart shows how the contractor who prepared the RIA worked through this. Appears to use compliance rates with OSHA regulations as a proxy for compliance rates with voluntary standards, without really justifying this. For benefits analysis, existing levels of falls are used as the baseline because current standards have been in place for 30 years -- so it assumes no improvement in safety without the new regulations. Most of the foregoing is carefully done, but it ignores the broader question of what kinds of trends we could expect to see if OSHA does not take this action.
2/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Principal costs analyzed are training, assessment, and hazard inspection costs, plus costs of installing or replacing equipment. The analysis is careful to identify the costs that are incremental to voluntary compliance with existing consensus standards. But this is done only for the chosen alternative. Costs of a lot of the smaller provisions of the rule are not considered.
2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
Analysis often concludes that since additional costs of materials are a small proportion of the costs of new equipment or construction, they can be ignored. Only one alternative is considered.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The RIA explains theoretically how the elasticity of demand affects firms' ability to pass cost increase to consumers. It concludes that any price increases would be very small because the costs are small in relation to revenues.
3/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Since the RIA reasons that price increases will be very small, it concludes that the reduction in output will also be very small.
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
No discussion of cost uncertainty.
0/5
Does the analysis identify the alternative that maximizes net benefits?
OSHA only calculates net benefits for one alternative and states specifically that the goal is not to maximize net benefits.
1/5
Does the analysis identify the cost-effectiveness of each alternative considered?
The agency has a lengthy, if patchy, exposition of costs and benefits for every rule, but then fails to combine them, offering only cost effectiveness for the entire action. Cost-effectiveness of the chosen alternative was mentioned in one sentence in a table.
2/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
A page of discussion explains how the price elasticity of demand affects the distribution of costs between employers and consumers. Cost incidence is not explicitly calculated. The RIA argues that firms will probably be able to pass on a lot of the costs as price increases, but the costs are so small that price increases would be very small. It does not address how employee compensation could change in response to the regulation, which is odd considering that it is a workplace regulation. The RIA breaks down costs by industry and shows cost per establishment for each industry. Costs are calculated separately for small businesses and presented by industry.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Since the analysis presents fatality and injury statistics for different industries, it implies that workers in some industries may benefit more than workers in others. But there is no explicit discussion of the incidence of benefits, and no discussion of whether the regulation creates net benefits for employees.
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
OSHA appears to have used the cost analysis to conclude that the regulations are economically feasible, which the standard is required to use under law. Problems with quality of the analysis make it unclear whether the analysis really affected the decision or was an after-the-fact justification.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Federal Register notice notes that the OSH Act prevents OSHA from using the value of net benefits to make decisions about safety standards. The standards must be "economically feasible," and OSHA concluded that the proposed standards meet this test because the costs are a very small percentage of revenues and profits. A few small tweaks were rejected because they offered little or no additional benefit or high costs coupled with low benefits. Since the RIA focuses only on the net benefits of the chosen alternative, it is not clear how cognizant OSHA was of the net benefits of alternatives.
4/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No commitment to measures, goals, or any retrospective analysis. OSHA could set goals for fatalities and injuries prevented by the regulation, but the RIA presents an insufficient framework to do counterfactual analysis.
0/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
Agency uses BLS statistics but does not indicate that outcomes will be measured in the future. No commitment to track the regulation's actual effects. However, the data on fatalities and injuries that the government already gathers could be used to track trends and do program evaluation.
2/5
Total 32 / 60
' '