Research has found the cost for all businesses to implement OSHA''s proposed ergonomics regulation will come to an average of $91.4 billion annually, with compliance costs reaching $886.6 billion over 10 years, according to the Employment Policy Foundation (EPF).
A survey conducted by the group, "Economic Analysis of OSHA''s Proposed Ergonomics Regulation," said the cost for implementation in the first year will be $129.4 billion, which is the rough equivalent of one-half of the budget for the Department of Defense.
Even using OSHA''s low estimate of $4.2 billion, the costs will exceed benefits by a factor of 15 to 1, said EPF.
EPF''s numbers are based on a national survey of occupational safety and health managers in Fortune 500 companies.
"OSHA''s estimate missed the mark because it failed to compile empirical estimates of the resources and labor effort the employers would have to expend to implement and comply with the proposed regulation," said EPF.
EPF claims, over a 3-month period, it did the research that OSHA failed to do over the last decade.
The foundation constructed an integrated computer model that calculated the numbers of musculoskeletal disorders (MSDs), establishments and employees affected by the proposed rule, MSDs averted by implementation of the program, costs for implementation of each program activity required, and value of economic benefits for MSD cases averted.
While EPF did not say how many companies it survey, it noted, "respondents to this survey represented every major industry category and their answers represent actual experience in conducting safety and health program activities in over 19,000 establishments and for 1.7 million employees."
"With an estimated annual cost of $12,511 per establishment, the regulation affects smaller businesses the hardest because they often operate with slim profit margins and limited working capital," said EPF.
The group expressed concern because it believes the prospect of high compliance costs, time-consuming federal inspections, OSHA fines and other expensive liabilities will dissuade many prospective entrepreneurs from starting new businesses.
"Small businesses have provided an important source of the new technologies and new products that have spurred our current economic expansion and ensured American leadership in world markets," said EPF President Ed Potter. "OSHA''s proposed mandate threatens to destroy that important source of innovation and economic energy."
"OSHA should have done better research on costs before proposing its ergonomics rule," continued Potter. "It should go back to the drawingboard."
EPF''s earlier 50-page report, Critique of OSHA''s Economic and Regulatory Flexibility Analysis of the Proposed Ergonomics Program Standard," said the agency''s cost-benefit analysis contained errors and omissions.
In particular, the report said the OSHA analysis was flawed because it either underestimated the cost of implementing the requirements of the ergonomics proposal or used an overly optimistic assessment of how many employers are already in compliance.
by Virginia Sutcliffe