1. How will Ergonomics labor regulations impact workplace flexibility in the United States?
The ergonomics rule–recently overturned by Congress–was issued in the final days of the Clinton administration by the Occupational Safety and Health Administration (OSHA). The rule sought to address “musculoskeletal disorders” (MSDs) or repetitive motion injuries that arise due to physical activity in the work place. Although such work-related injuries may impose real costs on workers and the American economy, OSHA’s solution did little to address the underlying source of the problem, and it ignored the incentives that private employers have to address this issue on their own. Specifically, OSHA’s rule would have imposed a significant burden on businesses by requiring them to implement detailed plans and programs to address MSD’s. However, the solution lies not in government programs or paperwork; rather, it requires increased information on the causes and remedies of MSDs. Even OSHA’s own data suggested the private sector is taking action to address the problem due to the significant costs MSDs impose on workers and employers.
The OSHA rules would cost the American public roughly $12 billion a year and they lack scientific evidence to suggest they will be effective. Even the National Academy of Sciences, which recently released a report on ergonomics suggested that far more study is necessary before an effective strategy can be identified.
The OSHA rules would have a significant impact on the economy because businesses of virtually any size company were vulnerable to the costly regulations and paperwork required by the rule. One “job related” injury would have been enough to trigger new regulatory burdens. And “job related” injury was such a nebulous term that even an injury that occurred outside of the workplace but was aggravated on the job would have left employers vulnerable. Another important point is that the United States has a diverse manufacturing sector and questions of workplace injuries are dealt with more effectively at the source, through remedies addressing specific problems. Implementing a centrally planned solution cannot address the circumstances of every workplace.
2. Since 1995, the US has seen its productivity growth substantially outpace that of Western Europe. Do you attribute this to European regulation of labor markets? Could ergonomics regulation affect productivity?
U.S. productivity has outpaced Western Europe for a number of reasons. Excessive regulation has certainly limited Europe’s growth, and the United States faces its own hurdles with respect to regulation (although relatively smaller). Of course, the technology sector in the United States has provided tremendous productivity gains for the entire economy. Excessive regulations in the United States, such as the Clinton administration’s ergonomics rule can pull down productivity, as resources are shifted from productive activity to regulatory compliance.
3. What is the impact of ergonomics regulation on insurance markets? What is the impact on worker’s compensation suits? Would ergonomics regulation encourage frivolous lawsuits?
The ergonomics rule would have raised significant challenges for the insurance industry. The rule’s broad approach and vague definitions could have left employers responsible for almost any injury a worker incurred-on or off the job. For instance, “job related” injuries included injuries that occurred elsewhere but were exacerbated on the job. In many ways, the ergonomics rule went well beyond most state workers compensation laws. For example ergonomic injuries would have required compensation of 90 percent to 100 percent while the worker was out of work, whereas typical workers compensation is two-thirds of the employee’s pay.
The ergonomics rule was one of the broadest rulemakings ever conducted. The fact that Congress overturned the rulemaking demonstrates the degree of concern it generated. While MSDs are a costly problem in the workplace, the private sector has been making progress addressing this problem. A more sensible rulemaking would provide employers both the flexibility and information to address these problems on their own. A new layer of bureaucracy offers little in the way of a solution. As OSHA revisits this issue, let’s hope they keep this in mind.