Safety: the unmarked path to productivity

It’s clear: safety measures cost. And cost impacts the economy. So when economic growth levels are historically low, questions arise about safety. Do we really need all these regulations? Can we afford the safety measured we have imposed on ourselves? Should we instead pay more attention to cutting unnecessary costs and improving our productivity?

No comments

According to conventional wisdom, safety costs money. Risk is the natural order of things, and to escape it we add protective items we believe will keep us safe from harm. Guards, shields, railings — all easily installed, but all cost money.

For example, when the NTSB reverse engineered all of the measures under the Federal Motor Vehicle Safety Standards, they reported their findings in added vehicle weight and cost – much of which is passed on to consumers through higher prices, taxes, and insurance fees. When a leading consumer products magazine called for new safety technologies to be made standard on all vehicles, the article was titled “Car Safety at Any Cost.”

It’s clear: safety measures cost. And cost obviously impacts the economy.

Take, as another example, the safety of coal miners. While it goes unargued that we want miners to remain safe on the job, ensuring their safety increases the cost of coal. The increasing cost of coal decreases competitiveness. Safe miners mean coal-fueled electricity may cost more, even though safely mined coal does not create more electricity than unsafely mined coal.

When economic growth levels are historically low, questions arise about safety. Do we really need all these regulations? Can we afford the safety measured we have imposed on ourselves? Should we instead pay more attention to cutting unnecessary costs and improving our productivity?

The daily news underscores the point. A recent Wall Street Journal headline reads “Productivity Slump Threatens Economy’s Long-Term Growth,” while a New York Times article reminds that “Silicon Valley Has Not Saved Us From a Productivity Slowdown.” And writing in the IPWatchdog, Neal Solomon alerts readers that over “the past decade, economic growth, wage growth, business investment and productivity growth have declined” while “economists have discovered that productivity growth alone explains the dramatic development of industrial economies.”

Productivity is the key to growth, so why should it not dominate decision-making?

Solomon adds an important fact, however: “the causes of productivity growth are unclear, with capital, labor and technological contributions.” So what about safety?

When Food Safety News used USDA data to assess the economic cost of foodborne illness, they looked at 15 pathogens that cause 95% of illnesses and death from foodborne causes where a pathogen is specified. Evidently, such illnesses send more than 50,000 people to the hospital each year, and the

annual cost to the economy is “more than $15.6 billion, or about half of the $32 billion the World Health Organization says the Ebola outbreak will cost the world economy.”

If you think safety is expensive, try risk. A 2013 New York Times article reported that asthma is “the most common chronic disease that affects Americans of all ages,” and the Centers for Disease Control and Prevention “puts the annual cost of asthma in the United States at more than $56 billion.” A leading factor in the increasing rates of asthma is widely thought to be indoor air quality.

Similarly, the Economic Policy Institute notes that the “total number of occupational illness and injury deaths in 2007 (59,102) was greater than the number of deaths from causes such as motor vehicle crashes (43,945), breast cancer (40,970), prostate cancer (29,093), and homicide (18,361).” The cost of workplace injuries and illnesses: $250 billion annually.

When all the facts are in, safety is productivity — not cost — and innovation can be a key driver.

Refrigeration, innovations in food processing, better food traceability, and the like all drive down foodborne illness rates — and, with them, the monetary cost of foodborne illness. Some financial gains are obvious, while others are harder to specify, such as how much is saved by people not needing hospitalization.

In buildings, recent innovations have enabled the tighter sealing of building envelopes, which has resulted in the ability to keep out a range of outdoor pollutants — from particulates to pollen, as well as trap and cultivate indoor pollutants. It took a revolution in ventilation to fix the problem, but today buildings can be designed to keep bad air out and good air in.

FOX Business cites an estimate from the Integrated Benefits Institute that “U.S. companies lose more than half a trillion dollars a year in lost productivity that can be traced to health.” Safety is not the only factor, but the numbers are staggering.

From the very beginning of modern technology and industry, the aim of vastly improved productivity was integrated with that of controlling risk. The two were co-dependent. Today’s productivity crisis may have the experts stumped. But it is possible that part of the solution may lie not in a faster pace, more automation, or training and retraining, however important those things may be. The evidence suggests that performance depends — perhaps first — on safety or the elimination of certain kinds of accidents. From the beginning, and still today, safety is productivity.

Leave a Reply