Business Case for Safety and Health
Workplace fatalities, injuries, and illnesses cost the country billions of dollars every year. In its 2012 Workplace Safety Index, Liberty Mutual estimated that employers paid almost $1 billion per week for direct workers' compensation costs for the most disabling workplace injuries and illnesses in 2010. Employers that implement effective safety and health management systems may expect to significantly reduce injuries and illnesses and reduce the costs associated with these injuries and illnesses, including workers' compensation payments, medical expenses, and lost productivity. In addition, employers often find that process and other changes made to improve workplace safety and health may result in significant improvements to their organization's productivity and profitability.
How can investing in workplace safety and health improve your organization's financial performance?
- A 2012 study concluded that inspections conducted by California's Division of Occupational Safety and Health (Cal/OSHA) reduce injuries with no job loss. The study showed a 9.4% drop in injury claims and a 26% average savings on workers' compensation costs in the four years after a Cal/OSHA inspection compared to a similar set of uninspected workplaces. On average, inspected firms saved an estimated $355,000 in injury claims and compensation paid for lost work over that period. There was no evidence that these improvements came at the expense of employment, sales, credit rating, or firm survival.
Source: David Levine, Michael Toffel, and Michael Johnson, "Randomized Government Safety Inspections Reduce Worker Injuries with No Detectable Job Loss." Science, Vol. 336, No. 6083, pp. 907-911 (May 18, 2012). See Abstract and Press Release.
- The total estimated national costs of occupational injuries and illnesses among civilians in the United States in 2007 were approximately $250 billion. The costs of injuries were approximately $192 billion and the costs of illnesses were approximately $58 billion.
Source: J. Paul Leigh, Economic Burden of Occupational Injury and Illness in the United States." Milbank Quarterly, Vol. 89, Issue 4, p. 728 (Dec. 2011).
- According to the 2016 Liberty Mutual Workplace Safety Index, the most disabling workplace injuries and illnesses amounted to more than $62 billion in direct U.S. workers' compensation costs in 2013.
Source: 2016 Liberty Mutual Workplace Safety Index (PDF*). Liberty Mutual Insurance Company, (2016).
- Companies that did not adequately manage workplace safety and health performed worse financially than those who did from November 2004 to October 2007. Investors could have increased their returns during this period had they accounted for workplace safety and health performance in their investment strategy.
Source: Goldman Sachs JBWere Finds Valuation Links in Workplace Safety and Health Data. Goldman Sachs JBWere Group, (2007, October). See Press Release.
- There is a direct positive correlation between investment in safety, health, and environmental performance and its subsequent return on investment.
Source: White Paper on Return on Safety Investment. American Society of Safety Engineers (ASSE), (2002, June).
- Over 60 percent of chief financial officers in one survey reported that each $1 invested in injury prevention returns $2 or more. Over 40 percent of chief financial officers cited productivity as the top benefit of an effective workplace safety program.
Source: Chief Financial Officer Survey. Liberty Mutual Insurance Company, (2005).
- A forest products company saved over $1 million in workers' compensation and other costs from 2001 to 2006 by investing approximately $50,000 in safety improvements and employee training costs. The company has participated in OSHA's Safety and Health Achievement Recognition Program (SHARP) since 1998.
Source: Anthony Forest Products. OSHA Small Business Success Stories, (2007, February).
- The average worksite in OSHA's Voluntary Protection Programs (VPP) has a Days Away Restricted or Transferred (DART) case rate of 52% below the average for its industry. Fewer injuries and illnesses mean greater profits as workers' compensation premiums and other costs plummet. Entire industries benefit as VPP sites evolve into models of excellence and influence practices industry-wide.
Source: Voluntary Protection Programs (VPP). OSHA.
- Some of the companies that participated in an OSHA Strategic Partnership to address ergonomic issues in foundries in Wisconsin have seen significant reductions in injury and illness rates. These reductions have led to a decrease in workers' compensation claims and associated costs.
Source: Foundry Ergonomics Partnership. OSHA Strategic Partnership Program Success Stories, (2005, January).
- An OSHA Strategic Partnership covering construction of a power plant in Wisconsin resulted in injury and illness rates significantly below the construction industry rates in Wisconsin. In 2006, employees worked over 1.7 million man hours at the site with zero fatalities. The 2006 Total Case Incident Rate (TCIR) was 69 percent below the Wisconsin average and the 2006 Days Away, Restricted, Time Away (DART) rate for the site was 75 percent below the Wisconsin average.
Source: Weston 4 Power Plant Construction. OSHA Strategic Partnership Program Success Stories, (2007, February).
Now that you know that investing in workplace safety and health may improve your company's productivity and bottom line, there are many resources from OSHA and other organizations to help you get started.
The following are examples of resources that may help you improve your organization's workplace safety and health and learn about OSHA's compliance assistance resources.
- OSHA's On-site Consultation Program. OSHA. Using a free consultation service largely funded by OSHA, employers can find out about potential hazards at their worksites, improve their occupational safety and health management systems, and even qualify for a one-year exemption from routine OSHA inspections.
- Compliance Assistance Quick Start. OSHA. Use this step-by-step guide to learn about the compliance assistance resources on OSHA's Web site.
- OSHA Publications. OSHA. A wide range of publications on safety and health topics, including:
- The Journey to Safety Excellence National Safety Council (NSC).
For other resources on Making the Business Case for Safety and Health, see Additional Information.
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