Safety Practices, Firm Culture, and Workplace Injuries, and: Workplace Injuries and Diseases: Prevention and Compensation (review)

Workplace injuries are costly for society. According to the Bureau of Labor Statistics, in private industry there were over 4.3 million recordable occupational injuries and illnesses in 2003, 1.3 million of which involved time away from work. In 2001 workers compensation insurance cost employers $64 billion in medical expenses and lost wages. Clearly there is a need for greater understanding about workplace safety and systems for injury compensation.

To explore these issues, Safety Practices, Firm Culture and Workplace Injuries describes a study to determine effective Human Resource Management (HRM) practices for reducing workplace injuries. Butler and Park assert that accident rates can be reduced by increasing worker incentives to be careful, modifying the work environment to reduce risk (ergonomics), and by HRM policies to decrease worker incentives to file false or inflated claims. The authors believe that injury claims result from three sources: 1) risk-taking moral hazards which exist when workers adapt their behavior to gain insurance benefits; 2) claims reporting moral hazards which contribute to injury claims when workers have incentives to over-report injuries; and 3) intrinsic risk, that is, the physical danger of accidental injury associated with the work.

Butler and Park provide a comprehensive review of the literature and examine a wide variety of HRM practices using a regression model to determine how HRM policies affect accident frequency and severity. They use 1998 safety survey data collected by the Minnesota Department of Labor and Industry, from 230 state firms, which was matched to workers' compensation claims filed between 1990 and 1998. Their rather lengthy description of the data analysis and findings may lose some readers more interested in applying successful HRM policies.

In summarizing their findings, Butler and Park conclude that management safety culture is the HRM practice with the largest cost savings per employee, while involvement of workers in strategic safety planning decisions and in the financial returns (profit sharing) of the company are also important for efficient safety outcomes. This study provides an economic evaluation of workplace injury prevention with the focus being on management of human resources, rather than concern for worker health and safety, which is seen as purely a by-product of minimizing costs. Incentives to change worker behaviors are emphasized rather than employer involvement in ergonomic programs that eliminate injury risks.

Workplace Injuries and Diseases is a compilation of articles by U.S. and Canadian experts on workers' compensation, from a conference held in memory of Terry Thomason, who was dedicated to improving workers' compensation. These authors explore a variety of pertinent workers compensation issues such as economic incentives, adequacy of benefits, permanent partial disability, the worker's compensation appeal system in Canada, pricing, performance measurement, the impact of behavioral economics on workplace injuries, as well as a look at two case studies addressing black lung and workers compensation reform in the state of Rhode Island. I appreciated that these authors considered workers' compensation from the employer, insurer, and worker perspectives.

Some of the book's highlights include an excellent overview of economic theories and key issues relating to workplace injuries and workers' compensation by Thomason. He defines concepts like rate groups and experience rating and explains how they connect to worker incentives to use workers compensation and employer incentives to be safe. The role of regulation by government agencies in the U.S. and Canada was also reviewed and questioned. Thomason found that interventions by joint health and safety committees were more effective at reducing injury rates, especially in unionized companies. In another chapter Boden, Reville, and Biddle examine the adequacy and equity of workers' compensation cash benefits and the tradeoff with cost. While it is somewhat cumbersome to follow the...