News from EPI Poorly-researched estimate of OSHA regulations leads to vastly overstated costs

For Immediate Release: Thursday, August 18, 2011
Contact: Phoebe Silag or Karen Conner, news@epi.org 202-775-8810

Poorly-researched Crain and Crain estimate of OSHA regulations leads to vastly overstated costs

The estimate by Nicole V. Crain and W. Mark Crain that Occupational Safety and Health Act (OSHA) regulations cost businesses $65 billion a year is vastly overstated, a new Economic Policy Institute (EPI) Issue Brief finds.  Crain and Crain conducted a study of the cost of government regulations for the Small Business Administration’s Office of Advocacy in 2010 that included this estimate.  

Crain and Crain attribute more than 99 percent of the $65-billion estimate to regulations adopted in the 1970s, 1980s and 1990s.  Deconstructing Crain and Crain: Estimated cost of OSHA regulations is way off base, by EPI Vice President Ross Eisenbrey and Director of Regulatory Policy Research Isaac Shapiro, explains that the Crains’ estimate is problematic for three reasons.  First, pre-issuance cost estimates of regulations more than 10 years old are unreliable because different methodologies have been used in different time periods.  Moreover, businesses have adjusted to changes they were required to make due to new regulations, and the cost estimates do not account for these changes.

Second, Crain and Crain base their estimate on a series of studies that trace back to a 1974 National Association of Manufacturers (NAM) survey.  Not only is NAM traditionally opposed to regulations, their archives center is unable to find the 1974 survey, so researchers are unable to evaluate whether it was accurate.  The Crains arbitrarily inflate the cost of OSHA regulations to match the costs supposedly found in the never-published 1974 survey of NAM members.

Finally, the Crain and Crain estimate counts fines as a regulatory cost.  Because estimates of compliance costs assume all firms comply completely with new rules, Crain and Crain are effectively double-counting.  Fines actually paid by employers are, in any event, a negligible cost.

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