Cliff Shannon

Monday, 22 July 2002 09:45

Opinion: The OSHA absurdity

Charles Jeffress is undoubtedly a devoted family man and a pretty good fellow to have as a friend. But as the head of the federal Occupational Safety and Health Administration, he is a damned menace to society.

Workplace safety is no less important than it was 100 years ago, when gruesome crimes like the Triangle Shirtwaist factory fire, in which nearly 200 poor immigrant women suffered tragic deaths, galvanized our nation to action. But circumstances have changed, and OSHA is adapting slowly or not at all.

OSHA was created as a command-and-control regulatory agency: mountains of regulations and reporting requirements, backed up by a small army of inspectors and stiff penalties for even small deviations. In recent years, internal and external critics complained that bureaucratic rules were becoming more important than tangible improvements in workplace safety. Congressional hearings and media reports in the early 1990s gave substance to those complaints, and OSHA came under public pressure to reform.

The changes have been positive. There have been fewer workplace injuries every year since 1995. Although some disputes remain, most OSHA field offices now seek to work cooperatively with employers and workers.

Unfortunately, this progress does not sit well in some precincts in Washington, D.C., where some officials long for a return to an outmoded — and discredited — command-and-control regulatory approach.

First, OSHA recently — and infamously — sought to make employers responsible for assuring compliance with federal safety rules in the homes of employees who, on a full-time, part-time, or occasional basis, work from their homes. OSHA higher-ups calculated (correctly) that the public would not cry out about inflicting legal, financial and even criminal liabilities on employers for such “crimes” as potential fire hazards posed by employees’ untidy home computer areas.

But Mr. Jeffress and his lieutenants failed to foresee Americans’ outrage at the prospect of a legion of safety inspectors and compliance officers invading their homes.

In the face of the resulting political dung-storm, the Secretary of Labor rescinded the OSHA ruling and promised that American workers would remain safe and private in their homes. Nevertheless, tens of millions of Americans working (happily) outside the traditional workplace (and beyond the reach of OSHA) can’t sit well with OSHA higher-ups. Don’t be surprised if this issue crops up in another guise.

Second, small businesses have typically been spared from some OSHA paperwork and administrative requirements. This made sense in that detailed paperwork requirements are a particular hardship for smaller businesses, and the incidence of workplace injuries is generally lower among smaller businesses.

However, the increasing (disturbing?) fraction of working Americans employed by small businesses seems to have attracted attention at OSHA, and it responded last year with new regulations that will, for the first time, bring businesses with fewer than 50 employees under the full lash of OSHA paperwork requirements. Potential costs are estimated in the billions; potential benefits are not apparent.

Third, after years of battling Congress, skeptical scientists and opponents within the Clinton administration, Mr. Jeffress realized his dream of issuing federal ergonomics regulations. Never mind that these regulations don’t provide a useful definition of ergonomics and ergonomics-related injury.

They call for employers to correct conditions in any part of the workplace in which an ergonomics injury is reported, restrict workloads of injured workers and train workers to identify ergonomics problems. Virtually every general industry workplace, regardless of size or injury history, will fall under the new rules.

For manufacturers and most commercial concerns, just a single reported incident (e.g., chronic back pain) will trigger disruptions. Even office work environments will be affected; ergonomics experts estimate it should be possible to make offices ergonomics-safe for $150 per work station, plus consultants’ fees.

Although ergonomics has been around for a while, enough people disagree about its scope and validity that the National Academy of Science last year undertook a detailed inquiry into the issue. OSHA, of course, showed a level of disdain in having to wait for the results, despite U.S. Department of Labor reports showing DOL-defined ergonomics-related injuries are declining. Mr. Jeffress has responded to criticism by essentially daring employers to stop him.

Productivity gains have fueled a sustained economic expansion that has made our nation more prosperous and secure than at any other time in its history. OSHA’s new regulatory forays (and the others that are sure to follow) are akin to the medieval practice of applying leeches to the skin to improve health.

If this nonsense isn’t halted, America’s economic prospects in the coming decade will be diminished.

Cliff Shannon is president of SMC Business Councils, a Pittsburgh-based business association for smaller businesses across the state. After composing this piece at home, he was briefly detained by federal agents for suspected workplace safety violations but was released without charges being filed. Reach him at (412) 371-1500.

Monday, 22 July 2002 10:02

Energy insights

The good news is that Pennsylvania's Electricity Choice program is under way, and thousands of southwestern Pennsylvania small businesses are participating. The bad news is that actually shopping for an electricity supplier is turning out to be confusing and frustrating.

In some cases, problems are the unavoidable consequence of doing something completely new. In other instances, however, there is needless complication due to utility company bumbling and/or obstructionism.

To generate maximum electricity - shopping leverage for our combined 12,000 member-companies, SMC and the Manufacturers Association of Northwestern Pennsylvania recently partnered with Pittsburgh-based Strategic Energy Limited (SEL). SEL is Public Utility Commission-licensed and has a unique approach: Rather than marketing electricity for a single power generator, it shops all suppliers to find the cheapest electricity for its customers.

The theory behind partnering with SEL was that its electricity shopping on behalf of an aggregation of hundreds of small and mid-sized member-companies would deliver cost savings the individual companies could not get alone. Results are proving that correct, but unexpected problems are slowing progress, particularly for companies shopping themselves.

On the utility side of electricity choice, Duquesne Light had done a first-rate job preparing both its residential and commercial customers. Duquesne Light customers who enrolled in the state's new electricity choice program have received a timely confirmation letter and a detailed summary of their past 12 months' electricity consumption. The summary contains all the numbers an electricity supplier needs to quote a price.

However, Allegheny Power and Penn Power have failed to provide adequate or timely information to their affected customers. Whether this was due to incompetence or deliberate obstructionism, the PUC should have - but has not - penalized the two utilities. Instead, Allegheny Power and Penn Power customers have been forced to scramble through their files, looking for copies of their past 12 months' electricity bills. This paper chase has significantly slowed the progress of electricity choice for thousands of companies and homeowners.

A serious problem has also developed among electric suppliers. Although as many as 75 suppliers have been licensed by the PUC, only a few are selling electricity in western Pennsylvania. For instance, it was three weeks into the Electricity Choice program before SMC could locate a cost-effective electricity supplier for its home-based business owners.

True, residential customers aren't generally as attractive to power marketers as high-kilowatt commercial customers. But there is relatively little interest in commercial customers, either. For reasons still not completely clear, few active players exist in the electricity marketplace. Strategic Energy Limited is one of those few, and it is being absolutely overwhelmed by business owners and managers who can't find any other cost-effective source of power.

To be sure, no one is threatened with the lights going out. Our local utilities will still supply electricity - at the usual prices. But needless consumer frustration and confusion is being caused by (some) utility companies' lack of cooperation, and marketplace distortions of mysterious origin are hampering progress, too. To ensure that Pennsylvania's pioneering electricity choice program succeeds, the PUC needs to step in, ferret out obstacles, and, if necessary, rattle some cages.

Cliff Shannon is president of SMC Business Councils.

Monday, 22 July 2002 09:52


Since we’re going to hear and read this fall lots of propaganda about the pluses and minuses of federal tax cuts, we should remain mindful of several important facts.

First, Congress has already locked up $2 trillion of the next decade’s projected $2.9 trillion federal budget surplus to assure long-range financial stability for Social Security and Medicare. The tax cut debate is not about protecting Social Security or Medicare. The needed funds are set aside in a statutory “lock-box” that ensures it will not be spent on other programs or used for tax reductions.

Second, $2 trillion for Social Security and Medicare will allow the U.S. Treasury to reduce federal debt and restructuring of remaining borrowing at more advantageous terms. This is happening already.

Third, if Social Security and Medicare are assured, one of three things will happen to the predicted $900 billion additional federal surplus: (1) It will be spent by the federal government; (2) It will be returned to taxpayers; or (c) It will disappear because the economy slows.

About (1), note that the current fiscal year’s actual surplus — about $87 billion — has already been soaked up by additional federal spending. This is to be expected. Congress and the White House will find ways to spend every available nickel of any surplus.

About (2), several years of strong economic growth and the federal budget surplus itself owe themselves to American workers’ and businesses’ steadily increasing productivity. Is a reward for this hard work appropriate? Wouldn’t the right reward be one that would also bolster growth and productivity gains?

Finally, if the last scenario kicks in, the disappearance of projected surpluses would affect the $2 trillion set aside for Social Security and Medicare.

This brings us to the fundamental question: Do we think the economy will be more likely to thrive because the federal government spends $900 billion more over the next decade, or because Americans get a large tax refund?

Federal Reserve Chairman Alan Greenspan says the worst economic option is for Congress and the White House to spend federal budget surpluses. Unless there is a tax cut this year, you can bet the ranch and the dog that every single penny of the next decade’s predicted surpluses (and probably more) will be “disappeared” by this time next year.

Cliff Shannon is president of SMC Business Councils. Reach him at (412) 371-1500.