Workplace Accidents Cost The Economy Billions Of Dollars Each Year

The fertilizer plant explosion in West, Texas that killed 15, injured hundreds, and caused property damages that could reach $100 million has some talking about the need for increased workplace safety regulations to prevent future disasters. The facility hadn’t been inspected by the Occupational Safety and Health Administration since 1985 and slipped by six other regulatory agencies.

But as the New York Times reported, lawmakers in Texas worry that new regulations would be too costly and endanger the state’s high ratings for a business friendly environment:

Asked about the disaster, [Gov. Rick] Perry responded that more government intervention and increased spending on safety inspections would not have prevented what has become one of the nation’s worst industrial accidents in decades.

“Through their elected officials,” he said, Texans “clearly send the message of their comfort with the amount of oversight.” […]

Even in West, last month’s devastating blast did little to shake local skepticism of government regulations. Tommy Muska, the mayor, echoed Governor Perry in the view that tougher zoning or fire safety rules would not have saved his town. “Monday morning quarterbacking,” he said. […]

Texas has always prided itself on its free-market posture. It is the only state that does not require companies to contribute to workers’ compensation coverage. It boasts the largest city in the country, Houston, with no zoning laws. It does not have a state fire code, and it prohibits smaller counties from having such codes. Some Texas counties even cite the lack of local fire codes as a reason for companies to move there.

Meanwhile, Texas ranks at the top of the country for the number of workplace fatalities, experiencing more than 400 every year over the last decade. It also has a high rate of fires and explosions: over 1,300 chemical and industrial plants have caught fire or exploded.


These accidents come with a huge cost: the fires and explosions at Texas’s chemical and industrial plants cost as much in property damage as those in all other states combined from 2007 to 2012. Texas experiences more than three times the number of accidents and four times the number of injuries and deaths as the second-ranking state in the country, Illinois, resulting in 300 times the property damage costs.

The cost of workplace accidents doesn’t just impact Texas, though. They cost the U.S. economy billions of dollars a year. A study conducted by the Department of Health and Human Services, Centers for Disease Control and Prevention, and the National Institute for Occupational Safety and Health found that between 1992 and 2002, 64,333 workers died from workplace injuries, which cost society a total of $53 billion, or an average of $831,000 per death. Another study by J. Paul Leigh for the Milbank Quarterly found that in just 2007 alone, there were 5,600 fatal workplace injuries and 8,559,000 nonfatal ones, while there were 53,000 fatal illnesses and 427,000 nonfatal illnesses. These cost society a total sum of $250 billion due to medical and indirect expenses.

The lack of safety regulations can also cost businesses directly. They spend $170 billion a year on costs associated with injuries and illnesses sustained on the job, including more than $40 billion a year in worker’s compensation benefits. A report from the American Society of Safety Engineers found that having inadequate safety, health, and environmental protocols can cost a company in benefit claims, liability damages, litigation expenses, and the potential to lose bids and government contracts. It also notes that “having a solid safety and health management program with senior management commitment will improve productivity and employee morale.”

The Dallas Morning News has reported that West Fertilizer Co. only had $1 million in liability insurance, and Texas doesn’t require such facilities to have insurance that could cover the potential damage they might cause. That could mean that the costs of this disaster will be borne by those whose property was damaged, as they can expect little from the company itself. President Obama has also authorized federal aid to help the community recover. The costs of the explosion are already affecting more than the company itself.