The Impact of Different Government Units in the Regulation of the Workplace Environment

This study examines the issue of whether or not state and federal job safety agencies provide the same levels of public output. Tests are conducted on the hypothesis that state takeover of regulation from the federal program serves to reduce the costs of firms. These costs are comprised of two components: the penalties for noncompliance and the uncertainty costs of regulation. The public policy implication that is drawn from these tests is that it matters to firms which government unit regulates them. The Occupatioanal Safety and Health (OSH) Act was enacted in 1970 to provide uniform job safety regulation for the nation.1 Prior to the OSH Act, regulation was the sole responsibility of states. Some states carried no safety laws until recently; the first job safety statute in Texas was enacted in 1967.2 The OSH Act does not prevent any state from asserting jurisdiction under state law when that state is '... at least as effective in providing safe and healthful employment and places of employment as the standards promulgated...' under the OSH Act.3 Therefore, states have two options to choose from: Leave regulation to the Occupational Safety and Health Administration (OSHA) or provide its own program of regulation. States which operate their own programs must first seek approval from OSHA. OSHA pays 50 percent of the operating costs of approved state programs. Once programs are approved, OSHA retains discretionary enforcement authority for three years while it monitors the performance of states. OSHA may then reject programs during this period and the federal program would continue. There are 21 states which operate their own programs.5 This paper presents a model which explains why certain states elect to operate their own programs. Tests are conducted on the hypothesis that state takeover of regulation from the federal program serves to reduce the costs of firms. These costs are comprised of two components: the penalties for noncompliance and the uncertainty costs of regulation. The policy implications of * This paper has benefitted from the construcive comments of Joseph Cordes and Harry Watson. e i pact ferent government its regulation orkplace ironment