Contents

Main Page
Introduction
Defining and Identifying Small Business Industries
Small Business Industries and Related Measures of Risk
Results
Discussion
Reference
Appendix

Introduction

Objectives

More than half (56%) of the U.S. workforce in private industry is employed in business establishments with fewer than 100 employees [Bureau of the Census 1997; Wiatrowski 1994]. Of all U.S. private industry establishments, 98% employ fewer than 100 employees, and more than 87% employ fewer than 20 employees. Prevention of occupational injury and illness is often difficult in these establishments because small businesses generally have few safety and health resources, cannot usually hire staff devoted to safety and health activities, and often lack the ability to identify occupational hazards and conduct surveillance [Wiatrowski 1994; Pedersen and Sieber 1988]. The National Institute for Occupational Safety and Health (NIOSH) recognizes these special challenges to safety and health in small business establishments. As a result, this investigation was conducted to characterize the risk of occupational injury, illness, and fatality associated with industries composed mostly of small business establishments. The three primary objectives of this investigation were as follows:

1. To identify standard industrial classification (SIC) codes meeting the definition of a small business industry*
2. To identify the top 25% of the highest-risk small business industries by ranking them according to total cases and incidence rates (IRs) of occupational injuries, illnesses, and fatalities
3. To identify the top 25% of the highest-risk small business industries by ranking them according to a combined risk index (achieved by combining data on injuries, illnesses, and fatalities).

Ranking small business industries on the basis of occupational injury, illness, and fatality data should prove useful to a broad audience, including occupational safety and health practitioners, the small business community (owners, managers, and employees), labor officials, trade associations, product suppliers, and local and State health agencies. This document is especially intended for identifying high-risk small business industries that may warrant further investigation, additional hazard characterization, or risk assessment. Ultimately, this information is intended to promote prevention activities targeting industries with the greatest need.

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Background

As stated, 56% of the U.S. workforce in private industry is employed in business establishments with fewer than 100 employees [Bureau of the Census 1997; Wiatrowski 1994]. In 1994 in the United States, 6.5 million private industry establishments were operating, and they employed more than 96.7 million employees [Bureau of the Census 1997]. These private industry establishments represent all major divisions of the economy except self-employed persons, domestic service employees, railroad employees, agricultural production workers, most government employees, and employees in oceanborne vessels in foreign countries.

Of all private industry establishments operating in 1994 in the United States, 98% (6.38 million) employed fewer than 100 employees, and more than 87% (5.66 million) employed fewer than 20 workers. Table 1 shows the number and percentage of employees in establishments with fewer than 100, 20, and 10 employees in 1994.

These statistics are given in terms of business establishments—not companies. An establishment is an individual business location such as a fast-food restaurant. In contrast, a company consists of all establishments under common ownership or control, such as a chain of fast-food restaurants owned by a single employer. The Bureau of the Census [1998] reports that the 6.5 million private establishments operating in the United States in 1994 were owned by 5.3 million companies. This figure indicates that most companies own only a single establishment, but multi- establishment companies may have a disproportionate impact. Although 56% of the U.S. private workforce is employed by establishments with fewer than 100 employees, only 38% is employed by companies with fewer than 100 employees [Bureau of the Census 1997].

Statistics about establishment size are generally the most appropriate for this report, since regulations and guidelines usually apply to individual establishments at a given business location. When we refer to resources available to an employer, company size might be more relevant. This distinction is important when comparing statistics from different agencies. For example, the U.S. Small Business Administration (SBA) defines small business in terms of company size, not establishment size.

Targeting Small Business Industry

Small business establishments (those with fewer than 100 employees at a single business location) are found in all industrial segments. Occupational safety and health prevention activities (including inspections and other enforcement strategies of the Occupational Safety and Health Administration [OSHA]) have often focused on the 2% of private industry establishments with 100 or more employees—though the agency has established a number of programs designed to provide consultation and other services specifically to small businesses [DOL 1993, 1996]. As noted earlier, small business establishments generally have few safety and health resources, few if any staff devoted to safety and health activities, and limited ability to identify occupational hazards and conduct surveillance [Wiatrowski 1994; Pedersen and Sieber 1988]. Because more than 98% (6.3 of the approximately 6.5 million) of the private industry establishments operating in the United States are classified as small business establishments, it is difficult to determine where best to use limited Federal, State, and local resources available for occupational safety and health. Thus a decision was made to target small business industries that is, those with SIC codes in which 80% of the employees work in business establishments with fewer than 100 employees.

Employers, employees, and insurers involved with small businesses can all benefit from a heightened awareness of the risks and hazards within various small business industries. Other accounts have noted that providing this information (possibly in the form of industry report cards) would spur market-adjusting forces to reduce injuries and illnesses as employees are made aware of risks and as employers strive to provide safer workplaces or pay a higher compensating wage [Schroeder and Shapiro 1984; Leigh 1998]. This report focuses on identifying high-risk small business industries using national injury, illness, and fatality data (both total cases and IRs).

Incidence of Injuries, Illnesses, and Fatalities

According to the U.S. Bureau of Labor Statistics (BLS), the incidence of nonfatal work-related injuries and illnesses in private industry fell in 1995 to the lowest rate this decade, continuing a 3-year decline in these rates [BLS 1997a]. A total of 6.6 million work-related injuries and illnesses were reported during 1995. This figure translates into an average rate for all private industry of 8.1 cases per 100 full-time equivalent workers (i.e., per 200,000 hr, based on 40 hr per week for 50 weeks per year per worker), compared with a high of 8.9 cases per 100 full-time equivalent workers in 1992. Although this trend is encouraging, nearly 6.1 million injuries alone in 1995 resulted in lost work time, medical treatment other than first aid, loss of consciousness, restriction of work or motion, or transfer to another job. An estimated half million occupational illnesses occurred in 1995. However, this estimate is uncertain, as it is generally more difficult to determine whether an illness is work-related. Therefore, occupational illnesses tend to be underreported. Work-related fatalities in private industry totaled 5,495 in 1995 and 5,521 in 1996 [BLS 1997b]. These figures also indicate that serious hazards are still associated with many workplaces.

Consequences of Occupational Injuries and Illnesses

The consequences of occupational injuries and illnesses are significant. In addition to causing pain, suffering, and loss of productivity for affected employees and their families, occupational injuries and illnesses exact a hefty toll on U.S. industry. The National Safety Council (NSC) estimates that occupational injuries and fatalities in the United States in 1996 cost $121 billion, or $790,000 per death and $26,000 per disabling injury [NSC 1997]. These data do not include costs associated with occupational illness. Another study places employers costs of occupational injuries alone at $155 billion annually (in December 1990 dollars) [Miller 1997]. Leigh et al. [1997] estimate the total annual costs of occupational injuries, illness, and fatalities in the United States to be greater than $170 billion in 1992, noting that these estimates are conservative because (1) they ignore costs associated with pain and suffering and home care provided by family members and (2) the numbers of work-related injuries and illnesses are likely to be undercounted. Under- reporting of occupational injuries and illnesses, especially among small business establishments, has been recognized as a major source of bias in the Federal statistics [Mendeloff and Kagey 1990; Nelson et al. 1992; Oleinick et al. 1995; Murphy et al. 1996; Leigh et al. 1997; Leigh and Miller 1998a].

Occupational Health Services Provided by Small Businesses

Over the last half century, devising strategies to provide a safe workplace and to protect the health of workers have been common goals of government agencies, labor organizations, and industry groups. Providing for the safety and health of workers was identified as a priority in a 1965 report to the U.S. Surgeon General entitled Protecting the Health of Eighty Million Americans: A National Goal for Occupational Health [DHEW 1966]. The report recognized that with a few exceptions, minimal or no occupational health surveillance or services were provided by small business establishments a fact that was later verified by the National Occupational Exposure Survey (NOES) [Pedersen and Sieber 1988]. Significant differences found by NOES between small business establishments (8 to 99 employees) and large ones (500 or more employees) include the percentage of establishments that provide the following:

                                                 Small             Large
                                                establishments    establishments
                                                      (%)               (%)
On-site occupational health units:
    With a physician in charge........................0.1               30
    With a staff person in charge.....................1.9               78
One or more medical screening tests
    for all employees.................................6                 54
Preplacement physicals...............................21                 82
Industrial hygiene or safety personnel................2                 59
Industrial hygiene consultants.......................14                 56

OSHA conducted a similar but broader survey of more than 7,000 establishments in 1990 [ORA 1993]. They determined that of 5.3 million establishments with 85 million employees, only 6.3% had a medical surveillance program. The category of smallest business establishments (1 to 19 employees) had the fewest establishments with a medical surveillance program (3.8 %), followed by those with 20 to 99 employees (14.4%), those with 100 to 249 employees (33.4%), and those with 250 or more employees (55.8%).

Strategies for Increasing Occupational Health Services

Recognizing occupational safety and health challenges for small businesses is an important first step toward determining effective strategies for addressing these concerns. In drafting the national public health agenda published in Healthy People 2000: National Health Promotion and Disease Prevention Objectives [DHHS 1990], the U.S. Department of Health and Human Services expressed the need to "establish in 50 States either public health or labor department programs that provide consultation and assistance to small businesses to implement safety and health programs for their employees."

On an international level, the importance of setting safety and health priorities for small businesses has also been recognized. Within the European Union, increasing emphasis is being placed on providing education, training, and additional support to small and medium-sized enterprises for improving the recognition, communication, and prevention of hazards in these establishments [Hunter et al. 1995]. Rather than introducing legislation and enforcing regulations, the European Commission for a Fourth European Union Action Programme on Safety, Hygiene, and Health at Work has focused on information campaigns for small and medium-sized enterprises in a program called Safety Actions for Europe (SAFE) [Rogers 1995].

More than 30 years ago, the Surgeon General suggested that to provide occupational health services, health surveillance, and industrial hygiene and safety support to small business establishments, occupational safety and health programs should be established at the local level in county and city health departments [DHEW 1966]. Despite this recommendation, a 1992—93 survey conducted by the National Association of County and City Health Officials found that only 20% of local health departments provided occupational safety and health services directly; 4% did so by contract, and 76% provided no occupational safety and health services [NACCHO 1995].

Although the report to the Surgeon General focused on providing workers with occupational health services, others have addressed small business establishment owners, operators, and franchise managers [Finch 1977; Frazis et al. 1995; Personick and Windau 1995; Tuskes and Key 1988; Wiatrowski 1994]. In 1984, OSHA established a program to consult with employers about establishing effective occupational safety and health programs [29 CFR^† 1908]. The program is active in all 50 States and emphasizes businesses with the most hazardous operations. Primary attention is given to smaller businesses (i.e., those with fewer than 250 workers). The OSHA Targeted Training Program (recently renamed the Susan Harwood Training Grant Program) provides grants for safety and health training programs in small businesses and for specialized training in ergonomics, scaffolding, and workplace violence [OSHA 1997]. To reduce the burden of regulatory compliance for small businesses, the Small Business Regulatory Enforcement Fairness Act of 1996 requires Federal agencies to help small businesses comply with government regulations and to develop policies that reduce or eliminate fines for small businesses. In implementing the statutes of the Act, the U.S. Department of Labor reported that 88% of small businesses fined by OSHA between March and December 1997 had fines reduced by a total of $110 million [AIHA 1998].

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Small Business Industries