Sometimes safety regulations hurt the poor more than they help them

Sometimes regulations aimed at helping the poor end up hurting them. That doesn’t mean we should eschew regulation, but it does imply reason for caution.

Housing provides one example. The Portland Tribune recently carried an interesting piece on the way that building codes and other regulations keep the price of housing high, and reduce the availability of truly affordable housing for the working poor. Requirements that all bedrooms have a certain number of electrical outlets, for example, or that all bathrooms be disabled-accessible, raise costs not just for builders but for tenants. And in some places, builders who receive public subsidies to build low-cost housing are forced to pay union wages — even when paying slightly lower wages would let them build housing that is more affordable to those in need.

Another long-discussed example is automobile safety. Every advance in automobile safety has reduced fatalities and improved crash survivability, but has also raised the price of automobiles. I’m glad to drive a car that has seatbelts and anti-lock brakes and plenty of airbags. But then, I have a good job and can afford those things. Of course, I can’t afford the level of safety provided by, say, a full-sized Mercedes sedan. But there are plenty of people who can’t even afford a reasonably-safe compact car like mine, and for some of them the difference between affordable and unaffordable lies in a litany of safety features. The problem is even more pronounced in developing countries. A recent story out of India offered speculation that in that country, those who can’t afford cars with government-mandated safety features will have to opt for even less safe, 2-wheeled forms of transportation.

A final example comes from the realm of labour regulations. Here in North America, we have the luxury of a wide range of on-the-job health and safety protections. Other places — including for example Bangladesh — are not so lucky. There, the problem is not that the regulations don’t exist. There are in fact plenty of regulations in Bangladesh. The problem is that Bangladeshis literally cannot afford higher standards. Higher standards would price much of that country out of a job. And so, for that matter, would voluntary efforts by employers to improve safety conditions at their factories.

None of this means that we shouldn’t worry about safety standards when employing or making products for the poor. But every safety feature has a cost, and every cost represents money that could have been spent on something else, some alternative way in which we could have made the world a better place including by making the world’s poor better off.

A colleague of mine, a fellow philosopher from the US, once suggested the following thought experiment: Imagine you owned a garment factory in Bangladesh, a factory that pays 1,000 Bangladeshi women the lowest wage allowable by law to make clothes for Canadians and Americans. Imagine you ended up with a million dollars in profits, and needed to figure out how to spend it. And imagine that you really, really wanted to use the money to do some good for the community in which your factory is located, to make it a better place. What should you do? Spend it on higher wagers? On improving workplace health and safety? “You know what I would do?” asked my colleague. “I would use that million dollars to build another factory, to give another thousand people jobs.”

11 comments so far

  1. Dr Cathal Doyle on

    Hi Chris, your article raises some interesting issues, but I fear it obscures some fundamental points. I agree that there can be issues around certain health and safety standards potentially pushing those who cannot afford to meet them out of the market – I have heard allegations for example that stringent EU standards around supply chain for agricultural products, or even standards imposed by fair-trade coffee buyers on suppliers, can potentially limit the access of small farmers in developing countries to markets, as they simply cannot afford to meet the demands which may necessitate what for them is a significant upfront investment. In such contexts it could be argued that standards have the potential amount to protectionist measures for European based farmers. The appropriate response in those cases is arguably not to lower the standards, but to provide farmers who wish to supply their produce to EU markets with the means to achieve those standards. There are also other scenarios where certain poorly designed standards can lead to inefficiency without adding any benefits, however, that is a case for redesigning such standards rather than dismissing the need for standards at all.

    In the case you address above we are talking about measures which are designed and necessary to prevent loss of life and ensure basic well-being – so very basic and fundamental standards which I would argue should not be traded off on the grounds that more jobs (under similar conditions) could be created or that people would choose a less safe option because of their poverty, as such a “choice” is not a choice at all. Improving safety standards in Bangladesh, even if they imply some increase in the cost of clothing – which some estimate as costing as low as 7 pence / item of clothing (http://fairtradeblog.tumblr.com/post/48857818997/fashion-brands-and-consumers-must-take-responsibility) – will not have a significant impact on the level of consumer demand and in turn would not impact negatively on the job market. In a similar vein, Muhammad Yunus, makes a cogent argument that what is needed in Bangladesh is not more poorly paid and unsafe jobs, but better paid and safer jobs, again pointing at the minimal investment involved in achieving this: http://www.theguardian.com/world/2013/may/12/muhammad-yunus-bangladesh-appeal.

    In summary, while it may not be its intent, the piece could be read as implying that because you are poor and lack choice you will be willing to take risks with your life and well-being, and that those who benefit from you taking those risks (and those who profit from them) should accept this situation, and not attempt to ensure that adequate measures in place to protect your life and well-being.

    An alternative, and I believe ethically sound and pragmatic argument, would be that those sourcing goods should insist on enforcement of safety standards and assist in their realization. These demands could act as a strong impulse for effective oversight and enforcement mechanisms to be established through adequate taxation regimes, rather than encouraging governments to ignore the enforcement of their own laws in a race to the bottom in the context of labour health and safety standards. Such an approach would contribute towards transforming the risk the poor are asked to take in relation to their lives and well-being into a relatively insignificant marginal cost increases for consumers or profit reductions for corporations.

    Finally, while the piece is framed around the objective of “making the poor better off” it does not touch on the underlying issue of income and wealth inequality. Ultimately, what is necessary to address these types of concerns is not lower standards but a much more meaningful redistribution of wealth – the real elephant in the room for me.

    • Chris MacDonald on

      Cathal:

      Thanks for your comments. I agree with much of what you say. But I very clearly didn’t dismiss the need for standards — the right standards are essential. I’m merely pointing out that in some cases, higher standards hurt rather than helping.

      Note that regulations *never* “prevent loss of life and ensure basic well-being”. All they can do is push in *toward* those things — reducing loss of life, and improving well-being. Canadian auto safety standards or British labour standards don’t eliminate deaths. So it’s a matter of choosing how much you want to spend in order to be how safe. I choose to drive a compact car, rather than spending another $10,000 to drive a safer one, because I think the tradeoffs are right. A safer car would mean eliminating my budget for vacations etc. The same trade-offs happen, unavoidably, in the workplace.

      The ability to solve such problems simply by transferring money is pretty limited, both in practical and in ethical terms. We cannot plausibly expect to transfer enough wealth to Bangladesh for them to be able to afford western-style labour standards anytime soon, for example.

      Your final point about inequality is just right. I don’t touch on that (it’s a brief blog post, not a book!) Bangladesh is desperately poor. Redistribution may be warranted, but it’s not at all clear how best to achieve that. Raising safety standards probably isn’t the way.

      Chris

  2. Marvin Edwards on

    The only difference between us and Bangladesh is that our economy has matured to the point where all necessary goods and services are being produced and exchanged daily in the market. The people producing the goods have jobs that pay well, so that they can afford the things produced by others.

    One answer to the thought experiment would be to spend the million dollars on a new factory, but one that produces and installs the safety equipment. Since labor is cheap, the product called “safety” should also be cheap. And their clothes are cheaper because they get a discount at the garment factory. I assume we already have a food market in Bangladesh, where that necessity is also cheaper than anywhere else in the world.

    The money supply would be managed so that when a new product enters the economy, the new wages will be covered.

    Eventually, they will build their own cars, again paying those who produce “safety”, and the money supply would be bumped again (by their equivalent of our Federal Reserve).

    And, eventually, they’re just like us.

  3. Curt Day on

    Chris,
    When we have to trade safety for affordable items or safety for employment, doesn’t that make you question the economic system rather than the country where regulations are too expensive?

    • Chris MacDonald on

      Well, no. ANY economic system — literally every system everywhere, ever — has to trade safety against other things. You and I both do it all the time in our own lives, for that matter. We take all kinds of risks because we think it is *worth* it, either because the activities have value in and of themselves, or because the money we save (e.g., by not driving the safest possible car) is well used for other stuff.

  4. Kumar Ale on

    Chris,
    Having also worked as a labour in construction industry in Hong Kong, I can tell you, we always put safety first.
    1: The cost of accidents and deaths at workplace to both the worker and company is not a petty sum. We had at least two major injuries that led to long term hospitalization in a year. + Work was stopped for a few days for inspection following one of the accident. Everyone suffered, because we worked on daily wages, and the company must have suffered caused by the delay.
    2: We had several contractors, but I always chose one who paid slightly less but hired more workers to do the same amount of job. This put us under less stress giving us time to create a safe platform.
    3: Lots of Nepalese workers have died in Qatar at Olympic construction sites. We wanted to work for a living, not for luxury or an extravagant lifestyle. What is the point of working if we do not get to live?
    “Safety First”

    Kumar

    • Chris MacDonald on

      Kumar:

      Thanks for your comment. It’s worth nothing that “Safety First” doesn’t mean “maximum safety”. No employer, anywhere, *maximizes* safety, and nor would any employee want them to. Maximizing would mean putting additional safety measures in place, at some cost — and the cost is (especially in low-margin industries) going to mean lower wages and/or fewer people hired.

      Chris

      • Marvin Edwards on

        It might be worth remembering that in Bangladesh it wasn’t a matter of wages or general safe working practices (see Cathal’s link to the Guardian article). The 8 story building actually collapsed, killing 1120 people. The supervisor noticed the walls cracking the day before but made everyone work anyway. The building owner was arrested. So we should insist upon some minimum safety standards regardless of the business cost.

      • Chris MacDonald on

        Marvin:

        Sure. Some *minimum* standards are required as a matter of basic human rights. We can likely argue well beyond minimum. My quarrel is with arguing for *maximum.*

        Chris

  5. Emmanuel on

    Hi Chris, Good article. I think our communities have a lot to benefit from safety legislations and safety intiatives. legislations have their place or else we will be back to thesame era of lack of control and the poor sometimes need legislation to cover corporate practices. I actually wrote an article on redefining sustainability in the context of health and safety. it is abit related and creates a context on some of these initiatives http://www.africahrhub.com/health-safety-environment-and-community-topics/


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