COMMENTS OF THE AMERICAN FEDERATION OF LABOR And Congress OF INDUSTRIAL ORGANIZATIONS ON THE STATEMENT BY THE COUNCIL ON WAGE AND PRICE STABILITY ON THE PROPOSED OSHA STANDARD ON COTTON DUST, JULY 12, 1977 The statement presented by the Council on Wage and Price Stability dealing with the proposed OSHA standard on cotton dust should receive no serious consideration in the record of the rulemaking, by reason of incompetence. Created by the Act of 1974, the Council on Wage and Price Stability is directed to monitor the inflationary impact on the nation's economy created by both private and public sector activities, and to report its findings.

In carrying out its responsibilities under Section 3(a) of the 1974 Act, the Council in evaluating public sector activities has the responsibility, among other things to ". . . review and appraise the various programs, policies, and activities of the departments and agencies of the United States for the purpose of determining the extent to which these programs are contributing to inflation . . .”

Under Executive Orders 11821 and 11049, and OMB Circular A-107, each federal agency is required to provide for each major rulemaking: an analysis of principal and, if possible, secondary costs, or other inflationary effects of the rulemaking; a benefit to cost comparison, and a review of alternatives to the proposed rulemaking as to its costs and benefits-comparing them to those of the proposed rulemaking.

In addressing its comments on that part of the Inflationary Impact Statement developed by the Occupational Safety and Health Administration estimating costs of compliance the Council writes: "The Council is unable to judge the reasonableness of these estimates since it lacks the necessary technological and engineering expertise."

Since the Council by its own admission cannot judge the validity of the OSHA Inflationary Impact Statement on costs to management for compliance with the cotton dust standard, a decent regard for its own reputation, such as it is, should have prompted the Council not to file any statement whatsoever.

Instead, the Council on Wage and Price Stability (COWPS) makes matters worse by many useless and wrong-headed utterances on the OSHA Inflationary Impact Statement which it admits it cannot adequately judge. The COWPS statement sums up the estimated benefits accruing from the standard and dismissed by this scornful conclusion: "The reduction in byssinosis prevalence appears to be the only significant benefit of a cotton dust standard." (P. 13) What else? Shine your shoes? Pay off the National Debt?

COWPS's lack of understanding of workmens' compensation as an adjunct to and as affected by the enforcement of an occupational safety and health hazard, shines through its treatment of this subject with the same lustre as its costs and benefits.

COWPS challenges OSHA's comments on inclusion of reduced workmens' compensation as a benefit created by reduced prevalence of byssinosis. It states (P. 14) “Such inclusion is a common mistake in this type of analysis . . ." Such payments are simply transfers from one group to another while the real benefit is the decline of byssinosis prevalence."

Nobody would deny that reducing incidence of byssinosis is the primary aim of the standard and its most important accomplishment. However, the error lies in the COWPS statement that reduction of workmens' compensation payments is not an additional benefit stemming from an effective occupational health standard.

To the extent that employer's premiums based on experience rating are reduced-and this is particularly true of self-insurers-the savings are retained by the firm, even if the workmens' compensation fund of a state pays out fewer workmens' compensation awards.

Further, reduction of absenteeism from occupational illnesses or injuries, is a money gain to management in terms of more stabilized production.

Finally, the gains to the uninterrupted earning ability of workers protected from occupational injury or illness by the OSHA standard is also capable of being computed quantitively as a benefit.

COWPS demonstrates its lack of comprehension of the OSHA Act itself in the area of standards dealing with toxic substances (Section 6(b) (5).

It erroneously assumes that OSHA derives its standards primarily on economic considerations, instead of the overriding statutory priority of worker health

and safety. From this faulty premise COWPS leaps to the equally faulty conclusion that since OSHA places "some limit to the costs industry can bear before its existence is threatened and OSHA stops at that limit (or some earlier one), then it is a recognized scientific principle that more employees can be protected by a standard based on cost-effectiveness principles than one not based on costeffectiveness grounds." (P. 8)

If there is any "recognized scientific principle" in relating costs to benefits in the field of occupational safety and health standards, it is that there is none. The difficulty, which COWPS is apparently unable or unwilling to comprehend is that nobody has bothered to calculate, for example, the costs to families losing their breadwinners by reason of occupational illness, or the costs to a worker of spending the remainder of his years on a breathing machine.

Thus, OSHA has testified in the cotton dust rulemaking proceedings that the substantive provisions of the standard to protect the worker against the hazard will not be diluted because of any real or alleged considerations of economic or inflationary impact. In establishing the effective date for compliance, however, economics would be considered in the standards implementation-for example, time periods over which the standard is to be achieved. In other words, the criteria is not what industry says it can afford, but a standard set at the lowest level feasible to protect the safety and health of workers.

The culminating absurdity of the COWPS cotton dust statement is its proposal to substitute a system of levying fines on employers for each new case of byssinosis discovered and reported, with a special OSHA flying squad deployed to monitor employees' health, rather than workplace conditions in 7,000 workplaces with 300,000 workers which have received 147 OSHA inspections over fiscal years 1973-75 and the first three quarters of 1976.

COWPS lacks any qualified health expertise and is not mandated by the 1974 Act to comment on health aspects per se of a standard. Undeterred by either deficiency, it proceeds to do so gratuitously. In fact, COWPS rests the major part of its alternative proposal to the OSHA cotton dust standard on its own grotesque interpretation of the heart of the dilemma respecting cotton dust. "The problem (so reads he COWPS' comments) is not that there is too much cotton dust; the problem is that there is too much byssinosis." This is like saying that the problem is not too many anopheles mosquitoes; the problem is that there is too much malaria.

The findings of 24 studies covering cotton workers in 5 western European countries and the United States, and summarized in the OSHA standard publication, have all revealed consistent correlation between exposure to cotton dust and byssinosis. It could be summed up by the conclusion of a 1977 study of chronic respiratory disease in U. S. cotton textile workers by the most eminent authority on the subject, Dr. Arend Bouhuys, that:

"... loss of lung function in textile workers is associated with, and most likely caused by, their exposure to cotton dust at work . . . Our findings indicate that cotton dust exposure in textile mills is an important cause of lung function loss, or respiratory symptoms, and of disability."

The Bouhuys' study also concluded that lung function loss "occurs among those industry jobs and not among people in other jobs in the same mills."

Finally, a NIOSH review of a study of nearly 3,000 textile workers, plus more than 900 control subjects, conducted by the Duke University Medical Center and the North Carolina State Board of Health found that "Dose-response curves for the association between dust level and byssinosis prevalence and lung function loss are strikingly linear." This means that the higher the dust level, the higher the frequency of byssinosis, of lung function loss, respiratory symptoms and disability.

Once it has made the remarkable discovery that the problem is not cotton dust but byssinosis, COWPS proceeds to add a simple, money-saving enforcement alternative proposal which it was apparently able in a short time to develop as a replacement to the science of industrial hygiene as the major means of protecting workers from occupational health hazards.

COWPS proposes that the cotton dust standard ". . . could simply specify the required results of a medical surveillance system. Such a system would be workable because the early stages of byssinosis are detectable and reversible. For every new case of byssinosis discovered, the firm could be fined according to some reasonable standard based on the 'gravity of the violation'." (P. 31)

Assurance is given by COWPS that such a system of fines would stimulate employers to undertake innovation, technology and research aimed toward re

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ducing byssinosis-far better, COWPS airily asserts, than the "unrealistic standard" proposed by OSHA.

A more wonderful opportunity for the employer to avoid abating the cotton dust hazard in his workplace would hardly be found. Reported byssinosis cases would magically fade from view. Why? Because the employer would require universal wearing of respirators and fire every employee caught without one, or the worker could quit if he didn't like it. Then, when employees given regular medical exams were found with byssinosis, they would be quickly dismissed. There is nothing new about the so-called "economic disincentive" on which the COWPS enforcement alternative is based. It was powerfully championed in the 1960's as a means of abating water pollution by levying fines on industries, based on the amount of pollution they dumped into the water. The West German system of fining such polluters was cited as a great innovation, until experience demonstrated that this procedure was simply a license to pollute, and the protests of The Netherlands over upstream pollution flowing into the Rhine Delta continued as unabated as the pollution of the river.

The COWPS' proposal is simply a license to continue polluting workplaces where employees are exposed to cotton dust. It is incompetent, unworkable and a faint hearted denial of the rights of workers defined by the OSHA Act. As speaking in effect for the Executive, it is difficult to conceive of why this denial of human rights at home is accompanied by espousal of expanded human rights abroad voiced by the President and his policy spokesmen. Proposals such as this have a habit of spreading like water on a blotter. It would be a most deadly blow to this Act and the hopes and expectations of workers for a safe and healthy workplace if the COWPS cotton dust enforcement policy were to be proposed by this Administration to cover all safety and health standards.

STATEMENT OF LOUIS G. PELOUBET, CONTROLLER, UNION CARBIDE CORP., REPRESENTING THE BUSINESS ROUNDTABLE

The CHAIRMAN. Mr. Peloubet, we are honored to have you. You are the controller of Union Carbide and you represent the Business Roundtable, right?

Mr. PELOUBET. Right.

The CHAIRMAN. Go right ahead.

Mr. PELOUBET. Mr. Chairman, members of the committee, I am Louis G. Peloubet, controller of Union Carbide Corp. Union Carbide is a member of the Business Roundtable, an organization of some 180 industrial, transportation, financial, and retailing corporations which are vitally concerned with the subject of inflation and economic stabilization. William S. Sneath, the chairman of the board of Union Carbide, is chairman of the Business Roundtable's task force on wage and price controls. Mr. Sneath would be present today except for other commitments which make it impossible.

We appreciate the opportunity to express our views on the President's anti-inflation program and the views of the Business Roundtable on issues involving wage and price controls, and the extension of the life of the Council on Wage and Price Stability.

We believe the program aimed at controlling and reducing inflation, which President Carter announced on April 15, is generally constructive and useful. We believe that the major elements of his program will, if they are carried out with skill and dedication, be successful in moderating the underlying causes of inflation and that they will achieve the goals which the President seeks.

The business community is as anxious to control inflation as the President and the members of this committee. Just as individual households have been seriously disdadvantaged by inflation, so too, the business sector has faced financial erosion.

In the last few years corporate profits have been buffeted by both the recession and inflation. In 1974 and 1975, aftertax earnings of nonfinancial corporations were $59.7 billion and $55.8 billion, respectively. Earnings did rebound in 1976 to $72.2 billion. However, when the earnings retained by corporations are adjusted for the effects of inflation on depreciation, inventories and loss of general purchasing power, the 1974 and 1975 retained earning become -$13.5 billion and -$900 million, respectively, while the 1976 retained earnings reach only $7 billion.

The 1974, 1975, and 1976 retained earnings demonstrate that business has been unable to even maintain its capital base. The increase in 1976 still left earnings at less than one-third of the value that was common during the 1960's.

The President's program may not be dramatic. It is unlikely to achieve the regular headlines that can accompany dramatic White House confrontations over price increases or wage demands. But the battle against inflation is essentially a day-by-day, problem-by-problem fight against underlying causes which are neither widely understood nor acknowledged."

WAGE AND PRICE CONTROLS AND PRENOTIFICATION

We believe that several features of the President's program deserve special mention. Members of the Business Roundtable are heartened by the absence of any reference to wage and price controls and the absence of any mention of prenotification, whether voluntary or mandatory, of major price or wage increases.

Wage and price controls-and that includes prenotification-have never been effective against inflation. They raise false hopes in the public and pervasive fears in business and labor-a treacherous foundation for the consumer-labor-business confidence that is needed now and for the years to come. In actuality they fuel, rather than dampen, inflation. The create an artificial nonmarket incentive for higher wages and prices. They all too often lead policymakers into ignoring the real causes of inflation and into fiscal and monetary policies that accelerate inflation. If these policies could work, they would have worked somewhere, sometime. But they have not. There is general agreement on this point among economists and administrators associated with the programs of the 1960's and 1970's. Such policies were also tried and failed in 11 major Western European countries in the 1960's. All collapsed, usually with a burst of large wage increases.

For these reasons, we believe the President was wise in not requesting authority for any form of wage and price controls.

BUSINESS INVESTMENT INCENTIVES

Another feature of the President's program which we find particularly encouraging is his indication, echoed in recent statements by administration officials, that effective incentives to increase investment in new production capacity would be recommended as part of his program of comprehensive tax reform. Tax programs, like the investment tax credit, and increased capital recovery allowances, are some

of the Nations' most powerful weapons in stimulating economic growth and stilling inflation. New productive capacity creates new jobs. It increases productivity, and that is a direct counter to the threat of inflation. It improves America's ability to compete for world markets. It benefits the consumer. And past evidence indicates that it even benefits the coffers of the Treasury by increasing national income and economic activity.

The President's proposal is all the more important in the light of his energy message. Effective energy conservation will require extensive new investment by industry in machines and processes which are less energy intensive. Major coal burning boilers are two to four times as costly to build and install as are oil or natural gas boilers of the same size. Environmental control programs also require extensive capital investments-investments which can be inflationary in an economic sense, however necessary they are for other reasons.

We also believe that the President's plan to require full consideration of the economic cost of major Government regulations, through a more effective analysis of their economic impact, is highly commendable. By their nature, Government policy decisions are not subject to the cost-benefit calculus of the marketplace. Properly done, economic impact statements should provide a second-best approximation of market signals and would contribute to directing Government policies toward the needs of society and away from stimulating inflation.

President Carter has also asked the president of the AFL-CIO and the chairman of the General Electric Co. to help coordinate a cooperative collaboration among business, labor, and the Government aimed at the broad policy issues essential to improving the economy, creating of jobs, and reducing inflation. Certainly, the people of Union Carbide are prepared to join in this effort in any way we can. I am confident that all the members of the Business Roundtable will fully cooperate. We regard both of these efforts-economic impact analysis and joint business-labor-Government discussions-as being of major importance because they may focus greater attention on some of the fundamental causes of inflation. We are beginning to see more clearly that key Federal decisions, in areas like food and agriculture policy, energy, and health care, are primary and direct contributors to increases in the cost of living, increases in prices, wages and wage demands. Let me offer an example. Union Carbide's forecasts indicate that one aspect of the President's energy program-the imposition of the end-use consumption tax which would ultimately raise the domestic price of oil $3 per barrel above the world price level-on petrochemical feedstocks and process fuels would produce a 20-percent increase in the chemical price index by 1985. In our view this is one instance of an inflation impact that needs to be identified, understood, and taken into account by Federal decisionmakers. It illustrates the kind of contribution which we believe these efforts, aided by the CWPS, can usefully make in the fight against inflation.

COUNCIL ON WAGE AND PRICE STABILITY

Now let me turn to the questions with respect to the Council on Wage and Price Stability and the provisions of S. 1542.