Extreme Heat Costs North Carolina Employers and Workers

Workers are protected from all kinds of hazards such as ladder falls and electric shocks. But federally and in most states—including in North Carolina—there are no such standards protecting workers from heat. That needs to be fixed, and fast, especially as climate change makes heat season ever more brutal in the Southeast and across the country.  

The Occupational Safety and Health Administration (OSHA) and a handful of state agencies are working to improve existing heat standards or to develop new ones. Industry groups aren’t exactly happy about that, arguing that heat standards will cost too much. This argument, of course, only considers up-front compliance costs for employers—such as providing drinkable water to employees, allowing people to take cooldown breaks before they faint, and keeping air conditioning units in working order.

Industry’s “too costly” argument leaves out the avoidable health-related costs of heat, such as reduced productivity and emergency room visits. A new report from Milliman, an independent actuarial consulting firm, suggests these costs may be considerable in four heat-exposed industries in North Carolina. In general, the report found moderate to strong links between increases in annual heat exposure and statewide increases in annual workers compensation costs for lost wages. 

Milliman used data from 2011 to 2018 to examine the relationship between the annual number of hours with a heat index above 90°F and all-cause workers compensation claim costs. They considered four heat-exposed industries in North Carolina:

• Agriculture, which includes farm, nursery, and logging workers; 
• Construction and Erection, which includes everyone from road workers and roofers to swimming pool installers; 
• Cartage and Trucking, which includes workers engaged in activities such as mail and package delivery, taxi driving, and ambulance services; and
• Commercial Enterprises, which includes occupations such as hay and grain dealers, gas station attendants, and warehouse workers. 

Correlations between heat and workers compensation costs in each of these four groups were calculated relative to workers in clerical offices, banks, and other indoor settings that likely have air conditioning. 

When the four industry groups were considered together, there was a strong positive correlation between extreme heat and indemnity costs per $100 of payroll (pure premium), and a moderate positive correlation between heat and indemnity costs per claim (severity). (See the blue box above for definitions.) The strength of the relationships between heat and costs in the four groups together appear to be driven by the strength of the results in two industries: Cartage and Trucking, and Commercial Enterprises. The strongest correlation was for wage-adjusted indemnity severity in Cartage and Trucking. Thankfully for some of the workers in that industry, UPS and the Teamsters union have reached a tentative deal that would get air conditioning and other heat protections into much of the company’s vehicle fleet. 

The researchers could not conclude there was a significant relationship between heat and lost wage costs when they considered the Agriculture industry or Construction and Erection industry alone. This might be due in part to small sample sizes. Many farmworkers aren’t covered by workers compensation in North Carolina, and many construction workers may be denied benefits because they’re being illegally misclassified as independent contractors. Furthermore, both industries in North Carolina rely heavily on Hispanic and Latine workers, many of whom are immigrants. Immigrant workers who are entitled to workers compensation may be unaware of their rights. They also may be afraid to apply for fear of retaliation from their employer, or face language or other barriers to filing claims and appealing denials of their claims. 

Some workers in those industries also may opt not to file claims because they can’t afford to. North Carolina has a seven-day waiting period for indemnity benefits and only covers two-thirds of missed wages. That’s an impossible pay gap for people such as farmworkers and construction laborers who are already trying to support themselves and their families on poverty wages. Better to: “Put your head down. Do the work. Don’t complain,” as described in a recent Futuro Investigates and Latino USA podcast about foreign-born farmworkers.

In contrast to the lost wage costs, most of the relationships between extreme heat and medical costs were not statistically significant. This is surprising, given what we know from previous research about the health costs of heat-related illnesses and injuries in the general population. One possibility is that most workers in the four industries can minimize the need for heat-related medical treatment simply by staying home from work to rest and hydrate. Another is that heat-related illnesses may not be reported or recognized as work-related—especially in workplace cultures that value “toughness.” These issues, however, will have to be the subject of further research.

Here's the bottom line: labor agencies in North Carolina and other states shouldn’t be swayed by industry arguments that heat protections will cost too much. Failing to take commonsense protective measures against heat just pushes costs into the future, often onto workers themselves. And, of course, some workers sickened by heat pay the ultimate price: Their lives. Agencies need to develop formal heat standards now, so workers make it through every shift safely and take home their entire, hard-earned paycheck.