Safety Pays in Mining: Technical Guide
Version 2.0
This Technical Guide describes the data and calculations used in Safety Pays in Mining.
Most Common Injuries and Work Activities for 2022
The Mine Safety and Health Administration’s (MSHA’s) accident/injury/illness data file for 2022 was used to provide these statistics. Data were sorted by commodity and then: 1) the most frequent Mine worker activities in which a miner was injured were identified, and 2) Part of body was cross tabulated with Nature of injury to identify specific types of injuries. Injury data can be found on the NIOSH web page for MSHA data file downloads.
What Is the Cost of Occupational Injury?
Costs can be selected by the part of body injured, the nature of injury, cause of injury, or selected combinations of part/nature/and cause. These selections are based off the Workers Compensation Insurance Organizations (WCIO) injury description tables. Only injuries with more than 50 claims were included.
Direct cost ($)
Direct cost in Safety Pays in Mining is the cost of workers' compensation claims (medical expenses and indemnity payments for wage loss, both paid and reserved) for a specific injury type represented as an average (mean) cost and various percentile costs.
The estimated cost of an injury is calculated from data provided by the National Council on Compensation Insurance, Inc. (NCCI) and reflects the various costs of medical only and lost-time workers' compensation insurance claims for policy years 2012-2015.
NCCI manages the nation's largest database of workers compensation insurance information. NCCI analyzes industry trends, prepares workers compensation insurance rate recommendations, determines the cost of proposed legislation, and provides a variety of services and tools to maintain a healthy workers compensation system. NCCI makes no guarantees nor assumes any responsibility for the accuracy of or any results obtained through the use of the NCCI data provided through this tool. NCCI's information and data may not be used or copied in any manner excepted as provided in conjunction with the NIOSH website application, Safety Pays in Mining.
Only non-zero cost injury types (diagnosis) with more than 50 cases were included. A total of 35,967 mining claims were included in the analysis with 21,223 medical only non-fatal injury claims and 14,744 lost time non-fatal injury claims. The medical only claims include injuries that only had medical related payments with no time away from work. Lost time claims include the medical costs and indemnity payments for time away from work. Lost time claims are generally more severe injuries than medical only claims. Mining companies can enter their own injury cost data or can use one of the default values provided in the web application.
All injuries have mean, 25th percentile, 50th percentile (median), 75th percentile, 90th percentile, and 95 percentile direct costs.
When expecting a single claim, the cost is likely going to be around the median. The median provides a good estimate for a single “typical” claim, since half of the claims have higher costs and half of them have lower costs. However, you should consider two factors that may lead you to select a cost higher than the median.
1. The total number of claims you expect, considering all claim types
If you are expecting more than one claim, the chance of very expensive claims increases. As a result, if you are expecting two to ten claims, using the 75th percentile for each claim will lead to a better estimate for total costs. When the number of claims exceeds 15, the 90th percentile for each claim provides a better estimate.
2. Your concern about the risk of having a claim that costs much more than the typical claim
There is substantial risk that claims will cost much more than the ‘typical’ claim, as illustrated by the cost of claims at the 90th percentile and above. Even if you have a single claim, there is a 10% chance that your claim will exceed the 90th percentile cost.
How the direct cost estimates are calculated
The most recent total cost evaluations (medical expenses and indemnity for wage loss, both paid and reserved) for each claim were used.
Indirect cost ($)
Indirect costs usually account for the majority of the true costs of an injury and these costs may be uninsured and unrecoverable. The indirect costs used in Safety Pays in Mining are the costs to the employer beyond those covered by workers' compensation.
Indirect cost estimates can include:
- Any benefits paid to injured workers for absences not covered by workers' compensation.
- The wage costs related to time lost through work stoppage associated with the worker injury.
- The overtime costs of other workers necessitated by the injury.
- Administrative time spent by supervisors, safety personnel, and clerical workers after an injury.
- Training costs for a replacement worker.
- Lost productivity related to work rescheduling, new employee learning curves, and accommodation of injured employees.
- Clean-up, repair, and replacement costs of damaged material, machinery, and property.
- Increased workers’ compensation insurance premiums.
Indirect cost estimates generally do not include:
- The costs of MSHA fines and any associated legal action
- Worker pain and suffering
- Loss of good will from bad publicity
To estimate the indirect costs of injuries, Safety Pays in Mining uses an indirect cost multiplier of 2.12.* The indirect cost is calculated by multiplying the direct cost of an injury and the indirect cost multiplier.
Therefore,
Indirect cost = Direct cost × Indirect cost multiplier
All costs are rounded to the nearest whole dollar.
*Huang, Y. H., Leamon, T. B., Courtney, T. K., DeArmond, S., Chen, P. Y., & Blair, M. F. (2009). Financial Decision Makers' Views on Safety. Professional Safety, 54(4), 36.
A note regarding injury costs
Direct costs are paid by those companies who self-insure. Companies who purchase workers’ compensation insurance would have these direct costs paid by the insurance company. However, the cost impact for mines with workers’ compensation insurance would largely be through increased premiums and eligibility to participate in group policies.
It should not be assumed that all injuries result in workers’ compensation claims. Many injuries are unreported. These injuries can result in costs for employers as well, although there is some evidence that the unreported injuries tend to be less severe. Unreported injuries can still result in reduced productivity, absenteeism, sick days, and group medical costs.**
**Leigh, J. P., Marcin, J. P., & Miller, T. R. (2004). An estimate of the US government’s undercount of nonfatal occupational injuries. Journal of Occupational and Environmental Medicine, 46(1), 10-18.
**Ruser, J. W. (2008). Examining evidence on whether BLS undercounts workplace injuries and illnesses. Monthly Lab. Rev., 131, 20.
**Boden, L. I., & Ozonoff, A. L. (2008). Capture–recapture estimates of nonfatal workplace injuries and illnesses. Annals of Epidemiology, 18(6), 500-506.
Total cost ($)
This is the sum of the direct and indirect costs for a select injury or injuries.
What Is the Impact of the Cost of Occupational Injury on Your Company?
Profit margin measures how much of a company’s sales it keeps as earnings, and here it is calculated as after-tax profit divided by revenue. The profit margin used in Safety Pays in Mining can be either your company's profit margin or a default value. The default value of 11.7% represents the average of after-tax profits per dollar of sales for all mining for years 2018 through Q1 of 2023 excluding 2020. The unusual values from 2020, likely due to the COVID-19 pandemic, were excluded. The average was calculated using data from the U.S. Census Bureau's Quarterly Financial Reports for Manufacturing, Mining, Trade, and Selected Service Industries. The default value gives the best estimate for corporations with NAICS mining codes and assets of $50 million or more.
Annual sales ($)
Enter your company sales total, or Safety Pays in Mining will use the default values shown in the table below. Annual sales were averaged using U.S. Census Bureau Economic Census data for 2017. This is the average yearly sales estimate for the selected commodity based on NAICS codes.
| Commodity | Default Annual Sales |
|---|---|
| All Mining (except oil and gas) | $14,980,000 |
| Coal | $42,610,000 |
| Metal | $101,010,000 |
| Nonmetal | $26,700,000 |
| Stone | $6,150,000 |
| Sand & Gravel | $4,770,000 |
Injury total cost as a percentage of annual sales (%)
Total cost ÷ Annual sales
Additional sales needed to pay for injury total cost ($)
Total cost ÷ Profit margin
How Could Your Company Spend Its Savings from Preventing Injury?
While a mining company might choose any number of ways to spend or reinvest savings from injury prevention, mines may decide to add to their workforce or better outfit existing workers. Using the program, explore your options and their associated costs.
How many additional employees could your company employ for one year?
Total cost ÷ Total compensation × Average hours worked per year
This provides an estimate of the number of employees that your company could have hired for one year if the injury was prevented.
Hourly wage data was retrieved from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics, National Industry Specific Occupational Employment and Wage Estimates, which is released each May. The default hourly wages were calculated from the five-year (2018 to 2022) average hourly wages for mining (NAICS code 212xxx, all occupations, mean hourly wage) and are shown in the table below.
| Commodity | Default Hourly Wage |
|---|---|
| All Mining (except oil and gas) | $27 |
| Coal | $32 |
| Metal | $33 |
| Nonmetal | $25 |
| Stone | $25 |
| Sand & Gravel | $25 |
The total cost to a company for employee compensation includes both the wage amount and any additional benefits they provide. Employee benefits might include Social Security, insurance, retirement benefits, paid leave, and overtime pay. The average benefit amount for mining industries (calculated using 2018 to 2022 data) was one-third of the total compensation figure. Therefore, total compensation is equal to hourly wage plus another 50 percent of the wage value in employer-paid benefits. This data was retrieved from the BLS National Compensation Survey.
Data on the average weekly hours worked was retrieved from the BLS Current Employment Statistics program. The average hours worked per week for the mining industry (for the years 2018 to 2022, excluding oil and gas) was 45.2 hours per week. By calculating 50 working weeks per year, the average employee worked 2,260 hours per year.
How many employees could your company provide with a hearing loss prevention program for one year?
Total cost ÷ Yearly cost of a hearing loss prevention program per employee
The default $300 per person annual estimate for a hearing loss prevention program is based on estimates by Sayler, et al. (2017) and Rabinowitz, et al. (2018)***.
*** Sayler, S. K., Rabinowitz, P. M., Cantley, L. F., Galusha, D., & Neitzel, R. L. (2017). Costs and effectiveness of hearing conservation programs at 14 US metal manufacturing facilities. International Journal of Audiology, 57(sup1), S3–S11. https://doi.org/10.1080/14992027.2017.1410237
*** Rabinowitz, P., Cantley, L. F., Galusha, D., Trufan, S., Swersey, A., Dixon-Ernst, C., Ramirez, V., & Neitzel, R. (2018). Assessing hearing conservation program effectiveness. Journal of Occupational & Environmental Medicine, 60(1), 29–35. https://doi.org/10.1097/jom.0000000000001125
How many employees could your company provide with MSHA-suitable safety boots?
Total cost ÷ Cost of a pair of MSHA-suitable safety boots
The default price of $175 for MSHA-suitable safety boots was averaged by NIOSH using 2023 prices from numerous occupational safety and health equipment suppliers.
How many employees could your company provide with MSHA-suitable hard hats?
Total cost ÷ Cost of an MSHA-suitable hard hat
The default price of $60 for MSHA-suitable hard hats was averaged by NIOSH using 2023 prices from numerous occupational safety and health equipment suppliers.