CPSIA – Happy Birthday CPSIA!!!

Can’t let a wonderful occasion like this go unnoticed – HAPPY BIRTHDAY CPSIA! Two years ago today, President Bush signed the Consumer Product Safety Improvement Act into law, giving vast new powers to CPSC and promising wondrous new levels of “safety” for children in our country.

And how much safer we have become! In my post “Numbers Don’t Lie“, I abstracted the injury statistics from CPSC children’s product recalls over the prior 11 years. I know from “someone who should know” that the CPSC does not tabulate injury statistics like this – so I am your only source even on the second birthday of the CPSIA. No matter, the spreadsheet indicates that there were 242 recalls of children’s products between August 14, 2008 and the end of my study, April 21, 2010. By contrast, there were a total of 657 recalls of children’s products between August 14, 2008 and the randomly-selected end of my study, March 5, 1999. The injuries associated with lead that proceeded the CPSIA were one death and two asserted injuries, and after the CPSIA – one asserted lead injury (in two years). [See "Numbers Don't Lie (Update No. 1)".] What an achievement! It’s so, soooo clear we need this tough new law. . . .

By the way, I don’t mean to be too “science-y”, but a reduction in lead injuries from one death and two asserted injuries in nine years to one asserted injury in two years is simply not a statistically significant reduction. And we must consider additionally that ALL of the injuries, before and after the CPSIA, were ASSERTED BUT NOT VERIFIED. So there may be ZERO recorded actual injuries – we just don’t know. This makes our health improvement objectives even fuzzier.

And the cost of the CPSIA “final solution”? Well, I have calculated that, using the HTA’s estimate of $5.625 billion in annual CPSIA compliance costs (which I believe is low and in any event was calculated before the CPSIA showed its hand on testing frequency – see below), the 11-year cost of compliance is a mere $61.9 Billion. Using EPA metrics for the economic value of a human life and one lost IQ point, and giving full credit to each of the three asserted but unverified lead injuries, I have calculated the cost of the injuries to be $6.1 million over 11 years. That’s pretty symmetrical, don’t you think? $62 billion in costs to save $6.1 million.

Spend $10,000 to save a buck. That sums up this era in a single sentence.

Oh, but it gets even better. In case you, or pick any regulator, are too dense to understand the implications of those numbers for the future prospects of the children’s product market, the CPSC has recently published a rule for comment on testing frequency and “reasonable testing programs”. This rule was due on November 14, 2009 (hence the “15 Month Rule”) but was delayed because the CPSC understood the rule’s potential to literally kill all small businesses in this market. [That would include our business, btw.] So they held a two-day workshop in December 2009 to hear ideas and industry concerns and then spent months crafting the rule. This rule has been in the works for two years now. You have to figure they’re serious.

The CPSC was kind enough to illustrate the costs our business can expect under their sparkling new rule. So I broke out my trusty calculator (again – too math-y? too science-y?) and determined that they intend for us to spend a mere $10,000 per item per year in testing. This includes destroying 54 samples of each item in the process of testing. Anyhow, think of how many products you make – and multiply by $10,000. That’s your annual testing bill now.

Drum roll, please . . . our bill will be a mere $15 million per year! Pretty exciting to get off so easy. No doubt our bankruptcy will make American kids safer. Of course, I am pretty sure it won’t make them any smarter – our educational products will cease to exist. Then, of course, their ignorance of math and science might qualify to run the CPSC. There’s always a bright side to tragedy and catastrophe, I suppose.

It is worth a passing note that this is my 490th blogpost on the CPSIA and its terrible effects. I have submitted comments letters by the bushel basket, testified numerous times at the CPSC (often at their request), testified in front of Congress, been on national TV and radio, wrote Op-Eds and been featured innumerable times in various publications, held a rally on Capitol Hill, met with Commissioners, Congressional staffers and members of Congress, and so on. The CPSC’s actions are not being taken in ignorance. They are being done in the face of reason. This is not partisanism – this is “know nothing-ism”.

So Happy Happy Birthday, CPSIA! Your work is not done, unfortunately. Our company is still breathing.

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CPSIA – Happy Birthday CPSIA!!!

CPSIA – Numbers Don’t Lie

One of my greatest frustrations with the CPSIA debate is its highly emotional tenor. It seems to me that the debate trades more in passion than in analysis. Since the big issue is safety, namely incidents of injury and death among children from consumer products, the resolution should depend on statistics and science – but the discussion NEVER goes there. Solutions based on a pure heart and good intentions won’t solve a numbers problem. Many people involved in this law have little background in science. It is also clear that some people are playing fast and loose with data. That’s a problem.

Many people use data relating to lead and childhood injuries that play on basic human emotions. After all, who would want another child to be injured, much less killed? That truism is justification for the CPSIA as “necessity”, notwithstanding possible “unintended consequences”. Even the mere mention of cost and effectiveness discredits opponents of the law.

A convenient example of this phenomenon is Henry Waxman’s opening statement at last week’s hearing. He called out three separate incidents of injury to kids: “Just over four years ago, a little boy named Jarnell Brown died of lead poisoning when he swallowed a metal charm that came with a pair of kids’ shoes. A year later, in 2007, two children became comatose and had to be hospitalized because of a children’s toy that turned out to have a toxic drug in it. That same year, millions of cribs were recalled for a simple defect that had caused multiple infant deaths.“

These three groupings of injuries are unrelated and derive from radically different hazards. Jarnell Brown swallowed a jewelry charm made of lead. The two kids were affected by AquaDots, an unprecedented, one-of-a-kind chemical toy defect. Crib injuries are obviously of a different nature and involve a separately regulated category of child (infants) subject to unique risks. Despite the wildly disparate data, he concludes: “The bottom line was clear: our system for keeping children safe was broken.“

While I think that the Cubs are pretty mediocre and so are the Bulls, I don’t think Chicago is broken. This is apples-and-oranges. So goes the CPSIA debate.

Let me be clear, I am not saying Waxman INTENDED to mislead with his remarks – no, in fact this is how most people have treated data in support of the law. Few if anyone uses actual balanced injury or hazard data. Even the fear mongers’ standard of “there’s no safe level for lead” is almost obviously untrue but it strikes an emotional chord and is, at one level, hard to refute. Clearly, sprinkling lead on your bowl of cereal in the morning isn’t recommended. That said, it is equally clear that lead is very infrequently deadly and since we all consume lead daily by breathing, eating and drinking, it must be tolerable (at a minimum) at certain dosage levels. Thus there has to be a “safe” level for lead – or else we’d all be as dumb as a box of rocks. I consider to be a simple observation.

So what’s the truth? Data on recalls and the hazards uncovered by the CPSC is frankly hard to come by. I went through the exercise of preparing a 25-month analysis of lead-in-paint back in February 2009 and published my data. The data were great but frankly, I needed more. So I set out to prepare a much broader survey of recall data so we could really talk numbers. I have attached a data analysis of the 899 CPSC recalls of Children’s Products between March 5, 1999 and April 15, 2010. This is slightly over 11 years of data and while it is a somewhat arbitrary period, I consider it statistically significant and useful to reason from.

A few caveats: I prepared this data with the assistance of several people and spent quite a bit of time cleaning it up. It is good data, but almost certainly inaccurate in some respect or respects. This is not intentional and I would certainly welcome notice of any errors you may find. The source of the data is posted recall notices on the CPSC website. The categorization of products and hazards might be considered quirky and could be misleading if you do not look at the details. However, overall, this is the best data I know of for an analysis of injuries and deaths from Children’s Products.

The rationale behind this analysis is that official CPSC recall data over an 11-year period reflects the policies, judgment and decisions of the agency and is revealing about what the agency thought was and was not important during that period of time.

The spreadsheet has three worksheets. You have complete access to ALL of my data. I have incorporated hyperlinks to EVERY recall in the spreadsheet, so you can dig deeper if you are so inclined. The first sheet, entitled “Total by Category” is sorted by Product Category. The second sheet, entitled “Total by Year” sorts the same data by Recall Date. The final sheet, entitled “Summary by Product” includes FOUR ANALYSES pulled from the first two sheets. There is recall statistical data by (i) product category by hazard, (ii) hazard by product category, (iii) year by hazard, and (iv) hazard by year. Four slices of the data, never before seen.

Some interesting facts:

• Grand Total Recalls: 899
• Grand Total Children’s Products Recalled: 3,128
• Grand Total Units Recalled: 308,697,297 (remember, this is over 11 years)
• Grand Total Injuries to Kids from Recalled Products: 2,381
• Grand Total Deaths from Recalled Products: 35

Okay, let’s unpack this data. First of all, this is inclusive of ALL Children’s Products. That would include the recall of 150 million units of vending machine jewelry in 2004. It also includes all crib, bassinet, play pen and stroller recalls. Even common toy box recalls are included. You are welcome to react emotionally to these gross numbers, but please remember, this is a mishmash of 11 years of data at the macro level. We need to probe more deeply for real insights.

For perspective on these data, please consider CDC data on childhood mortality: the current mortality rate for kids age 1-4 is 4,631 per annum (leading causes of death: unintentional injuries and congenital malformations) and for kids age 5-14 is 6,149 per annum (leading causes of death: unintentional injuries and cancer). I believe unintentional injuries are principally car accidents. Anyhow, this implies an 11-year mortality rate of 118,580. Notably the annual mortality rates exclude kids 0-1. I don’t have those numbers and haven’t bothered to look for them. You get the picture. The CPSC has accounted for 35 deaths in the same period.

It bears noting that these statistics suggest that our markets are in fact rather safe. Injuries to children and deaths associated with Children’s Products, while unacceptably high, are just 0.03% of the overall mortality statistics. We can and should continue to focus on improvements, but we should also have some perspective on our challenge. Polishing the apple is different than crisis management.

To further clarify the injury/death problem from lead, let’s look at the breakout of injuries and deaths by hazard. Unlike my February 2009 analysis, this data shows all hazards and all recalls in the 11-year period. Please note that some of these hazards are very closely associated with one or two product categories. Lead is closely associated with jewelry. Lead-in-paint is largely associated with toys but touches almost all product categories. Falling and entrapment is a largely infant category. Strangulation is mainly clothing (certainly of late, with all the drawstring recalls) and infant products. With this data, you can see what comes from where.

Injuries and deaths from Children’s Products in this period break down as follows:

• Brake Failure 0, 0
• Burns 74, 0
• Cadmium 0, 0
• Choking 150, 3
• Collision 2, 0
• Falling/entrapment 1803, 17
• Fire hazard 4, 0
• Illness 0, 0
• Impalement 0, 0
• Laceration 284, 0
• Lead 3, 1 [The only death from lead in 11 years is Jarnell Brown, mentioned above.]
• Lead-in-paint 1, 0 [That's right, ONE INJURY in 11 years, no deaths.]
• Magnets 3, 0
• Strangulation 26, 7
• Suffocation 29, 7

A quick question: if you were running the CPSC and had access to this data, what would you focus on? Interestingly, if you look at lead and lead-in-paint recalls in the early years of this data, you will see something that seems somehow quaint now, namely very few recalls and in small quantities for lead and lead-in-paint.

• 1999: 0 recalls [partial year]
• 2000: 0 recalls
• 2001: 5 recalls
• 2002: 3 recalls
• 2003: 4 recalls
• 2004: 6 recalls
• 2005: 10 recalls
• 2006: 16 recalls
• 2007: 98 recalls
• 2008: 65 recalls
• 2009: 29 recalls
• 2010: 11 recalls [partial year]

Was the agency napping . . . or was the CPSC behaving rationally? What were they doing when they could have been catching lead-in-paint violations? Check my analysis: they were focusing on choking, falling/entrapment and laceration, presumably because these hazards were causing BY FAR the most injuries and deaths. Lead and lead-in-paint produced almost no injuries or deaths for 11 years. It is also worth noting in 2007, that under withering political and populist pressure, the agency changed its recall policy on lead and lead-in-paint to strict liability (every violation was recalled). In the early part of the decade, many lead violations were dealt with privately by the agency, making statistical comparisons impossible (and giving the incorrect impression of laxity by the agency at that time).

The data is also useful to give perspective on the effectiveness of the CPSIA’s application of regulatory and corporate resources to new safety activities. In conjunction with last week’s hearing, the HTA filed an economic analysis prepared by an independent safety consultant that projects aggregate annual CPSIA testing costs of $5.6 billion. Personally, I think that number is very low for the all-in economic impact from this law, but for the sake of argument, let’s use it as THE number for regulatory compliance. So we are all going to spend $5.6 billion ANNUALLY to comply with this law regulating lead and phthalates. Over an 11-year period, ignoring inflation, our costs will be $61.6 billion. This expenditure is presumably designed to reduce the incidents of lead poisoning and phthalates. We have accounted for four injuries and one death. That’s what our $61.6 billion is aimed at.

Consider this: if we really want to keep kids safe, we should be somewhat indifferent to HOW they are injured – we just want to protect them from harm. Thus, a bump on the head, a broken arm and lead poisoning are all the same, equally bad. So what if we spent at the same rate on ALL injuries and death identified in CPSC recalls, at the projected CPSIA spend rate? Our cost would be $61.6 billion / 5 (11-year lead and lead-in-paint injuries and deaths) X 2416 (total injuries and deaths in the same period). Sitting down? The total compliance cost we would bear over 11 years would be $29.8 trillion ($2.7 trillion per year). The current national debt is $12.95 trillion. Please also consider that our annual safety expenditures would exceed the expected receipts of the federal government this year ($2.4 trillion). If the federal government only funded us, the government would still run a $300 billion deficit this year.

Call me a worrywart, but I think that kind of safety spending is a bit over the top.

The debate over safety has dramatic economic implications. Safety is a principal concern of the industries serving children’s markets, of course, but if we are crippled economically we won’t be around to make safe products. There is a sensible balance that can be achieved. The data suggests that the CPSC actually knows what it’s doing (at least it did before it became a political football) and can properly allocate its resources.

If the CPSC were entitled to focus on real safety risks (based on data), not the phobias of politicians and consumer groups, and if they could be convinced to stop trying to run our businesses for us, I think we could reduce and refocus safety spending and become much more effective in improving safety.

Numbers don’t lie. It’s time to reassess and amend the CPSIA. And if the Dems won’t let us do that, it’s time to reassess them and Congress as a whole.

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CPSIA – Numbers Don’t Lie