Poor Health Costs Staggering Due to Absenteeism and Reduced Productivity

A study from The Integrated Benefits Institute (IBI), a non-profit research firm, showed thatpoor health is costing the economy almost $600 billion per year, 40 percent of which (about $227 billion) is due to lost productivity. The lost productivity springs either from illness-induced absenteeism or decreased production performed by sick employees. The remaining costs come from worker’s compensation and wage replacement due to illness (about $117 billion), and pharmacy-related costs ($232 billion).

The argument for employer-sponsored wellness programs has also never been stronger. Cornell University Researcher Sean Nicholson says, “The literature shows that employers can save an average of $3 for every $1 they invest in improving their workers’ health.” And other research has put saving as high as nearly $6 for each investment dollar. Savings is realized due to the general improvement in employee health and the reduced number and extent of medicals claims initiated by ill workers.

The American Journal of Health Promotion has shown that employers with sufficient wellness programs see an average 27 percent reduction in sick-leave absenteeism, 26 percent reduction in health costs, and a 32 percent reduction in worker’s comp and disability claims. The new data presenting the true economic loss due to ill employees continues to solidify the argument that corporate investment in employee health not only improves productivity but avoids a potential loss of many thousands to millions of dollars per year.