Absenteeism costs employers billions of dollars every year
Wednesday, September 16, 2020
Absenteeism is a pervasive phenomenon impacting workplaces globally. In the United States, employers — aggregately — rack up billions of dollars in absenteeism costs per year.
Before we nail down the numbers, let’s review the concept of absenteeism.
What is absenteeism?
According to USLegal.com, “Absenteeism is the term generally used to refer to unscheduled employee absence from the workplace.”
In other words, absenteeism is when an employee fails to report to work as scheduled.
Absenteeism becomes excessive when an employee repeatedly does not report to work as scheduled. What’s “excessive” depends on the company’s policy. For instance, an employer may define excessive absenteeism as the employee having 3 or more unscheduled absences in a 90-day period.
Absenteeism comes in two forms:
Innocent — meaning the employee has a genuine reason for not going to work, such as because they (or a family member) took ill, or their babysitter did not show up as planned.
Culpable — meaning the employee does not have a genuine reason for not going to work, such as they’re pretending to be sick or simply want to stay home.
What causes absenteeism?
Among the numerous reasons are:
- Medical illness
- Family issues
- Marital conflict
- Alcohol or drug abuse
- Mental illness
- Child care issues
- Caregiver responsibilities
- Problems with boss or coworkers
- Excessive overtime
- Job hunting (e.g., attending interviews)
- Lack of engagement with work
- Poor work ethic
- Entitled mentality
- Transportation setbacks
How much money does absenteeism cost employers?
The precise dollar figure varies by study. That said, here’s a roundup of relevant statistics:
- Productivity losses stemming from absenteeism cost U.S. employers $225.8 billion each year, or $1,685 per employee: CDC Foundation.
- High blood pressure, diabetes, smoking, physical inactivity, and obesity collectively cost U.S. employers $36.4 billion annually, due to employees missing days of work: CDC, Workplace Health Promotion.
- Employees suffering from depression cost U.S. employers $44 billion per year in lost productive time (including work absences): PubMed.
- Illness-related lost productivity costs U.S. employers $530 billion annually. This includes wages and benefits for absences, cost of impaired performance caused by chronic health conditions, medical and pharmacy expenses, workers’ compensation, and opportunity costs for hiring replacement workers: Integrated Benefits Institute.
- A shift worker in the U.S. costs an employer around $2,660 in excessive absenteeism per year. That’s approximately $1.3 million annually for a business with 500 hourly shift workers: Circadian Technologies.
Moreover, the COVID-19 pandemic has exacerbated absenteeism in certain occupational groups — such as production, healthcare support, and personal care services. According to a study by the Integrated Benefits Institute, “Due to lost time from work caused by the coronavirus disease 2019 (COVID-19), employee benefits for absent workers could cost employers more than $23 billion in total.”
Note: Estimates of absenteeism costs tend to be on the conservative side, as they often don’t reflect indirect costs, only direct costs.
How does absenteeism affect employers and employees?
Effects on Employers:
- Reduced quality of good or services, such as due to employee fatigue or disengagement
- Rejection of finished products because of poor quality
- Decline in productivity
- High turnover
- Excess time spent disciplining absent workers and hiring suitable replacements
- Increases the workload of other employees, who are forced to pick up the slack, leading to resentment and low morale
- Elevates production costs
- Lowers the profit margin
Effects on (Absent) Employees:
- Reduces income, potentially triggering family and financial issues
- Heightens indebtedness
- Increases anxiety and mental stress
- Unable to perform job according to company standards
- Loss of employment
Additionally, replacement employees might not receive adequate training due to rushing to fill in for the absent worker, thereby raising the probability of mistakes.
What can employers do about absenteeism?
Combating absenteeism is a multifaceted undertaking that requires a holistic approach.
Though some employees are chronically absent because of poor work ethic or an entitled mindset, others may be struggling with real problems — such as depression, family conflict, or harassment or bullying at work.
Employers must make disciplinary measures, such as written warnings and termination, part of their absence management strategy. They should also aim to uncover the reasons behind the absenteeism and, where possible, extend support to the employee.
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