January 10, 2013
This winter, the flu is hitting hard and fast. So far this season, there have been over 22,000 reported flu cases, up from 849 last year, according to the Centers for Disease Control and Prevention, prompting Boston Mayor Thomas M. Menino to declare the outbreak a public health emergency on Wednesday.
All of this means that more employees are calling in sick and pulling infected children out of school or daycare -- but what’s the cost of taking that sick day?
According to the Centers for Disease Control, typical seasonal flu outbreaks cost employers some $10.4 billion in hospitalization and outpatient visits– that number doesn’t include the costs related to the worker being away from the job and lost productivity.
Paid Sick Leave: Costs Rise for Small Businesses
Lost productivity from illness costs the U.S. economy some $227 billion a year, according to a September report from the Integrated Benefits Institute, a health and productivity research organization in San Francisco. The calculation includes the productivity lost from when the employee is absent as well as when sick employees report to work but don’t perform at full capacity. They also calculated that the wage replacement cost from absent employees (including short and long-term disability and worker compensation), is costing the economy $117 billion a year.
“Companies that may already be shorthanded coming out of the recession could find themselves struggling to keep up with demand in the weeks ahead as absenteeism claims more manpower,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., a labor consulting firm.
Another problem: Companies that have dodged the problem of absent employees may be at more risk with sick ones on the job. According to an annual flu season poll by Staples of 250 office workers and facility managers in November, 80 percent said they show up to work when sick – and another survey in the Archives of Internal Medicine found that 51 percent of doctors report to work with flu-like symptoms.
What’s more, the pressure to avoid using sick days has intensified during the economic downturn. Data from Bloomberg BNA show that workers were taking sick days at about half the rate in 2011 than they were in 2006.
Overall, 40 percent of private-sector workers and 80 percent of low-wage workers do not receive paid sick leave benefits – adding up to an estimated 40 million workers in the U.S., according to the National Partnership for Women and Families.
Parents with young children are particularly affected by a lack of sick days. A poll from the University of Michigan’s C.S. Mott Children’s Hospital in October found that one-third of parents with children younger than 6 reported concern about losing their job or pay if they were to stay home to care for a sick child – and 31 percent said they don’t have enough paid leave to cover the days they need for sick children.
While President Obama has suggested a federal sick-day mandate, little has been done at a national level – though a few states and cities have been working to enact sick leave legislation. Last January, Connecticut became the first state to require paid sick leave at businesses with 50 employees or more. Massachusetts also reintroduced paid sick leave legislation last year, despite unsuccessful attempts at passing it in the past, and cities like Seattle, San Francisco and D.C., have mandated paid sick leave.
While proponents of the legislation argue sick leave should be in the same category as minimum wage and 40-hour workweeks, others insist that mandated leave would cost jobs and profits. The National Federation of Independent business estimated that the Massachusetts proposal could cost the state nearly 16,000 jobs by 2016 and $8.4 billion in lost production.
However, a study from the Economic Policy Institute on Connecticut’s sick leave mandate concluded that if employees used the national average of sick days – 2.41 days a year – the cost to businesses would only be 0.19 of total sales. Similarly, a report from the Institute for Women’s Policy Research analyzed San Francisco’s Paid Sick Leave Ordinance enacted in 2007 and found 85 percent of employers did not report any loss of profits.
“Having an effective leave policy is critical in preventing an office-wide outbreak of the flu,” said Challenger. “While sick employees may think they are doing the right thing by ‘toughing it out’ and coming into work when ill, the fact is they are only making matters worse.”