EHS Insider Blog

Don't Ignore the Hidden Costs: Health and Safety

Health and SafetyYou already are aware that job-related injuries and illness are expensive, due to medical expenses, lost days on the job, and insurance costs. But, did you know that as much as nine-tenths of the total cost of a workplace injury or illness is a hidden cost? That is the startling fact, as reported by Joe Gillian, Director of Loss Control at IWIF Workers’ Compensation Insurance, in a BBB post online.

The scope of the total cost is eye-opening. According to NIOSH, “A recent economic analysis suggested that traumatic occupational deaths and injuries cost the nation $192 billion annually, including direct medical costs and indirect costs such as lost wages and productivity.” Let’s delve deeper into the direct and indirect costs and see why preventing workplace injuries and illness makes sound fiscal sense.

Health and Safety: Direct Costs

OSHA cites the astounding figure of nearly a billion dollars per week for direct workers’ compensation costs.

What do these direct costs encompass? OSHA lists these examples: “workers' compensation payments, medical expenses, and costs for legal services.”

The 2016 Liberty Mutual Workplace Safety Index offers data on 2013 workplace injuries. You may download a PDF of the report and their infographic of the top ten causes of the most disabling workplace injuries and the associated direct costs by clicking the link above.

According to the report, the top five most disabling injuries and related direct costs were:

  • Overexertion, such as “lifting, pushing, pulling, holding, carrying, or throwing” ($15.08 billion)
  • Falls on the same level ($10.17 billion)
  • Falls to lower level ($5.40 billion)
  • Struck by object or equipment ($5.31 billion)
  • Other exertions or bodily reactions ($4.15 billion)

The total direct costs of all top ten workplace events came in at $61.88 billion. 

Health and Safety: Indirect Costs 

OSHA’s list of indirect costs includes: training replacement employees, accident investigation and implementation of corrective measures, lost productivity, repairs of damaged equipment and property, and costs associated with lower employee morale and absenteeism.

Add to that list the cost of buying replacement equipment if the damages cannot be repaired. Other hidden costs are hiring replacement workers, providing benefits for replacement workers and the fact that the company is now paying twice the benefit costs for one position. These costs are not typically factored in when calculating the costs of workplace injuries or illness. 

Joe Gillian’s own list goes deeper into hidden costs that often are not included: the effect on the bottom line if the injured worker is in sales and has built up a strong rapport with a sizable number of customers; a potential surcharge on insurance fees if the company now is a higher risk; and non-compliance fees or even civil or criminal penalties. 

Health and Safety: Costs to Society and to the Company’s Reputation

As we have reviewed the hidden and indirect costs, it is also important to note the costs both to society and to your company’s reputation. While both are difficult to delineate, ultimately, they play a role in the total cost of workplace injuries and illnesses.

When one worker is injured or becomes ill on the job, the entire family is affected as well, in multiple ways. That situation generates new, unfunded costs, and other strains for the family.

Now, consider a scenario in which multiple workers from the same company are injured or become ill within a similar time frame. What are the potential ramifications? Here are just three:

  • A strain on local resources; for example, caretakers, medical specialists, neighbors lending a hand
  • Potential new hires shying away from accepting positions at that company
  • Consumers hearing about the workplace injuries and deciding to avoid that company’s products or services

Eventually, multiple workplace injuries or illnesses at the same company will hit the company’s bottom line in ways that may not have been anticipated.

Health and Safety: Prevention to Boost Your Bottom Line 

The business case for boosting workplace safety is clear. To help you calculate your company’s potential cost savings, you can access OSHA’s interactive "$afety Pays" program.

Additional assistance calculating the Health and Safety specific cost savings for your company when you boost worker safety is available through the National Safety Council.

OSHA’s standards and best practices for your industry not only outline compliance, but also serve to make the jobs that your workers perform safer. Training is a critical component in workers' safety. Safety training is woven into OSHA’s standards and best practices and is a practical component in helping workers keep themselves and their colleagues safe.

Recommeded Article: 8 Reasons Why Near Misses Do Not Get Reported

To boost your workplace safety and help protect your bottom line contact Wise Businessware for a look at our online safety training content and EHS compliance and safety software. We are happy to assist you.

Download Guide: Training Requirements in OSHA Standards

Topics: Health and Safety