The Cost of Workplace Injury and Illness

Liberty Mutual insurance company has released its annual Workplace Safety Index showing that the direct cost of disabling work-related injuries and illnesses grew by 8.3% between 1998 and 2000 to reach $42.5 billion (that’s with a “b”) a year. The $42 billion only counts “direct” costs, which include “payments made to injured workers and their medical care providers.” Direct costs are only a part of the total costs.

“Indirect” costs, such as “overtime, training and lost productivity related to an injured employee not being about to perform their normal work” are estimated by Liberty Mutual to be between $127 billion and $212 billion, bringing the total financial impact of disabling workplace incidents to an astounding $170 billion to $255 billion a year. This is based on a survey of managers, 40 percent of whom report that each $1 of direct costs generates between $3 and $5 of indirect costs.

And even this is an underestimate as Liberty Mutual defines a “disabling incident” as six or more days away from work. This means that injuries resulting in less than 6 days away from work aren’t even counted in the total cost.

Ergonomic injuries accounted in 2000 for over a third ($14.7 billion) of the total direct cost of workplace injuries and illnesses, with “overexertion” accounting for $11.9 billion or 28% of total direct costs, and “Repetitive Motion” accounting for $2.8 billion, or 6.5% of the total. Liberty Mutual estimated ergonomic injuries to total only $13 billion in 1999 and $12.1 billion in 1998. As many states don't even compensate for many ergonomic injuries, these costs most likely seriously underestimate the total cost of ergonomic injuries as well.

During this same period that we saw the costs of workplace injuries and illnesses rising, the frequency of disabling workplace injuries fell a little more than 1 percent. Liberty Mutual blames the increase in costs to growing use of advanced and expensive medical treatments, people going to the doctor more, and, most curiously, the alleged fact that many jurisdictions have broadened their definition of work-related injuries, meaning that workers compensation covers more medical conditions that previously. I’m not sure if there is anyone involved in the workers compensation field who could cite a major movement toward broadening coverage workplace medical conditions, especially workplace disease. And the general trend in many states is to reduce workers compensation benefits.