Smokers impact productivity, study says

Companies benefit from smoke-cessation
programs, study authors say.

A recent report from the Conference Board of Canada claims that employees who smoke have a strongly detrimental effect on their companies’ bottom line.

Smoking Cessation and the Workplace: Benefits of Workplace Programs, which was released on Oct. 29, is the third and last in a series of briefings by the Canadian Alliance for Sustainable Health Care (CASHC) — a program run by the Conference Board — on how smoking affects the work environment.

Among the report’s revelations: a combination of decreased productivity and increased absenteeism resulted in an average yearly loss of $4,256 per daily smoker in Canada in 2012, a figure that is way up from the calculated $3,396 in 2005.

“The research is mostly health-focused, but we also looked at productivity losses, because we were trying to argue that it is in the best interests of the employers to actually do something about this,” explained study co-author Fares Bounajm, an economist with CASHC.

“They do actually have a lot to benefit from this. But the other major goal is obviously to reduce smoking.”

The study analyzed four different categories of costs attributed to smoking employees, putting dollar values on the losses.

Daily smokers increase absenteeism rates

Productivity loss, attributed mostly to unsanctioned smoke breaks, accounted for an average cost of $3,842 per daily smoker in 2012, with an additional $414 lost per daily smoker due to absenteeism. Daily smokers also tend to take about two-and-a-half more sick days a year than nonsmokers do, the study added.

“In a typical Canadian firm with 100 employees, 14 daily smokers and 15 former daily smokers who recently quit, this represents an annual productivity loss of nearly $60,000,” the study said. “The figure can be significantly higher in industries where smoking rates are typically well above average.”

In terms of costs that have a more indirect effect on employers, the Canadian economy lost about $7.1 billion in productivity in 2010 due to people who could not work because of chronic conditions resulting from smoking, including lung and bladder cancer, leukemia, chronic obstructive pulmonary disease and heart disease.

An additional $4.3 billion in long-term economic losses was due to the calculated 26,681 premature deaths attributable to the habit that same year.

Bounajm said that while employers shouldn’t necessarily be seen as responsible for helping their employees quit smoking, they do have a strong financial motivation to establish workplace smoking-cessation programs.

“Smokers do cost their employers money, and we know that a lot of the employees would like to quit,” he said.

“This could be a win-win situation for both the employers and many of the smokers that do want to quit, because the employers can implement a workplace cessation program, and by doing so, they can get a good return on their investment, because they can lower their productivity losses due to smoking. At the same time, the employees benefit because they become healthier and they achieve their goal of quitting smoking.”

Bounajm added that employers could add cessation aids to their company benefits plans. “We know that there are two types of aids that do work. We know that counseling works. We know that certain cessation aids work. And we know that combining them together actually works the best.”

The report estimated that an effective workplace cessation program could cause the prevalence rate of daily smokers in an average Canadian company to decrease by 35 per cent by 2025.

Source: OHS Canada

Keep indoor air healthy to boost productivity

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Companies pay almost $6,000 extra per year for each employee who smokes

A new study suggests that U.S. businesses pay almost $6,000 per year extra for each employee who smokes compared to the cost to employ a person who has never smoked cigarettes.

Researchers say the study is the first to take a comprehensive look at the financial burden for companies that employ smokers.

By drawing on previous research on the costs of absenteeism, lost productivity, smoke breaks and health care costs, the researchers developed an estimate that each employee who smokes costs an employer an average of $5,816 annually above the cost of a person who never smoked. These annual costs can range from $2,885 to $10,125, according to the research.

Smoke breaks accounted for the highest cost in lost productivity, followed by health-care expenses that exceed insurance costs for nonsmokers.

The analysis used studies that measured costs for private-sector employers, but the findings would likely apply in the public sector as well, said lead author Micah Berman, who will become an assistant professor of health services management and policy in The Ohio State University College of Public Health on Aug. 21. Berman began this work while on the law faculty of Capital University in Columbus.

"This research should help businesses make better informed decisions about their tobacco policies," said Berman, who also will have an appointment in the Moritz College of Law at Ohio State. "We constructed our calculations such that individual employers can plug in their own expenses to get more accurate estimates of their own costs."

The study focuses solely on economics and does not address ethical and privacy issues related to the adoption of workplace policies covering employee smoking. Increasingly, businesses have been adopting tobacco-related policies that include requiring smokers to pay premium surcharges for their health-care benefits or simply refusing to hire people who identify themselves as smokers.

The researchers acknowledge that providing smoking-cessation programs would be an added cost for employers.

"Employers should be understanding about how difficult it is to quit smoking and how much support is needed," Berman said. "It's definitely not just a cost issue, but employers should be informed about what the costs are when they are considering these policies."

The research is published online in the journal Tobacco Control.

The Centers for Disease Control and Prevention (CDC) estimated a decade ago that productivity losses and medical costs amount to about $3,400 each year per smoker. However, the report looked at overall costs to the American economy from smoking-related deaths and did not try to identify those costs that would be borne by an employer, Berman noted.

The CDC says smoking accounts for nearly one in every five deaths – or about 443,000 – in the United States each year and increases the risk for such illnesses as coronary heart disease, stroke, lung cancer and other deadly lung illnesses.

The researchers used multiple studies that calculated a variety of specific costs to develop an estimate of the overall annual extra cost of each employee who smokes.

According to their annual estimates per smoker, excess absenteeism costs an average of $517 per year; "presenteeism," or reduced productivity related to the effects of nicotine addiction, $462; smoke breaks, $3,077; and extra health care costs (for self-insured employers), $2,056.

The analysis also took into consideration a so-called death "benefit" in terms of economics. For employers who provide defined benefit plans, meaning they pay retirees a set amount in pension each year, a smoker's early death could result in an annual cost reduction of an estimated $296. This occurs when smokers pay more into the pension system than they receive in retirement – in effect, subsidizing nonsmokers' pensions because they live longer.

"We tried to be conservative in our estimates, and certainly the costs will vary by industry and by the type of employee," Berman said. "Several of these estimates are based on hourly employees whose productivity can be tracked more easily."

He noted that the analysis takes into account the known disparity in pay for smokers versus nonsmokers. In the calculations, smokers' salaries were discounted by 15.6 percent to reflect their lower wages.

The researchers describe their findings as "needed factual context to discussions about workplace policies" intended to inform the debate over whether such policies should exist.

"Most of the places that have policies against hiring smokers are coming at it not just from a cost perspective but from a wellness perspective," Berman said. "Many of these businesses make cessation programs available to their employees.

"Most people who smoke started when they were kids and the vast majority of them want to quit and are struggling to do so. This is a place where business interests and public health align. In addition to cutting costs, employers can help their employees lead healthier and longer lives by eliminating tobacco from the workplace."
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