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

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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 study 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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STUDY: Want to earn more? Be a loyal employee

Workers who are loyal to their employers tend to be paid more, according to the first broad-scale study of worker loyalty and earnings.

Michigan State University researchers surveyed 10,800 employees in former socialist countries that introduced capitalist economies in the 1990s. While previous research has found that worker loyalty bolsters companies' bottom lines by lowering labor turnover costs and enhanced customer service, this study shows that employees benefit as well – by making more money, said Susan Linz, lead author and professor of economics.

"We know that firms realize financial gain from loyal workers, but we wanted to know if they share those benefits with the workers," Linz said. "And among the more than 650 workplaces included in our study the answer is yes, they are sharing the wealth."

The researchers surveyed employees from 2005 to 2011 in six culturally and economically diverse countries: Armenia, Azerbaijan, Kazahkstan, Kyrgyzstan, Russia and Serbia. The employees came from a wide range of sectors including manufacturing, retail and financial services, health care, education, public sector, construction and transportation.

Loyalty was measured in three ways: by workplace seniority; whether the employee would turn down an offer of slightly more money to change jobs; and whether the employee was committed to and engaged with the company – i.e., did they buy into the company's mission even when it was outside their job responsibilities.

Linz said she was surprised to find such a strong link between worker loyalty and higher earnings. In three countries, the contribution of loyalty to earnings was equivalent to the contribution to earnings of an additional year of experience.

Workers were more likely to be loyal if they expected to earn a bonus or learn new skills. In addition, loyalty was higher among employees who expected that doing their job well would result in job security and the feeling that they were accomplishing something worthwhile.

Contrary to previous studies, however, praise from supervisors was not always positively linked to worker loyalty.

The findings have implications in the global economy. Western-based companies looking to set up shop in countries such as Azerbaijan or Russia, for example, need to know how to train their managers to motivate workers. Knowing which strategies promote loyalty is crucial.

"If Western managers come in and start offering them praise, telling them they're doing a great job and so on, it might not have that big of an effect," Linz said. "Managers might have more success by offering the workers a chance to learn new skills, which can contribute to their sense of better job security or desire for more job autonomy, all of which were positively linked to loyalty in our study."

In the United States, where it's common for workers to switch jobs and where companies and entire sectors are downsizing, popular perception is that it doesn't make sense for employees to be loyal. But what if firms do reward loyalty? Linz said it would be interesting to conduct the employee survey here to see if the findings are similar.

Linz conducted the study with Linda Good, professor of advertising, public relations and retailing, and Michael Busch, a doctoral student in economics.
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Poultry processor cited for exposing workers to chemical hazards

LITTLE ROCK, Ark. – The De Queen poultry processing plant owned by Pilgrim's Pride Corp. has been cited with 11 safety violations and proposed penalties totaling $170,000 by the U.S. Department of Labor's Occupational Safety and Health Administration for exposing workers to hazardous chemicals.

The inspection, which began in January, was initiated under the agency's Process Safety Management Covered Chemical Facilities National Emphasis Program. PSM encompasses a detailed set of requirements and procedures employers must follow to address hazards proactively that are associated with processes and equipment that use large amounts of hazardous chemicals. In this case, it's the use of anhydrous ammonia in the refrigeration system.

A willful violation, with a $70,000 fine, was cited for failing to document that the emergency shutdown system for the engine room was designed to ensure that the mechanical ventilation system was activated by an ammonia leak. A willful violation is one committed with intentional, knowing or voluntary disregard for the law's requirements, or with plain indifference to worker safety and health.

The nine serious violations, with a $61,500 fine, were cited for PSM deficiencies of the relief valves and failing to provide process hazard analysis, operating procedures, testing procedures and management of change procedures. A serious violation occurs when there is substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known.

The repeat violation, with a fine of $38,500, was cited for failing to ensure the adequate frequency of self-inspections and tests of ammonia refrigeration equipment and vessels. A repeat violation exists when an employer previously has been cited for the same or a similar violation of a standard, regulation, rule or order at any other facility in federal enforcement states within the last five years. A similar violation was cited in 2011.

"Process safety management prevents the unexpected release of toxic, reactive or flammable liquids and gases in processes involving highly hazardous chemicals," said Carlos Reynolds, OSHA's area director in Little Rock. "It's vital that Pilgrim's Pride ensure safeguards are in place to protect the safety of workers at its work sites."

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to ensure these conditions for America's working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.

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ISO to Develop New Global Occupational Health and Safety Standard

Following the tragic deaths of thousands of garment factory workers around the world in the past year, including over 1,100 people in a factory collapse in Bangladesh, the International Organization for Standardization (ISO) has announced that it will develop a new standard for global occupational health and safety (OH&S) with the goal of providing governmental agencies, industry, and other affected stakeholders with effective, usable guidance for improving worker safety in countries around the world. The work will be overseen by ISO Project Committee (PC) 283, Occupational health and safety management systems – Requirements.

"This proposed occupational health and safety standard represents one of the most significant consensus standards activities in the last 50 years," said S. Joe Bhatia, American National Standards Institute (ANSI) president and CEO. "It has the potential to significantly and positively impact occupational health and safety management on a global level."

To support this effort, ANSI and the American Society of Safety Engineers (ASSE) are seeking participants for a U.S. Technical Advisory Group (TAG) for ISO PC 283. All U.S. experts and interested stakeholders in OH&S management are strongly encouraged to get involved and help influence the development of this important standard.

The U.S. TAG to ISO PC 283 will advise ANSI on voting positions relevant to the proposed OH&S management standard, and will carry out detailed discussions on issues related to its development. As the U.S. member body to ISO, ANSI accredits U.S. TAGs to develop and transmit U.S. positions on ISO technical activities. Following the TAG's accreditation by ANSI, ASSE will head up the U.S. work effort by serving as the U.S. TAG administrator to ISO PC 283.

"Time and time again we've seen how investment in OH&S management can help to make work environments safer, while also serving to improve overall organizational performance and boosting the bottom line," said Kathy Seabrook, CSP, CMIOSH, EurOSH, president of ASSE.

"ISO PC 283 will be doing critically important work, and the U.S. needs to have a strong, active and engaged role in this activity," added Mr. Bhatia. "ANSI and ASSE encourage all interested U.S. stakeholders to get involved in this significant new global standards initiative."

For more information about the U.S. TAG to ISO PC 283 and the opportunity to take part in this critically important work, click here. To access the TAG membership application form, click here.

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Cleaner indoor air is associated with an increase in productivity and job satisfaction. Contact an Electrocorp Air Quality Expert to learn more about our industrial air cleaners.