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The cost of drug and alcohol abuse in the workplace is an incredible drain on the economy and affects the bottom line of nearly every organization. The federal government estimates that the cost in the U.S. alone is over $200 Billion to our society. Since 7 out of 10 abusers are employed somewhere in our economy, the potential cost of abuse in the workplace is staggering.
The most common and relevant areas of cost associated with abuse in the workplace are: increased absenteeism, increased accidents, decreased productivity, additional training/hiring expenses, and additional workers compensation insurance premiums.
Our experience in the industry has allowed us to illustrate the typical (and conservative) average cost estimates for each area within an organization. They are intended to be used to show how significant the total cost of abuse is, and how easily a Safe-T-Works screening program can be justified. We encourage you to let us show you in more detail (and specifically for your organization's cost parameters), how an investment in employee screening will pay for itself several times over. Once you allow us to show you the compelling costs of abuse in the workplace, we are sure that you will see that it is hard to understand how you can afford not to be screening your workforce.
You may view the illustration of each area’s cost by clicking below*:
*Our illustrations are very conservative and assume that a company that is not screening would only have 6% Abusers in their workforce, even though over 7.5% of the population abuses both drugs and alcohol. Typically those companies who are not screening become the "Employers of Choice" for abusers, and will have significantly more than the national average. We also assume only an average wage of $8/hour, and that an employee’s “Productivity” would only generate 150% of their wage rate for your company. These numbers are purposely low to maintain the conservative approach of our justification. We also do this because the numbers are so compelling that anything other than a conservative approach is not needed to justify a program. Our approach also then averages each cost over 100 employees so that we can give you an average cost per employee that can then be applied to any size organization.
Cost of Increased Absenteeism
The cost of absenteeism is very easy to understand and is a very significant cost to any organization. There have been numerous Federal, State, and Private Research studies that have shown conclusively that abusers are going to miss work more often than non-abusers. Although each study has published different ways of quantifying the affect (see the quotes below), our approach is simple and conservative. Based on the numbers we feel that it is conservative and logical to assume that an abuser will miss work about 1 day more a month than a non-abusing employee. As you can see below, a single employee would then cost your organization over $1,152. The average per employee cost would then be $69.
 Cost of Absenteeism
• Abusers are absent from
work 59% more frequently
• Abusers are 4 times more
likely to miss work
• Example: Abuser absent 1 day month more
• 1 day/month X 12 Month’s X 8 hours/day X $8/h X 150%
Productivity factor = $1,152 lost per abuser
• Absenteeism Cost
• $768 lost/emp. X 6 abusers/per 100 employees =
$6,912 per 100 Employees or $69/Employee
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Cost of Increased Accidents
The cost of increased accidents due to abusers has been one of the most studied and compelling factors in justifying a drug-free workplace. It is common sense that an employee who is abusing either alcohol or drugs is going to put himself and others in harm's way more often than an employee whose judgment is not impaired.
As you can see from the quoted statistics below, the increased accident risk is 3 to 5 times more for an abuser in the workplace. Our cost estimation is very simple and straightforward. We know that on average there are over 7 abusers for every 100 employees, putting others at an increased risk of being involved in an accident. We conservatively believe that by effectively screening these abusers out of your workforce and avoiding just 1 accident per year, that you can save over $98 for each employee when applying the average medical and lost time cost for each accident ($4,900). This average cost does not address the significance that a single catastrophic accident could cost or include the potential costs associated with the negative publicity and public perception that such an accident would generate.
 Costs of Accidents
• Drug users are involved in
accidents 3.6 times more often
• Abusers are 5 times more likely
to file a workers compensation claim
• Users have 50% higher Worker Compensation Costs
• Example: have 1 additional accident per year because of abuser
at national average of $4,900 per Workers Comp. Claim
• Accident Cost
• $4,900 Worker Comp./accident X 200% (Employer Damage
and Productivity) divided by 100 Emp. = $98 / Employee
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Cost of Decreased Productivity
The recognition and quantification of lost productivity associated with an employee that is an abuser has just recently begun to be studied and measured. It is common sense however, that an abuser will have decreased and compromised faculties that will result in much less productivity as compared to other employees.
The most commonly accepted measurement is from the federal government and estimates that an abuser is only 66% as productive at work. The costs associated with this 33% loss in productivity results in the single largest cost element that is typically studied and measured. Our conservative approach only assumes a wage rate of $8 and a 150% productivity rate, but still indicates a $8,160 productivity loss per employee that is an abuser. This averages out to a staggering average cost of $489 per employee across the entire workforce for those organizations not able to screen abusers. This cost does not address the potential loss associated with missed orders, work mistakes, poor quality work, and the effect on workforce morale when other employee have to compensate for an abuser's poor productivity.
 Cost of Productivity Loss
• Abusers are only 66% as
productive at work” (34%
less productive)
• Example: 2,000hrs worked/year X $8/hr X 34% =
$5,440 lost per abuser
• Productivity Cost
• $5,440 lost/emp. X 150% Productivity X 6 abusers/100 Emp. =
$48,960 per 100 Employees or $489/Employee
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Additional Training & Hiring Costs
The presence of abusers in the workforce can also put additional and avoidable costs in the hiring and training of new employees that are needed to compensate for the more frequent turnover associated with the hiring and retention of abusive employees. Simply put, employees who are abusing drugs and/or alcohol are much more likely to quit or be fired from your organization. The resulting costs associated with hiring their replacements, and then training them, is a significant factor to be considered.
Studies of this effect have provided a very wide estimate of its costs but our approach is conservative and simple. Even though we know that on average there are over 7 abusers for each 100 employees who are at increased risk to have to be replaced, we conservatively believe that by avoiding just 1 replacement per year that this could save an average of $2,600. These savings are made up of very conservatively accepted estimates for the hiring and training of employees and the decreased productivity of new employees as they gain experience. Because of the wide range of an individual organization's hiring and training costs, this estimate can be significantly different for your situation. Safe-T-Works would appreciate the opportunity to work with you on defining your specific costs and savings.
 Cost of Additional
Training & Hiring
• Average estimate of hiring and
training a new employee =$1,000
• Estimate of 1st year productivity loss of new employee
$8/hr X 2,000 hr/year X 10% lower 1st year productivity = $1,600
$1,000 + $1,600 = $2,600 for one employee/100 Employees = $26
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Costs of Not Taking Advantage of
Workers Compensation Insurance Discount
Most organizations do not realize that they are missing a significant savings opportunity on their workers compensation insurance premium by maintaining an employee screening program.
Many insurance companies offer a 5% discount for those organizations that have an employee screening program in place. In addition there are 11 states that mandate that all Insurance companies offer a discount for qualifying programs. Since we have already quantified the additional costs associated with workers compensation accidents in another section, this cost illustrates the average cost savings that an organization is not getting due to either not knowing how to qualify for the discount or not having a screening program at all. Let Safe-T-Works research how to help you take advantage of this "Hard Dollar" savings which can typically more than pay for the entire screening program by itself. There is a much more detailed and comprehensive discussion of this topic under the solutions tab of this website.
 Costs of Workers Compensation Premium
• Many insurance companies
offer a 5% discount on workers
compensation policies if the company has a drug policy and
testing program (there are 11 states that mandate the discount
if you have a qualifying program).
• Example: 100 employees @ 2,000 hrs worked/year X $8/hour
wage X 2.2% National Average Coverage = $35,200 average
Workers Compensation Coverage for 100 Employees
• Discount for Drug Policy/Program
• $35,200 Worker Comp. policy X 5% discount = $1,760 divided
by 100 employees = $18 Savings/Employee
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The Total Costs of Abuse in the Workplace
The most common and relevant areas of cost associated with abuse in the workplace that we have generically illustrated are: increased absenteeism, increased accidents, decreased productivity, additional training/hiring expenses, and additional workers compensation insurance Premiums.
Based on our conservative approach we believe that it costs over $700 per employee (see below) to pay for the increased costs associated with allowing just 6% of your workforce to be drug & alcohol abusers. Why let this small percentage of the workplace have such a devastating effect on your organizations bottom line, when an employee screening company can be implemented for just a small fraction of this cost? Once you look at the numbers how can your organization afford not to screen your employees effectively for drug & alcohol abuse? So whether you have an employee screening program or not, let Safe-T-Works show you how to maximize your bottom line by having an effective employee screening program work for you.
Our experience in the industry has allowed us to illustrate the typical (and conservative) average cost estimates for each area within an organization. They are intended to be used to show how significant the total cost of abuse is, and how easily a Safe-T-Works screening program can be justified. We know how important understanding the numbers can be, as is with understanding any change in an organization and what effects it can cause (both good and bad). We encourage you to let us show you in more detail (and specifically for your organization's cost parameters), how an investment in employee screening will pay for itself many times over. We will also use our experience to help you use our "current best approach" to avoid the common and additional complications that can arise. Safe-T-Works can do all of the work in implementing a program for you, letting you concentrate on the Strategic direction and effectiveness of your approach.
 Total Costs of Abuse
(Potential Cost Savings Opportunity)
• Cost of Absenteeism = $69
• Costs of Accidents = $98
• Costs of Additional Hiring & Training = $26
• Cost of Productivity = $489
• Costs of W. Comp. Premium = $18 (Hard Dollars)
• TOTAL = $700/per employee
• Even at 1⁄2, 1⁄4, or even 1/10 of the potential savings,
you can easily justify a program, let us show you how.
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*Our illustrations are very conservative and assume that a company that is not screening would only have 6% abusers in their workforce, even though over 7.5% of the population abuses both drugs and alcohol. Typically those companies who are not screening become the "Employers of Choice" for abusers, and will have significantly more than the national average. We also assume only an average wage of $8/hour, and that an employee’s "Productivity" would only generate 150% of their wage rate for your company. These numbers are purposely low to maintain the conservative approach of our justification. We also do this because the numbers are so compelling that anything other than a conservative approach is not needed to justify a program. Our approach also then averages each cost over 100 employees so that we can give you an average cost per employee that can then be applied to any size organization.
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