Disability Absence Cost Pegged at 8.7% of Payroll

June 28, 2010 (PLANSPONSOR.com) – The combined costs of incidental and extended disability absences are 8.7% of payroll, according to an updated study released Monday. 

A news release said the Mercer study, conducted for Kronos Incorporated, found the absence cost figure represents more than half of the cost of health care, which Mercer said is 13.6% of payroll.  According to the study, incidental unplanned absences also result in the highest net loss of productivity per day (i.e., work that is missed or postponed by not being covered by others): 19% versus 13% for planned absences and 16% for extended absences.  

The number of incidental unplanned absence days per employee per year averaged 5.4 days across all employee classes, and ranged from 3.9 for exempts, to 4.9 for nonexempt salaried, to 5.8 for nonunion hourly, and 7.3 for union hourly, the study found. 

The total costs of all major absence categories average 35% of base payroll – ranging from 29% for exempt employees, 36% for nonexempt salaried,  to 39% for nonunion hourly, and 38% for union hourly. 

“Employers tend to focus their energies on controlling health care costs, since the dollars are more easily measured, and they are rightly concerned about what health care reform will do to their budgets,” said Michael Klachefsky, principal, absence management practice leader, Mercer, in the news release.  

The Survey on the Total Financial Impact of Employee Absences was conducted online in the spring of 2010. A total of 276 organizations responded from all major industry segments, sizes, and regions throughout the U.S. More information about obtaining the report is here.