Employers have been hit hard by COVID in more ways than one, and now, hidden financial costs are adding up to have an overwhelming impact on businesses. New research from the Integrated Benefits Institute has found that, on average, pandemic-related absenteeism is creating $1 billion in employer losses each week.
Over the past 22 months, the pandemic has cost employers more than $78.4 billion, according to the nonprofit research firm. That’s more than a $25 billion increase since IBI last analyzed the financial impact of COVID on employers, back in April of 2021.
“As our analysis found, the expenses related to COVID-19 go well beyond the cost of testing, office redesign and medical expenses,” says Kelly McDevitt, IBI president. “To mitigate these expenses, employers must first holistically understand the cost drivers and implement a strategy to address each contributing factor.”
Over the course of the pandemic, employers have paid $24.3 billion in sick leave, $16.6 billion in disability wages, $35.3 billion in employee benefits. Employers in California and New York have paid $2.2 billion in disability insurance, according to the IBI data. New York, California and Texas are the three states with the highest lost work time, according to the research.
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Some strategies employers could adopt include adding enhanced wellness programs that offer employees greater support in managing the mental and emotional challenges the pandemic has caused. Increasing access to care via telehealth is another way to provide employees with a supportive benefit that will also help keep absenteeism low, McDevitt says.
“The pandemic presents a tremendous challenge to organizations both financially and operationally, and a proactive, well-rounded strategy can help,” she says.
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The IBI research also found that the level of employee absenteeism due to COVID varies by state; those states with greater resistance to COVID safety protocols have higher rates of employee absenteeism.
“There is dramatic polarization with regards to COVID mitigation strategies like masking, vaccinations, social distancing and belief in our scientific community recommendations,” says Joseph Aller, the director of analytics and research at IBI. “While the variations are complex and driven by multiple factors, a significant contributor to the differences is the acceptance of mitigation efforts.”
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The lessons (and costs) of the pandemic, McDevitt says, should lead employers to create a playbook for future crises, developing proactive response plans that can help mitigate impact — financial and otherwise.
“Many organizations have a disaster recovery planning process,” she says. “This has historically focused on business interruptions such as natural disasters or widespread power outages. COVID, or some other yet to be identified virus, may need to be included as part of a company’s business continuity plan. This pandemic may or may not represent the new normal, but it is certainly a known business risk, and organizations need to be prepared.”
