The Cost of Smoking to the Employer


As the number of states and communities that have banned smoking in public areas and places of work continues to grow, many employers in unaffected areas are evaluating the benefits of a workplace smoking ban. Numerous companies have enacted bans and some companies have even stopped hiring smokers at all. Though a potential employee who smokes may be just as qualified as a nonsmoking candidate, the costs associated with hiring a smoker are too significant to ignore. The life and health insurance premiums are much higher for a smoking employee than a non-smoker, and other types of insurance tend to be higher when there are smokers on the payroll. Plus, employers often incur significant costs for health care and lost productivity for each employee who smokes.


Expenses

Insurance-related costs are only the tip of the iceberg. Smoking also drives up the nation’s health care costs by acting as a major contributor to numerous chronic diseases. The Centers for Disease Control and Prevention (CDC) estimate that diseases caused by smoking result in $170 billion in direct health care costs. Employers and taxpayers shoulder much of those costs.


Beyond health care costs and insurance claims, smoking also affects many other aspects of an employer’s bottom line.

- Lost productivity:

  • The CDC estimates more than $156 billion in lost productivity from cigarette smoking.

  • Smokers who take four 10-minute smoke breaks per day work one month less per year than nonsmokers who do not need to take these breaks.

- Absenteeism:

  • Smokers are more likely to be absent from work than nonsmokers, and their illnesses last longer.

- Maintenance and repair costs for air cooling, heating and ventilation systems

- Replacing employees who are sick from smoking-related illnesses or suffer premature deaths due to smoking-related diseases

- Accidents and fires

- Property damage

- An increase in property or fire insurance

- Cleaning costs associated with smoke pollution

- Increased early retirement

- Increased legal liability

  • Nonsmokers have won workers’ comp settlements, disability benefits and unemployment for claims based on their exposure to secondhand smoke.


The Cost to You

Want to determine how much smokers are adding to your budget? According to a study published by the international peer-reviewed journal, Tobacco Control, employers approximately an extra $16 per day in additional medical costs and lost productivity, or $5,816 a year. Use the following formula to figure out how much smokers are costing you.

- Multiply your total number of employees by the estimated percentage of employees who smoke. If you are unsure of that percentage, use your industry’s average below. This calculation will provide an estimate of the total number of smokers that work for your company.

  • Construction: 31.4%

  • Food Preparation/Serving: 30.0%

  • Transportation: 28.7%

  • Maintenance/Repair: 27.2%

  • Production: 26.1%

  • Health Care Support: 23.7%

  • Building and Grounds Cleaning: 22.9%

  • Retail and Sales: 20.7%

  • Farming, Fishing, Forestry: 20.1%

  • Personal Care and Service: 19.7%

  • Office/Administrative Support: 19.0%

  • Management: 22.6%

  • Art/Design/Sports/Entertainment 14.9%

  • Business and Financial: 14.1%

  • Engineering/Architecture: 13.6%

  • Mathematical/Computer Science: 12.8%

  • Health Care Practitioners 11.8%

  • Community/Social Service: 10.9%

  • Legal: 9.4%

  • Life/Physical/Social Science: 9.2%

  • Education, Training and Library: 8.7%

- Multiply the previous calculation by $5,816, the cost per smoker per year. The output of this calculation is an estimate of the amount of money you spend each year because of smoking employees.

Total number of employees: ___________ x Estimated percent of smoking employees: ___________

= Total number of smokers: _________ x Estimated cost per smoker: $5,816

= Your estimated cost of smoking per year: ____________


Solutions

To combat the high cost of employing smokers, consider starting a smoking cessation program. Contact Allegeant LLC for resources to help you start a smoking cessation program or supplement an existing program.

This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.

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