Safety professionals want to reduce worker injuries because they want to see employees go home safe every day. However, reducing the amount of worker injuries also helps the company by reducing costs.
How? By saving on costs related to workers’ compensation, potential OSHA fines and recruiting new workers to replace those too injured to work.
A report from the U.S. Bureau of Labor Statistics (BLS) in 2022 revealed that there were 2.6 million nonfatal workplace injuries and illnesses reported in 2021.
Those injuries cost U.S. employers almost $167 billion in 2021, according to a National Safety Council (NSC) report.
The same report breaks that figure down to:
- $1,080 per injured worker
- $1,340,000 per worker death, and
- $42,000 per medically consulted injury.
The NSC said those figures include:
- wage and productivity losses
- medical expenses
- administrative expenses, and
- uninsured costs such as the value of time lost by workers other than those injured in an incident along with the cost of time spent to investigate injuries, write up injury reports and perform related tasks.
Workers’ compensation: Average cost per claim = $41K
The average workers’ compensation claim costs employers $41,353, another NSC report states.
But that figure can go significantly higher depending on the nature of the injury and the affected body part.
For example, the most costly lost-time workers’ compensation claims by nature of injury are for those resulting from amputation, which averaged $118,837 per claim filed in 2019 to 2020. The next highest costs were for injuries resulting in:
- fracture, crush or dislocation ($60,934)
- other trauma ($60,288), and
- burns ($48,671).
In 2019 and 2020, the most costly lost-time workers’ compensation claims by part of body were those involving the head or central nervous system. Those averaged $93,942 per claim filed. The next highest costs were for injuries involving:
- multiple body parts ($62,859)
- hip, thigh and pelvis ($59,758)
- leg ($59,748)
- neck ($59,391), and
- arm or shoulders ($49,116).
The BLS breaks it down in a slightly different manner, showing the cost per employee hour worked. With that in mind, for 2022 the total employer compensation cost for private industry averaged:
- $40.23 per hour worked
- $28.37 per hour for wage and salary costs, accounting for 70.5% of employer costs, and
- $11.86 per hour for benefit costs, accounting for 29.5% of employer costs.
No matter how it’s broken down, the monetary cost of workers’ compensation to an employer is extremely high.
OSHA violations can cost up to $156K
Safety professionals know that OSHA collects employer injury and illness data on an annual basis, which it publishes online.
The agency says this information is important because it:
- helps identify unsafe conditions and workplace hazards that may cause occupational injuries and illnesses
- is the first step to control and reduce occupational injuries and illnesses
- provides employers, workers and the public with valuable insights to make informed decisions, and
- improves research on the occurrence, prevention and control of workplace hazards.
“Recordkeeping is a valuable tool that provides a road map to where and why injuries and illnesses occur and where improvements are needed,” said Assistant Secretary of Labor for OSHA Doug Parker. “By increasing access to this data, we are providing information that can help people better understand the overall effectiveness of safety and health systems in the workplace.”
OSHA also uses this information to help it pinpoint the industries it needs to focus its enforcement efforts on. That means higher injury rates could mean increased scrutiny from OSHA.
And OSHA fines aren’t cheap. The agency recently increased its penalties to keep up with inflation, something it does annually, meaning maximum fines for:
- serious and other-than serious violations have increased from $14,502 per violation to $15,625 per violation, and
- willful and repeat violations have increased from $145,027 per violation to $156,259 per violation.
Those new figures apply to any fines assessed after Jan. 17, 2023, for OSHA violations that occurred after March 23, 2018.
Cost of recruiting: $6.7K to replace 1 employee
Injuries not only cost money, they also cost time – as in valuable time that employers lost to injury when their injured employees could’ve been productive.
Some employers worry about productivity if they see workers linger in the break room a few extra minutes after a break. That means they should also be concerned about the 70 million lost worker days – yes days, not hours – resulting from injury in 2021.
That can translate to lost profits for the company if the loss of a worker on the production line or warehouse floor results in missed deadlines. Of course, that loss multiplies the more workers a company has out due to injuries.
And what if an employer has to replace a worker whose injury resulted in them never being able to work again?
“Recruiting can be a costly expense between job postings, background checks, onboarding and more. But it can be challenging for an employer to conceptualize just how much it can cost your company in money, time and resources,” according to HRMorning.
HRMorning says that “it can cost more than $6,700 to replace a worker who makes $15 per hour. Plus, turnover for a 50-person workforce can cost as much as $168,000.”
Further, the cost of a bad hire can cause:
- strain on other employees
- increased errors
- low team morale, and
- lower productivity.
Even if a good candidate is found, “it can take six months after hiring to break even on recruiting costs.”
All of these costs can be easily avoided
As safety professionals already know, all of these costs can be easily avoided by creating and adhering to a safety program. That program should include thorough training, enforcement of the company’s safety rules, and participation and buy-in from both management and employees. According to Vector Solutions, reducing incidents can cut absenteeism and turnover, increase productivity, and raise workplace morale by demonstrating a commitment to employee health and safety.
A study conducted in California in 2012 examined the effect of random Cal/OSHA inspections on a company’s injury-related outcomes and performance.
Researchers used a regression model to compare changes over time in companies randomly chosen to receive inspections to changes in uninspected companies.
The number and cost of injuries declined after an inspection, researchers found. The study also found no evidence that the companies Cal/OSHA inspected had lower employment, sales or credit ratings or were less likely to continue to operate than companies the agency didn’t inspect.
Researchers were confident that the estimated effects were “attributable at least in part to OSHA inspections,” although other factors could have played a part.
Additionally, federal OSHA, in making its business case for safety and health, found that:
- workplace safety was among the top criteria employees consider when evaluating a new job offer from a small business, according to a survey from an insurance company
- there is a direct positive correlation between investment in safety, health and environmental performance and its subsequent return on investment
- more than 60% of chief financial officers in one survey reported that each $1 invested in injury prevention returns $2 or more
- more than 40% of chief financial officers cited productivity as the top benefit of an effective workplace safety program, and
- the average worksite in OSHA’s Voluntary Protection Program has a Days Away Restricted or Transferred (DART) case rate of 52% below the average for its industry, which translates to greater profits as workers’ compensation premiums and other costs plummet.