Study Shows Investing in Health and Safety is Good Business
by Blake McGowan, CPE
An excellent article was published in the September 2013 (Volume 55, Number 9) issue of the Journal of Occupational and Environmental Medicine (JOEM) titled, The Link Between Workforce Health and Safety and the Health of the Bottom Line. The article clearly describes and quantifies the relationship between health and safety efforts and a company’s stock market performance. Basically, a company that commits to and excels at providing a safe and healthy workplace is rewarded with a stock price that outperforms the market. Simply put, health and safety provides a competitive advantage. Here are some valuable excerpts from the Introduction of the article:
- More than 22% of working-age adults surveyed reported health-related work impairment from chronic illness in the previous 30 days. Those with impairment averaged 6.7 lost days. This is equivalent to 2.5 billion impaired days per year (Kessler et. al, 2001).
- A 2003 study found that illness and disability reduced total work hours by approximately 8.6% in 1996, with nearly 8.7 million Americans between the ages of 18 and 64 years being unable to work. This represented a loss of approximately $468 billion to the U.S. economy (Berger et. al, 2003). In 2006, more than $2 trillion was spent on health care (Goetzel, 2009).
- Recently, an article by Loeppke and colleagues reported that for every dollar of medical and pharmaceutical costs spent, an employer lost an additional $2.30 of health-related productivity costs. Health-related presenteeism (health risks and medical conditions affecting work performance) was shown to have a larger impact on lost productivity than absenteeism, with executives and managers suffering higher losses. Comorbidities demonstrated the largest effects on productivity loss (Loeppke et. al, 2009).
Here are some meaningful excerpts from the Results & Discussion of the article:
- The initial (theoretical) $10,000 investment (in each of the American College of Occupational Medicine Corporate Health Achievement Award winners) grew to $19,404.12 (from 1999 to 2013), a cumulative return of 94.04% for the research portfolio. During the same period, the S&P 500 had a cumulative return of −0.77% and the final investment value of $9,923.14.
- The annualized return for the portfolio was 5.23% versus the S&P 500 annualized return of −0.06%.
In summary, focusing on and investing in health and safety is good business.