COVID-19–Related Lost Work Time Could Cost Employers Upwards of $50 Billion

April 28, 2021
Matthew Gavidia
Matthew Gavidia

Matthew is an associate editor of The American Journal of Managed Care® (AJMC®). He has been working on AJMC® since 2019 after receiving his Bachelor's degree at Rutgers University–New Brunswick in journalism and economics.

An analysis by the Integrated Benefits Institute estimates that the total cost of lost time from work due to the COVID-19 pandemic could reach $50.5 billion, marking a 117% increase from prior projections.

Employee benefit spending for absent workers amid the COVID-19 pandemic may end up costing employers more $50 billion, according to an analysis by the Integrated Benefits Institute (IBI).

Conducting the study on April 12, 2021 when there were approximately 31.1 million diagnosed COVID-19 cases nationwide, researchers derived employment, wage, and leave benefit data from the US Bureau of Labor Statistics, as well as lost workday experiences within its own dataset of employer-sponsored disability claims to model the impact of lost work time on the total US coronavirus case count.

IBI had performed a similar analysis this time last year in which researchers projected a $23 billion cost burden for employers based on a high-range scenario of 15 million COVID-19 cases. With resulting cases achieving levels more than double than that figure, projected cost markedly rose by 117%–amounting to $50.5 billion in estimated absent employee benefit spending for employers due to the pandemic.

Several factors contributed to the total cost burden:

  • $10.7 billion in disability wage payments
  • $1.6 billion in state disability insurance (specific to California and New York)
  • $15.5 billion in sick leave wages
  • $22.7 billion in employee benefits

“Disability carriers and self-insured employers have lost a lot because of the sheer number of employees who have had to recover or self-isolate from COVID-19,” said Brian Gifford, PhD, director of Research and Analytics for IBI, in a statement. “But employees who have had to take time off because they got sick with COVID-19 have also lost more than $21 billion so far as disability wages pay an average of 62 cents on the dollar. A majority of employees have no disability coverage at all, and many don’t even have paid sick days.”

With 12.1 million cases of COVID-19 involving employed individuals, researchers utilized population data from the US Census Bureau to assess geographic variation in cases, employment patterns, industry mix, and wages.

In their findings, California ($7.2 billion), Texas ($4.2 billion), and New York ($3.7 billion) were identified as states with the highest lost work time. Moreover, metropolitan areas with the largest lost work time cost burden were New York-Newark-Jersey City ($4.3 billion), Los Angeles-Long Beach-Santa Ana ($2.9 billion), and Chicago-Naperville-Joliet ($1.7 billion).

“The age-old insurance industry definition of ‘productivity’ has certainly been redefined by the pandemic,” said Kelly McDevitt, IBI President. “As such, employers should closely examine their products and programs to ensure that their go forward strategy as a company meets the needs of their employees and families in managing their health and well-being in this new environment.”