Lost Time From Work Due to COVID-19 Could Cost Employers Billions, Study Finds

April 6, 2020

In a study released Monday by the Integrated Benefits Institute, researchers found that due to lost time from work caused by the novel coronavirus disease 2019 (COVID-19), employee benefits for absent workers could cost employers more than $23 billion.

In a study released today by the Integrated Benefits Institute (IBI), researchers found that due to lost time from work caused by the coronavirus disease 2019 (COVID-19), employee benefits for absent workers could cost employers more than $23 billion in total.

As indicated in the study, up to 5.6 million employees could be impacted during the pandemic if efforts to curb the spread prove insignificant, with almost 3 million workers at firms with fewer than 500 employees entitled to paid leave per the Families First Coronavirus Response Act (FFCRA) that went into effect on April 1, 2020. For employees at large companies (>500 employees), strategies by organizations to ensure coverage could prove vital.

“One important thing to keep in mind is that however the pandemic plays out—whether that is 1.5 million infected employees, 5 million or something else—about half of employees at large companies won’t have the income protection afforded by disability insurance or FFCRA,” said Brian Gifford, PhD, Director, Research and Analytics for IBI.

In the analysis, researchers derived employment, wage, and leave benefit data from the US Bureau of Labor Statistics, and additionally examined lost workday experiences contained in IBI’s own data set of employer-sponsored short-term disability (STD) claims. They formed a model for lost work time impacts for low-, mid-, and high-range scenarios depending on the total COVID-19 cases nationwide (≤4 million, ≤8 million, and ≤ 15 million cases, respectively).

Findings from the model suggest that employers and their disability insurance partners will be affected by substantial lost work time costs, with Thomas Parry, PhD, president of IBI, indicating that STD claims are “estimated to take between 20-75% of the premiums collected in 2018 due to the growing number of US employees diagnosed with COVID-19.”

While the significance of the findings depends on the eventual severity of the virus, researchers note that from March 17-31, confirmed cases increased by an average of 30% per day, which would mean that at the current rate the United States would diagnose its 4 millionth case by mid-April. Additionally, Parry notes that the study findings represent a very conservative estimate of COVID-19—related lost work time costs and exclude costs pertaining to paid family leave.

“Even if employees have some sick days to fall back on, on top of everything else, they’re going to lose about $2000 in earnings if they contract coronavirus. That’s not only going to impact the US workforce, but also consumer spending when businesses try to restart after the pandemic,” said Gifford.

To assist employers, researchers also provided guidance from healthcare and absence management professionals, which addresses areas such as:

  • Managing different types of leaves during times of uncertainty
  • Care resources for employees with chronic illnesses
  • Coping with mental health issues/stress
  • Readiness to resume business operations