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TOPIC: Cost-of-workplace-injuries

The True Cost of Workplace Injuries: Calculating the Impact


According to the 2016 Liberty Mutual Workplace Safety Index, the most disabling, nonfatal workplace injuries amounted to nearly $62 billion in direct workers compensation costs, last year. This is a very large number and represents a huge cost to employers, but when you take into account indirect costs, that number dramatically increases to $250 billion each year.

So how are direct and indirect costs defined and how can you calculate the true cost of an injury and its effect on your organization?

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The Cost of Workplace injuries and illnesses

Workplace injuries and illnesses have a tremendous impact on the bottom line for employers.

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What Workplace Safety Means to Your Bottom Line

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Protect Your Eyes with Eye Protection – There’s No Reason Not To!

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Is $250 Billion Enough?

A study conducted by J. Paul Leigh, professor of public health sciences at UC Davis has found that occupational injuries and illnesses cost the nation about $250 billion every year, much higher than shown on a previous study in 1992. This figure is $31 billion more than the direct and indirect costs of all cancer, $76 billion more than diabetes, and $187 billion more than strokes.

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How to calculate the true cost of an injury

In a recent post we talked about the high costs of workplace injuries for the employer. In fact, we quoted a study that found that workplace injuries and illnesses cost the nation $250 billion every year.  How are these costs calculated and how do they affect you the employer? 

Direct Costs

  • Medical Cost
    • Doctor’s visits, treatments, surgery, etc.
  • Indemnity Cost
    • 2/3 wages up to a set amount weekly
  • Medical
    • 100% of the medical – doctor, office visit/hospital, X-ray/MRI, prescription drugs, physical therapy, home nurse, etc.
  • Indemnity
    • Percentage of weekly wage (varies by state)
    • Permanent and partial disability
    • Death benefits
  • Expenses
    • Legal
    • Claim processing/handling charges

Indirect Costs

  • Pain and suffering of employee         
  •  Loss of production                                          
  • Customer “quality” issues & loss of business   
  •  Overtime costs
  • Equipment or product damage
  •  Recruiting and retraining
  • Time
  •  Damage to equipment
  • Interruptions in productivity
  •  Injured employee
  • Employee morale
  •  Customer service
   
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