When you're out sick from work, it can be a drag. You're achy, miserable, and there's nothing good on TV. But sometimes it's even more of a drag for your employer. The 500 widgets you would have assembled that day don't get assembled -- and therefore not sold, resulting in a drag on profits. For some companies, your absence requires the hiring of a replacement worker, to teach your classes or collect your highway tolls.

So how much do our health problems really cost American industry? According to the American College of Occupational and Environmental Medicine (ACOEM), a whopping $226 billion per year. That's more than a trillion dollars every five years. The ACOEM's survey of 29,000 U.S. workers yielded the following insights about "lost productivity time" (LPT):

  • About 71% of LPT costs were for non-sick-day time, when a worker is still at work but isn't operating at full capacity, due to some health-related factor such as a bad headache. Almost one-quarter (23%) of LPT costs were tied to worker absences, and the remaining 6% were due to workers taking time off to attend to family health issues.

  • The average LPT cost per worker was $1,700 in 2002. That's two hours of productivity lost per week -- roughly two-and-a-half weeks per year.

  • Smokers who consumed at least a pack a day generated twice as much lost productivity time as nonsmokers, while the health concerns of women resulted in LPT levels 30% higher than those of men.

This is all pretty bad news for company mangers. If the $1,700-per-worker figure is correct, Wal-Mart (NYSE:WMT), with its 1.3 million-plus employees, faces more than $2 billion in annual LPT costs. General Electric's (NYSE:GE) 300,000-some workers generate more than $500 million in LPT costs. For Pfizer (NYSE:PFE), the cost is around $167 million; for Microsoft (NASDAQ:MSFT), $93 million; for Ford Motor Co. (NYSE:F) and UPS (NYSE:UPS), around $600 million.

A recent Detroit Free Pressarticle details the efforts of Ford, Merck (NYSE:MRK), and many others to learn more about these costs. The potential payoff if companies can find ways to reduce LPT is huge, and should be of interest to firms and shareholders alike. Wal-Mart's net income in fiscal 2003 was $8 billion, but in a more ideal world, without LPT it would have been $10 billion or more -- an increase of at least 25%.

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