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Smoking employees cost $6,000 a year more, study finds

Smokers stand outside of an office building in New York City in 2009. A new study calculates that smokers cost their employers $6,000 more a year than nonsmokers.
Smokers stand outside of an office building in New York City in 2009. A new study calculates that smokers cost their employers $6,000 more a year than nonsmokers.Lucas Jackson/ Reuters

Smokers cost their employers nearly $6,000 a year more than staff who don’t smoke, researchers said on Monday in what they say is the first comprehensive look at the issue.

And in what some might see as a dark twist, they’ve taken into account any savings that might come because smokers tend to die younger than non-smokers, drawing less in pension costs.

The findings support a growing trend among employers to not only ban smoking in the workplace, but to refuse to hire smokers in the first place, argues Micah Berman of Ohio State University, who led the study.

“I think it’s certainly relevant to the argument,” says Berman, an expert in public health law.

Many studies have shown that smokers cost the health care system more and that they cost health insurers more. Because many companies self-insure – meaning they pay for health care costs even if a health insurance company manages the benefits for them – that means smokers cost their employers more.

There’s also the lost productivity of workers stepping away for a smoke break – and those breaks take longer as more employers ban smoking anywhere in the office or workplace.

But no one study put all these costs together, Berman says. “I was really surprised to see that there wasn’t any really good study out there,” he said in a telephone interview.

So Berman and colleagues with expertise in economics took a look at as many of the studies as they could find – studies on health care costs and so-called presenteeism – when people are at work but not putting in full effort. They looked at studies that calculated the cost of taking more sick days, and the cost of smoke breaks, and, finally, the costs of benefits of not having to pay pensions to employees who die prematurely.

“Our best estimate of the annual excess cost to employ a smoker is $5,816,” they wrote in the journal Tobacco Control.

They took a conservative approach whenever possible, Berman said, erring on the side of caution.

“Employers try to correct for the idea that smokers cost more by paying them somewhat less. Even when we adjusted for that – smokers still cost more,” he said.

They looked at the lowest possible costs for people taking smoke breaks – just eight minutes a day lost to smoking.  That would cost employers $1,641.14 a year, they said.  But it’s more likely much higher -- $3,077, they calculated, based on two 15-minute smoke breaks a day. Lost productivity was based on the average wages and benefits paid a smoker working full time: $26.49 an hour, with 232 days worked a year.

Excess healthcare costs of smokers, who have higher rates of lung disease, heart disease, various cancers and other illnesses:  $2,055.77.

Berman thought it was important to include the “death benefit”. “Though in some cases this may occur, it could happen only in defined benefit plans,” they wrote.

Most employers now offer 401K plans, which pay out based on the investments in them and not based on an employee’s lifespan. Berman’s team incorporated the death benefit calculation for the 21 percent of employers who still offer defined benefit pensions, and found the total lifetime savings per person was $10,123 for a male smoker and $383 for a woman – lower because women tend to have less money coming in a pension.

A startling part of the calculation was just how much less productive smokers really are. “Though all employees are occasionally unproductive in one way or another, research suggests that smoking status negatively impacts productivity separately and apart from lost work time due to smoking breaks and absenteeism,” Berman’s team wrote.

“This is because nicotine is a powerfully addictive drug. Although cigarettes satisfy a smoker’s need for nicotine, the effect wears off quickly. Within 30 minutes after finishing the last inhalation, the smoker may already be beginning to feel symptoms of both physical and psychological withdrawal. (Much of what smokers perceive as the relaxing and clarifying effect of nicotine is actually relief from their acute withdrawal symptoms.)”’

So-called presenteeism costs $461.92 a year for each employee who smokes, they calculated. Excess absences cost $517.

Many companies have adopted smoke-free workplace policies, and a growing number are also refusing to hire smokers at all. Alaska Airlines is one, says spokeswoman Marianne Lindsey.

“We have had a non-smoking policy within the company since the mid '80s (and we test for nicotine use upon hire) in those states where we are permitted to do so,” Lindsay says. “We also offer a free quit smoking program for employees and dependents who may have started smoking after being hired, or who smoked prior to our non-smoking policies being implemented. We can't make a direct correlation to medical costs, but we do know that there's many intangible benefits to (having) healthier employees.”

There are court challenges to these policies and now 29 states and the District of Columbia have laws specifically barring companies from banning or disciplining smokers, although they may charge them higher health insurance premiums.

Most public health experts advocate a softer approach. “Studies show as smokers have more opportunity to quit, and more resources to quit, they are more successful," says Laurie Whitsel, policy research director for the American Heart Association. She notes that most smokers say they want to quit. “Most smokers take six to nine times to be able to quit a tobacco habit,” Whitsel said in a telephone interview. "It is incredibly addictive.”

Former White House adviser Dr. Ezekiel Emanuel and colleagues argued against banning smokers in the New England Journal of  Medicine in April. “We believe that employers should consider more constructive approaches than punishing smokers. In hiring decisions, they should focus on whether candidates meet the job requirements; then they should provide genuine support to employees who wish to quit smoking,” wrote Emanuel, a former bioethicist at the National Institutes of Health who is now at the University of Pennsylvania.

The Centers for Disease Control and Prevention estimates that 19 percent of U.S. adults smoke, and that 443,000 people die prematurely every year because of tobacco use. The CDC estimates smoking costs $193 billion in health expenses and lost productivity.