The True Financial Cost of Job Stress
Updated: Jun 21
It is estimated that job stress cost U.S. businesses between $150 billion (Spielberger, Vagg, & Wasala, 2003, citing Wright and Smye) and $300 billion annually (American Institute of Stress).
However, it is important to note that these estimates have been criticized as guesswork and speculation (Goldin, 2004).
In “Counting the Costs of Stress,” Goldin questioned the $300 billion cost cited in newspapers and the media (e.g. New York Times, Forbes Magazine, NPR). She argues that had the media properly investigated the original source or applied basic statistical principles that it would have discovered that there was no basis for this amount (Goldin, 2004). She goes on to clarify that the $300 billion price tag of stress includes accident, absenteeism, turnover, diminished productivity, direct medical, legal, and insurance costs, workers’ compensation as well as tort and Federal Employers’ Liability Act judgments. Similarly, in their book, Banishing Burnout (2005), Leiter & Maslach stated that job stress is estimated to cost the U.S. economy $300 billion in sick time, long-term disability, and excessive job turnover. However, there was no mention of how the authors arrived at the $300 billion.
Goldin explained that, according to Dr. Paul Rosch of the American Institute of Stress, the statistics of $300 billion are based on a 1979 book called, “Stress and the Manager” by Karl Albrecht. In the book, Albrecht speculated an absenteeism rate, a turnover rate, overstaffing cost for reduced productivity due to stress, and estimated a cost per absentee day per worker. From those guesses, Albrecht rationalized that the cost to U.S. businesses totaled $150 billion per year.
Most interestingly, Goldin wondered if the American Institute of Stress’ recent guesstimate of $300 billion was due to adjustments for inflation since it was never mentioned in Albrecht’s book. Finally, Goldin cautioned that we should be careful to separate causality from correlation. She asked, is stress the cause of the $300 billion price tag or is it just associated with other factors that are the true culprits? (Goldin, 2004).
What is the true financial cost of job stress? It seems there are no clear-cut answers to this question.
Note: For an interesting follow-up story, read my 2016 post, “Cost of Stress on the U.S. Economy Is $300 Billion? Says Who?”
Written By: Steve Nguyen, Ph.D.
Organizational & Leadership Development Leader
American Institute of Stress. Workplace Stress. Retrieved from http://www.stress.org/workplace-stress/
Leiter, M.P., & Maslach, C. (2005). Banishing burnout: Six strategies for improving your relationship with work. San Francisco: Jossey-Bass.
Spielberger, C., Vagg, P., & Wasala, C. (2003). Occupational stress: Job pressures and lack of support. In J.C. Quick & L.E. Tetrick (Eds.), Handbook of occupational health psychology (pp. 185-200). Washington, DC: American Psychological Association.