If a highly skilled worker is injured or becomes sick, it’s easy to see the monetary benefits of getting that worker back to work as soon as possible. But what about your less skilled workers? What’s the benefit of making an effort to get them back to work in a hurry? Are you better off replacing them?
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In a report prepared for the Department of Labor’s Office of Disability Employment Policy (ODEP), researchers from the Mathematica Policy Research, Inc., compared the costs and benefits of implementing a return to work (RTW) program in the private sector. They looked at two scenarios:
- Employers that have an RTW program in place and the worker returns to work and remains employed full-time in his or her current position until full retirement age; and
- Employers that have no RTW program, they lay off the worker who experienced the disability, and hire a new employee who was previously in a comparable job, to fill his or her position.
Findings Not Encouraging for RTW Programs
The researchers based their wage assumptions on 2013 medians, as published by the U.S. Bureau of Labor Statistics, for a number of occupations.
The findings show that although workers and the federal government benefit monetarily from RTW programs, an employer would incur net costs of $184,614 from implementing an RTW program and reemploying a worker who experienced the onset of a medical condition rather than replacing that worker. Almost all of the net costs are because of the assumed reduction in productivity of the reemployed worker.
By contrast, the worker stands to accrue $688,033 in net benefits from the onset of the medical condition until retirement if reemployed, and the federal government stands to accrue $225,761 over those years.
Are There Benefits of an RTW Program?
The researchers said that they did not account for additional benefits that could raise the employer’s bottom line from net costs to net benefits. For example, a successful RTW program will most likely result in decreased turnover because a younger, less tenured replacement worker is at higher risk of turnover. Reduced turnover means lower recruitment and training costs in the long term.
In addition, a good RTW program can raise staff morale and productivity, the benefits of which can accrue to the employer on a companywide basis.
Also, there are tax credits available to companies that hire or accommodate workers with disabilities. On the other hand, there are disincentives for not accommodating workers with disabilities. The average costs to employers of complaints brought to the Equal Opportunity Employment Commission under the Americans with Disabilities Act are considerable and could tip the employer’s cost-benefit balance in favor of the RTW.
According to the study, from a societal viewpoint, there are many benefits to RTW programs, but investing in an RTW will often not be in the employer’s financial interest.
Employers that want to implement RTW programs face significant challenges. The researchers suggest that studying models that provide employers with economic incentives to retain workers who experience disability would be useful to policymakers that are interested in promoting successful RTW strategies.