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Obesity Weighs on Bottom Line

The total costs to employers could reach $45 billion in medical expenses and absenteeism, The Conference Board says.
Stephen Taub, CFO.com | US
April 10, 2008

The rising rate of obesity in the United States is significantly trimming corporate profits, according to a new study from The Conference Board.

Obese employees are said to cost private employers an estimated $45 billion annually in medical expenditures and work loss. "Employers need to realize that obesity is not solely a health and wellness issue," says labor economist Linda Barrington, research director of The Conference Board Management Excellence Program and co-author of the report. "Employers need to pay attention to their workers' weights, for the good of the bottom line, as well as the good of the employees and of society."

The rate of obesity in the United States has doubled in the last 30 years. Today, 34 percent of American adults fit the definition of "obese," according to the report. It notes that obesity is associated with a 36 percent increase in spending on healthcare services — more than smoking or problem drinking.

Many companies, however, realize this is a big problem and are actively addressing it. According to the report, more than 40 percent of U.S. companies have implemented obesity-reduction programs, and 24 percent more said they plan to do so in 2008.

Estimates of return on investment for wellness programs range from zero to $5 per $1 invested, according to the report. The Conference Board also asserts that the programs may give companies an edge in recruiting and retaining desirable employees.

However, others believe it may be more effective just to award employees cash and prizes for weight loss rather than devote resources to long-term wellness programs, according to the report.

"Employers need to weigh the risks of being too intrusive in managing obese employees against the risks of not managing them," the report states. "There is evidence that as weight goes up, wages go down."

Companies, however, must be aware that if they shell out the high costs for bariatric surgery, they are unlikely to recoup those costs before the employees have left for other jobs.

They also must also be fully aware of any potential discrimination risk before addressing employees' weight, whether for the employee's own good or that of the company.




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