Investing In Mental Health Good For Business

May is Mental Health Awareness Month, so it's as good of a time as any to talk about how the mental health of employees impacts the workplace.

Over 40 percent of Americans report increases in mental distress due to the COVID-19 pandemic, leaving employers with their own crisis, resulting in increased absenteeism, negative impacts on productivity and profits, and an increase in health care costs.

Encouragingly, employers that support mental health see a return of $4 for every dollar invested in mental health treatment, according to new research released from the National Safety Council and NORC at the University of Chicago. When employees receive effective treatment for mental distress, organizations realize reduced total medical costs, increased productivity, lower absenteeism and decreased disability costs. 

The analysis also revealed organizations spend over $15,000 on average annually on each employee experiencing mental health issues. This data highlights the costs pre-COVID-19 and likely underrepresents the current cost to employers due to the increase in Americans experiencing mental distress.

Mental distress has long been a hidden issue in the workplace, with 85 percent of workers reporting the workplace itself affects their mental health and wellbeing. One risk factor for mental distress is experiencing stress, which can be caused by workplace conditions. Chronic exposure to stressful workplace conditions can lead to a variety of mental health conditions, including experiencing depression, anxiety, an inability to concentrate and emotional exhaustion. Adding this to stressful conditions in the home, and the problem can quickly grow.

To help employers understand the pivotal role they play in supporting employee mental health and safety, NSC and NORC at the University of Chicago created the Mental Health Cost Calculator. The tool provides business leaders with data-driven insight about the costs of employee mental distress in their workplaces and identifies the specific ways untreated distress impacts employers’ costs. These costs include an estimate of the dollars lost in days of work missed, excess turnover and replacement costs, and greater health care use by distressed workers and family members. The calculator also offers research-proven steps employers can take to help employees and their family members recover, while increasing the safety, health and productivity of their workplaces.

“Millions of employees experience psychological distress each year, yet it often goes undetected. Employers are uniquely positioned to address employee mental health by raising awareness, supporting routine screening and early identification, and improving access to care and evidence-based treatments,” said Tracy McPherson, PhD, senior research scientist in the Public Health department at NORC at the University of Chicago. “This tool, developed in a partnership between NSC and NORC, helps employers understand the impact of untreated mental distress and understand why investing in a mentally healthy workforce is good for business, fosters a safe workplace, and improves the health of employees and their families.”

Other findings from the analysis include: 

1. Employees experiencing mental distress use, on average, nearly $3,000 more in health care services per year than their peers. The cost of days lost averages $4,783 per year per employee, and the costs of turnover averages $5,733 per year per employee.

2. Distress varies greatly across occupations. Occupations with high levels of distress are entertainment, sports, media and communications, technicians and related support occupations, while low prevalence occupations include executive, administrative, managerial, financial, protective services and construction.

3. Employees who have experienced mental distress in the past year are more likely to have reported driving under the influence of alcohol, marijuana or other drugs.

4. Mentally distressed workers are 3.5 times more likely to have substance use disorders.