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Sleep & Workplace Productivity: The High Cost of Lost Sleep to the Workplace

Written by Goodpath Employer Health Index (GEHI)
2021-08-12

Given the fact that 1 in 3 adults do not get enough sleep, every workplace is affected by the lack of sleep. Employees who do not get enough sleep may not perform their best at work and typically cause increased healthcare expenses. This is a costly and challenging problem for employers. 

Poor sleep among employees is linked to many negative outcomes that affect both the individual employee as well as the company. Lack of sleep or poor quality sleep is linked to:

  1. Higher utilization of healthcare, including medication, costing employers more in claims

  2. Higher incidence of workplace accidents 

  3. Reduced productivity at work 

  4. Trouble with concentration, listlessness, and decision-making

  5. Higher rates of absenteeism

All of this adds up to sizable economic costs for employers tied to poor sleep. 

Greater Healthcare Costs Because of Troubled Sleep

Employees with sleep disorders have higher healthcare costs than good sleepers. Sleep disorders contribute to higher healthcare costs in two ways:

  1. The direct costs of treating the disorder, and

  2. Overall poorer health that leads to additional healthcare spending

Individuals with insomnia had average annual healthcare costs $4,267 greater than employees without insomnia ($11,206 for individuals with insomnia vs. $6,939 for those without). 

A significant contributor to the difference in healthcare costs for those with insomnia is pharmaceutical spend. 75% of people with insomnia are prescribed medication. While medication helps short-term management of insomnia, it also may have dangerous side effects of daytime sedation, cognitive impairment, and risk of dependence.

Sleep problems are often a cause and a result of other medical conditions, leading to additional healthcare costs. When insomnia-specific treatments (e.g., medication) were removed from analysis, individuals with insomnia still had 85% higher healthcare costs than those without insomnia. Those costs are linked with the treatment of comorbidities that poor sleep increases the risk of developing (e.g., cardiovascular disease, diabetes).

A 2015 study by the National Safety Council found that an employer with 1,000 employees can save $536,000 in healthcare costs per year through sleep improvement programs

More Workplace Accidents Due to Poor Sleep

Not getting enough sleep, or getting poor quality sleep, leads to a higher risk of accidents and errors.  While this is important for all organizations, in high-risk industries, such as healthcare, aviation, manufacturing, and transportation, an error or accident can cause major injury, even death. In industries not considered high-risk, such as consulting or retail, an error or accident can lead to financial costs, reputational damage, and more. 

Employees reporting sleep disorders are twice as likely to have an accident at work and 1.5 times as likely to cause an error. Insomnia leads to a disproportionate share of the cost of workplace accidents. Based on simulations, an estimated 7.2% of all costly workplace accidents and errors are connected to insomnia. However, the disorder makes up 24% of the total cost of accidents and errors. As a result, insomnia is projected to be associated with 274,000 accidents and errors per year and a combined cost of these accidents of $31.1 billion

Lost Productivity & Decreased Work Quality Due to Poor Sleep

Poor sleep impairs one’s ability to work, hurting productivity, creativity, and the overall work environment. This loss of productivity from poor sleep directly affects the business’s bottom line. Additionally, a reduction in creativity can adversely affect innovation and competitiveness. 

Each year, 11.3 work days per worker are lost to reduced productivity from poor sleep. A large study of employees attributed a $1,967 loss in productivity per year per worker to poor sleep. Employees who got less than 5 hours of sleep per night had twice the productivity loss of those who got 8 hours

Lost productivity costs are 72% higher in those with moderate to severe insomnia than for those who sleep well. In total, lost productivity due to insomnia is estimated to cost U.S. employers close to $66 billion per year in 2017 dollars.

With 1 in 3 adults not getting enough sleep, employers are incurring additional costs. Baseline healthcare costs are 26% higher and over time insomnia can result in an average cost of $4,267 more per employee compared to those without this condition.  

Some of these costs can be mitigated through sleep improvement programs which have shown to save employers healthcare costs. Offering effective, accessible sleep programs supports both the health of the employee and the company.  

This article is part of our larger series on sleep and its role in employee health. Continue here for details on choosing the best sleep program for your workforce. 

For more information on sleep and its relationship with employee health and workplace productivity, access the full Sleep & Its Role In Employee Health report here. You can also access the Improving Employee Sleep Action Plan here.