Bad Deal for Generation Squeeze costs Business $2.3 billion annually in Absenteeism

Last time I wrote about Occupy Wall Street, observing that the slogan “We are the 99%” frames the growing inequality in Canada as a few fat cat corporate leaders gorging on the cream produced by many mice churning milk.  While this insight rightly illuminates some systemic problems with the distribution of income in our country and around the globe, I think it wrongly caricatures many individual business leaders today.

As readers of this column will know, I’ve been calling for Canadians to rally behind policy changes in support of the generation raising young kids because it is squeezed for time at home, squeezed for income after housing, and squeezed for services like child care (see  A number of Canada’s business elite have lent their reputations to similar recommendations in the past, because they recognize the societal value of policy change, and because they can make a business case for such investments.

Take people like Warren Beach, CFO of Sierra Systems, Debi Hewson, CEO of Odlum Brown, Yuri Fulmer, CEO of FDC Capital Partners, and Catherine Warren, President of FanTrust Entertainment Strategies.  Far from caricatured fat cats, these corporate leaders are some of the hardest working CITIZENS I know, volunteering countless hours to a number of philanthropic boards and fundraising campaigns, including the United Way where I met them.  At the United Way of the Lower Mainland, they don’t just use their influence to raise money for programs that support families with kids and isolated seniors.  They also lend their voices, encouraging Canadians to prioritize public policy to prevent social problems, rather than treat problems after the fact.

Part of their motivation, I suspect, is the business community already pays a price for the status quo.  Employees with young kids bring their time and service squeeze to their jobs.  The result is higher absenteeism rates for this group of employees, greater turnover, and increased use of extended health benefits – all of which employers pay for.

For a couple of years, I’ve been using some of my research time at UBC to provide evidence that the squeeze on the generation raising young kids costs the Canadian business community billions.  After giving a number of presentations where business colleagues smiled, nodded gently, but resisted engaging, I approached Warren Beach at Sierra Systems, asking whether he believed my findings?”  A no BS kind of guy, Warren replied “As a CA, I’ve seen many people inflate estimates, so I’m skeptical.”  But as a stalwart citizen, remaining skeptical wasn’t an option for Warren.  Instead, he agreed to devote some of his time, and the time of two CA colleagues, to support my team in refining the estimates.

In the light of Warren’s analysis, he is now a believer, suggesting my research team is likely conservative when estimating that “work-life conflict among employees with preschool age children costs the Canadian business community in excess of $4 billion annually. These costs include absenteeism, employee turnover, and health care premiums.”

Take absenteeism as a starter.  Average full-time wages in Canada mean the typical employee earns $213 a day.  The employer is out this wage when an employee uses a sick day or is otherwise away from work because of work-life conflict.  On top of the wage, there is the daily cost for extended benefits that employers pay, which is conservatively another 10 per cent of salary, or $21.

When someone is absent, colleagues have to fill in, and supervisors take time from what they would have otherwise done in order to manage the unexpected HR gap.   Plus, the company forgoes the profits it expected to earn on whatever labour doesn’t get performed.  Together, colleagues’ lost productivity and the company’s lost return on investment in employee wages add up to another 60-65 per cent of the average daily wage, or $128-$138.

This means the total employer cost when an employee misses a day due to work-life conflict is around $370 on average ($213 + $21 + $128-$138).

So how often do people miss days because of work-life conflict?  265,000 BC employees have preschool children.  Their time, income and service squeeze means they miss 3 to 3.6 more days per year because of their high levels of work-life conflict compared to people who report less of a squeeze.  These data come from Statistics Canada and research from Linda Duxbury and Chris Higgins at the Sprott and Ivey Schools of Business respectively – both of whom are leading researchers about work-life balance.

265,000 employees multiplied by 3-3.6 days per year is between 795,000 and 954,000 days lost to absenteeism in our province annually.  At a cost of $370 per day, that adds up to between $300-$356 million annually – just in BC, and just for employees with kids under age six.

Given BC is only 13 per cent of the Canadian population, we’re talking about $2.3 billion nationally.  That’s the price paid by the Canadian business community for otherwise avoidable absenteeism among the generation raising young kids.  (And that’s before we consider other costs, like avoidable employee turnover and health care premiums, which I will consider in future columns).

To put this annual $2.3 billion price in context, the Government of Canada invested $2.2 billion in stimulus spending in the second year of its Economic Action Plan to support adjustment and secure job opportunities in regions and industries most affected by the economic downturn.  Clearly, the magnitude of the absenteeism price tag is a significant drain on our economy.

Rather than waste $2.3 billion each year on avoidable absenteeism, might the business community not spend this money more productively, both for its own profitability, and for the good of society?

I think so.  There is no doubt the New Mom and Dad Benefits, $10/day child care and Flex-Time that I propose as part of a New Deal for Families will impact employers.  But it’s less about new costs, and more about replacing unproductive expenditures for more productive HR practices and social policy investments.

The Surrey Board of Trade will host a Business Summit October 25 that focuses on the costs of work-life conflict.  As a member organization, it deserves credit for showing leadership on what it will take to put families first as part of our country’s social and economic strategy.  Such leadership is not the activity of corporate fat cats.  It’s sound thinking on the part of smart business people who are solid citizens.

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