What Do Us Traffic Crashes Cost Employers?

Introduction

Recent publicity has focused on corporate layoffs as a cost-cutting tool. Debate has contrasted the “bottom line” with “corporate responsibility.” Injuries account for a substantial portion of health-related costs. Cost-conscious employers would be wise to evaluate their potential health care savings from traffic safety programs.

Data and Methods

Fatality incidence estimation used the National Highway Traffic Safety Administration’s 1998–2000 Fatal Accident Reporting System (FARS) and the U.S. Bureau of Labor Statistics’ 2000 Census of Fatal Occupational Injuries (CFOI).

To estimate occupational fatalities by state, we used the CFOI fatality count. If the CFOI state count was less than nine we used the 1998–2000 average of occupational motor vehicle traffic fatalities from FARS. This resulted in an estimated 2114 U.S. on-the-job motor vehicle fatalities. To get off-the-job motor vehicle-related fatalities, we subtracted the state occupational highway fatality estimates from the 1998–2000 FARS state totals. We assume that all people aged 18–64 are workers or dependents.

To calculate the number of non-fatal occupational injuries, we used the 1998–2000 FARS, 2000 police-reported state non-fatal injury counts (Blincoe et al, 2002), 2000 CFOI, and 1987–1992 National Health Interview Survey (NHIS). The number of motor vehicle crash survivors injured on-the-job by state was computed in four stages. We started from state counts of police-reported crash survivors, adjusted for police under-reporting of injury. The police reports documented an estimated 80% of the total injury victims (Blincoe et al., 2002). From these injury counts and FARS fatality counts, we computed the number of injured crash survivors per crash fatality by state. That ratio was multiplied by the estimated occupational motor vehicle fatalities by state. Finally, the resulting estimates were multiplied by the percentage of injured survivors of motor vehicle crashes on public roads who were injured on the job divided by the percentage of motor vehicle crash fatalities on public roads who died on the job. The percentage of survivors, 5.25%, came from the NHIS. The percentage of deaths, 4.3%, was computed by dividing the CFOI count by the FARS count. Incidence of commercial vehicle crashes used to calculate cost per crash was estimated from aggregated commercial insurance claims data purchased from the Insurance Services Office.

Medical, productivity, emergency services, property damage, legal, and non-liability insurance claims processing costs were estimated by multiplying SOII and CFOI counts by vehicle type occupied or pedestrian status times costs per crash victim from Zaloshnja et al. (2002). The costs then were distributed into more detailed categories with the distribution in Miller (1992). Other costs per case are from Miller (1992). These costs were inflated to 2000 dollars. Employer crash costs were adjusted to specific states using ratios of state to national costs. Costs per employee were calculated using the number of employees by state from the 2001 Statistical Abstract of the United States.

We estimated employer costs of safety restraint non-use and alcohol-involved motor vehicle crashes from a combined file from 1999 FARS, 1999 Crashworthiness Data System (CDS), and General Estimates System (GES). Costs per victim were merged into the file. The GES file was adjusted for under-reporting of alcohol involvement by police through the method described in Blincoe et al. (2002). A probability model constructed from FARS was used to estimate the probability of a non-fatal injury being work-related in cases when it could not be directly determined. The costed file was used to estimate employer costs of alcohol-involved injuries and the portion of employer costs per unrestrained victim that can be attributed to restraint non-use. The latter was estimated as a difference between the actual total cost and the hypothetical cost of crashes in the case that all vehicle occupants were restrained.

Results

Motor vehicle crash injuries on and off the job cost employers $41.5 billion in 2000 and required them to pay $18.4 billion in wage-risk premiums (Table 1). Employer health care spending for motor vehicle crashes was $7.7 billion in 2000. Another $8.6 billion was spent on sick leave and life and disability insurance for crash victims. New York and New Jersey employers carry the heaviest burden per employee in the nation: motor vehicle crash injuries on and off the job cost them $630 and $540 (direct costs) per employee, respectively.

Table 1.

Employer Motor Vehicle Cras h Costs (In millions of 2000 dollars.)

	Crash Injury
	On-the-job	Off-the-job	All
Health Fringe Benefit Costs	3,400	12,900	16,300
Non-Fringe Costs	18,600	6,600	25,200
TOTAL	22,000	19,500	41,500
Wage-Risk Premiums	18,400	0	18,400

Restraint non-use by on-the-job employees cost employers over $1 billion a year in direct costs and a similar amount in wage-risk premiums (Table 2). A larger $3.9 billion employer bill results from restraint non-use by employees and their benefit-eligible dependents while away from work. Direct costs per employee involved in a crash on the job average $27,750 unrestrained, far exceeding the $11,310 cost if restrained. The comparable figures for crashes off the job are $2,980 versus $600.

Table 2.

Employer Costs of Safety Restraint Non-Use (In millions of 2000 dollars.)

	Highway Crash
	On-the-job	Off-the-job	All
Health Fringe Benefit Costs	776	2,924	3,700
Non-Fringe Costs	276	967	1,243
TOTAL	1,053	3,890	4,943
Wage-Risk Premiums	1,077	0	1,077

The total annual employer cost of alcohol-involved motor vehicle crashes exceeds $9.0 billion. It includes $1.9 billion for crashes while working and $1.2 billion in related wage premiums. The health fringe benefit costs total $5.4 billion.

Conclusions

In balancing the goals of competitiveness and goodwill to employees, alternative strategies to cost-cutting become attractive. Traffic safety programs are a way to reduce employer costs without reducing the fringe benefits offered to employees. Protecting employees from motor vehicle crash injury can be a profitable investment of time and resources.