The Economic Costs of Alcohol and Other Drug Problems
A Financial Drain & Workforce Challenge

The economic costs of alcohol and other drug problems to the U.S. economy are staggering, with some estimates as high as $414 billion. While definitions of and approaches to estimating such costs vary, alcohol and other drug problems remain one of the most important workforce challenges facing employers today because (at a minimum) of rising health care costs and reduced productivity.

In the Sioux Falls area, preliminary indications from a report commissioned by Face It! suggests that the economic impact of alcoholism on our community is substantial, ranging from $117 million to as high as $190 million a year. This translates to a cost burden of about $560 to $900 per capita in our community each year.

The preliminary report also suggests that funding of recovery and treatment programs is a very good investment. Every dollar spent on treatment and recovery delivers nearly $8.50 in benefits. These “dividends” come from higher levels of employment, reduced absenteeism, materially less contact with the criminal justice system, and a 50 percent reduction in days spent in the hospital.

More on the costs of alcohol and other drug problems:

• Most adults with substance dependence or abuse were employed full time in 2006. About 62 percent of the 20.6 million classified with dependence or abuse worked full-time.
• More than two-thirds (67 percent) of human resource professionals surveyed believe that substance abuse and addiction is one of the most serious issues they face in their company.
• Health care costs for employees with alcohol problems are about twice those of other employees.
• Heavy drinking contributes to illness in each of the top three causes of death in the United States: heart disease, cancer, and stroke.
• Almost a quarter of a trillion dollars of the nation’s yearly health care bill is attributable to substance abuse and addiction.
• Seventy percent of the cost of alcohol-related problems is attributed to lost productivity and 14 percent related to health care expenditures.
• Reported job problems, such as incomplete work, absenteeism, tardiness, work-related injuries, mistakes and disagreements with supervisors are cut by an average of 75 percent among employees who have received treatment for substance use disorders and are in recovery.
• HR professionals reported that the most significant problems their companies experience due to employee substance abuse and addiction were absenteeism (62 percent), reduced productivity (49 percent) and lack of trust (39 percent).
• People with alcoholism use twice as much sick leave as other employees and they are five times more likely to file workmen’s compensation claims.
• More than half of working family members of alcoholics report that their own ability to function at work and at home was negatively affected by their family member’s drinking.
• The costs of alcohol or other drug-related crime was recently estimated to be approximately $205 billion.
• A study by the state of Oregon estimates that untreated substance abuses costs that state as much as $5.93 billion each year, including $813 million for health care, $4.15 billion in lost earnings and $967 million in other costs such as law enforcement, criminal justice and social welfare expenditures.