How Mental Health Can Save Businesses $225 Billion Each Year

Increase profit while transforming culture and improving well-being

An INC. Magazine Feature Story by Matthew Jones


Businesses around the world cut corners and put their employees’ physical and mental health at risk in the name of better margins. What they fail to realize is the enormous cost of such decisions. Data indicates that such a decision is a poor long-term investment. Failing to consult with mental health professionals costs businesses billions of dollars each year.

The Cost

Mental illness and substance abuse costs employers an estimated $225.8 billion each year, according to a study by Stewart, et al. 2003 that featured a random sample of over 28,000 workers in the US. The largest indirect cost of mental illness comes in the form of decreased performance due to absenteeism (regularly missing work), and present-ism (working while sick).

While most employers notice absenteeism, they often overlook present-ism. Despite the difficulty of obtaining an accurate measure of present-ism, a study measuring health-related productivity estimated that individuals working with untreated illnesses cost employers $1,601 per person each year.

A study of an employee assistance program demonstrated that 20 percent of lost productivity costs are due to absenteeism, while up to 80 percent are associated with present-ism.

The Problem

CEOs underestimate the hidden costs of employee well being. Overestimating the importance of physical health and underestimating the cost and prevalence of mental illness leads to wasteful spending and decreased life satisfaction of employees.

With one in five adults experiencing a diagnosable mental illness each year and 15 percent of those cases encountering a co-occurring substance use disorder, more workers are absent from work due to mental health issues than physical illness or injuries.

Untreated mental health issues are costlier to employers. For example, a study estimated that workers who meet the criteria for depression but are not receiving treatment utilize two to four times the healthcare resources of their peers.

With about 6.7 percent of all US adults having at least one depressive episode each year, employees suffering from depression cost employers more than $44 billion per year in lost productivity, with more than 81 percent of that lost productivity coming in the form of present-ism.

The Solution

Prioritizing mental wellbeing is long overdue in the US. With national tragedies and mass shootings occurring with disturbing regularity, corporate America needs to move towards a preventative rather than reactive mode of mental health treatment.

The private sector has the ability to create and implement effective mental health treatment that will result in greater employee wellbeing and increase productivity. The increased efficiency and reduction of absenteeism and present-ism will boost profits and change corporate culture.

Mental Health Treatment

The best part about mental health treatment is that it works. One study found that after only three weeks of mental health treatment, the number of employees suffering from a diagnosable mental illness decreased by 50 percent. This same study indicated that after a little over four months of treatment more than 75 percent of employees no longer experienced any work-related impairment.

In a study by ValueOptions, employees who completed at least one session with a mental health provider reported decreased absenteeism and a significant improvement in productivity and overall mental health.

Placing mental wellbeing at the center of this movement includes referrals to appropriate mental health professionals, mental health consultations, and more robust employee assistance programs. The long-term investment in psychological health will create returns that outweigh the crippling loss of productivity due to present-ism and absenteeism.

Prioritizing the mental and emotional wellbeing of employees will increase profit, improve lives, and transform culture.