What Do Traffic Crashes Cost?
Total Costs to Employers by State and Industry.
Table of Contents
Summary
Costs Covered by Employers
Costs Beyond the Company
Employers’ Health Spending
Traffic Safety Programs Savings
Employer Costs by State
Employer Costs by Industry
Conclusions
Appendix
References
  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. This report shows that by preventing motor vehicle crashes, the potential health care savings are large. Motor vehicle injury costs to employers are reported on a nationwide, state-by-state, and industry basis. The report improves on the national and state-by-state estimates of employer costs of crashes presented in Traffic Safety and Health Care: State and National Estimates of Employer Costs (DOT HS 808-234). It adds estimates of employer costs by industry.


Costs Covered by Employers

Employer costs resulting from motor vehicle crashes fall into three categories: Health fringe benefit costs, non-fringe costs, and wage premiums.

Health fringe benefit costs are the costs of fringe benefits paid because of illness and injury. They cover contributions to Workers’ Compensation medical and disability insurance, health insurance, sick leave, Social Security disability insurance, life insurance, and private disability insurance, as well as insurance administration and overhead.

Non-fringe costs include motor vehicle property damage and liability insurance, crash-related legal expenses, and the costs of unreimbursed vehicle damage and replacement. In addition, employers pay taxes to help fund police, fire, and ambulance services. Employers also lose productivity when employees suffer injuries preventing them or their co-workers from working at full capacity. Recruitment and training costs can result from deaths and long-term disabilities.

Finally, employers pay wage premiums to workers for accepting risky jobs. Individual workers and their families bear the non-monetary losses associated with workplace injury. This wage premium for risktaking can be viewed as payment in advance for possible future losses. Miller (1990) identifies 30 credible studies showing the amount paid. These values allow economists to estimate quality-of-life losses for injured workers.


Employer Costs Extend Beyond the Company Door

Employers pay for injuries that occur both on and off the job. In 1994, motor vehicle crashes killed an estimated 2,000 people while they were working and injured 323,000. As Table 1 shows, over half of the injuries forced people to miss work.1 Overall, on-the-job crash injuries (fatal and non-fatal) amounted to about 6.2% of all crash injuries.

TABLE 1
Injuries of Workers and Their Dependents
Due to Motor Vehicle Crashes in 1994
  INJURIES
  On-the-job Off-the-job All
Fatal 2,000 39,000 41,000
Non-Fatal 323,000 4,893,000 5,216,000
    Lost Work Days 171,000 2,593,000 2,764,000
    Non-Lost Work Days 152,000 2,300,000 2,452,000
TOTAL 325,000 4,932,000 5,257,000


TABLE 2
Employers' Motor Vehicle Crash Costs
(M = Millions, $ = 9/95 Dollars)
  CRASH INJURIES
  On-the-job Off-the-job All
Health Fringe Benefits Costs $4,000 M $14,300 M $18,300 M
Non-Fringe Costs 20,300 M 4,500 M 24,800 M
TOTAL $24,300 M $18,800 M $43,100 M
Wage-Risk Premiums $11,600 M $0 M $11,600 M

The 1994 economic cost of U.S. highway crashes was $150 billion (Blincoe, 1996). Employers share this cost for medical care, lost wages, travel delay, and vehicle repair with government and insurers. Crash victims and their families suffer all of the quality-of-life losses, which are not costed.

Motor vehicle crash injuries on and off the job cost employers over $43 billion in 1994 (Table 2) and required them to pay almost $12 billion in wage-risk premiums.

Nearly half of the total of fringe and non-fringe costs resulted from off-the-job injuries to workers and their dependents.