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Cantor: The good health of employees is a good business investment

New York State Health Commissioner Howard Zucker recently observed that government needs businesses to help fix the nation’s health care system. While saying that one’s health depends more on social circumstances, behavior, exercise and diet, Zucker sounded like another unfunded government mandate was heading businesses’ way.

Zucker does have a point. Americans spend more on health care than people in 12 other high income countries. Yet when compared to these 12 countries the United States has the lowest life expectancy at birth and highest prevalence of chronic disease. It’s not only the employees, the human capital that benefit if businesses become involved. There also may be an economic benefit to employers.

Human capital is a factor of the education and workplace experience an employee brings to the workplace and how often that employee is working. This is what drives employee productivity and employer profits. Affirming this is the National Bureau of Economic Research (NBER) which found that employee good health has a “positive, sizeable, and statistically significant impact on aggregate economic output,” exceeding the economic growth from differences in workplace experience and education.

While NBER acknowledged the economic impact of different levels of education attainment, college education alone does not guarantee that one will earn more. But without a higher level of education, it is unlikely that one will earn more. Zucker adds health into the employee productivity economic equation by noting that education, employment, and housing are factors in a person’s health, with college graduates expected to live 8-9 years longer than those who did not graduate from high school.

Better health and living longer benefits employers and the economy. NBER suggests that a one-year improvement in a population’s life expectancy contributes to an increase of 4 percent in production output. While this is a large economic impact varying upon education and workforce skills, what is becoming clearer is that increased spending on improving employee health appears to be justified purely on their impact of labor productivity.

Toward that goal Zucker has some achievable suggestions. Healthier food choices in employer cafeterias, establishing workplace wellness programs, encouraging exercise and reducing workplace stress. He was fine until he mentioned stress, but certainly these are low cost employer investments that could earn them economic benefits.
So maybe it’s time for employers to listen to Zucker’s suggestions. A healthy employee can only increase output not only through labor productivity but by the profits and accumulated capital generated for businesses.

MartinCantorCantor is director of the Long Island Center for Socio-Economic Policy and a former Suffolk County economic development commissioner. He can be reached at [email protected]

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