Researchers at the Graduate School of Public Health and Health Policy of the City of New York University, in collaboration with researchers from Baruch College of Johns Hopkins University and the Knauss School of Business of the University of San Diego, used a computational simulation model to determine the financial implications of employee burnout. Their findings, which were published on 26 February 2025 in the American Journal of Preventive Medicine, revealed that companies are losing between USD 4000 and USD 21000 per employee per year.
The Hidden Cost of Employee Burnout: The Financial Toll of Exhausted Workforce on Employers
Background
The World Health Organization has considered burnout as an occupational phenomenon and has included it in the 11th Revision of the International Classification of Diseases or IDC-11 in 2019. Hence, while it is not classified as a medical condition, it is now considered a syndrome resulting from chronic workplace stress that has not been successfully managed.
Increasing media coverage has highlighted burnout as a workplace crisis. However, when it comes to its financial impact on employers, precise data was lacking. Many organizations also recognize disengagement but may not realize the extent of the costs associated with having an exhausted workforce. Most previous discussions on burnout were also qualitative.
Nevertheless, to understand the extent of the financial toll of burnout, a team of researchers used a computational simulation model to provide concrete financial estimates. They specifically sought to measure how much burnout costs employers per employee type and at the company level by simulating how employees transition between engagement and burnout.
Findings
Different stressors related to the workplace outside factors and different employee positions were taken into account during the simulation. The likelihoods of individuals encountering various stressors were also factored in. The computational simulation model demonstrated its usefulness in estimating the costs to employers when employees experience burnout.
The simulation showed that employee disengagement, overextension, ineffectiveness, and burnout over one year can lead to significant costs. The estimated costs per individual are: roughly USD 3999 for nonmanagerial hourly employees, USD 4257 for nonmanagerial salaried employees, USD 10825 for managers, and a striking USD 20683 for executives.
Nevertheless, for an organization with a workplace population of 1000, the total cost of employee disengagement and burnout would be about USD 5.04 million annually. A comparative analysis also underscored that these financial costs range from 0.2 to 2.9 times the average cost of health insurance and 3.3 to 17.1 times the average cost of employee training.
Implications
The results especially highlight the fact that burnout is a costly issue that employers cannot afford to ignore. The specific financial burden of disengagement, resulting in lost productivity, and event health deterioration suggests that organizations should also invest in preventive measures and other wellbeing initiatives to mitigate these costs as part of their strategies.
“Burnout is pervasive and it is costing organizations millions each year,” explained Molly Kern, professor at the Zicklin School of Business at Baruch College and coauthor of the study, in a statement. “Organizational leaders need to consider how their cultures and benefits programs support the 60% of employees silently struggling with burnout.”
Some of the suggested interventions that organizations can explore and implement include providing mental health benefits to support employees struggling with stress, rolling out financial literacy programs to reduce stressors related to the socioeconomic situations of individuals, and better workload management to prevent overextension and disengagement.
FURTHER READING AND REFERENCE
- Martinez, M. F., O’Shea, K. J., Kern, M. C., Chin, K. L., Dinh, J. V., Bartsch, S. M., Weatherwax, C., Velmurugan, K., Heneghan, J. L., Moran, T. H., Scannell, S. A., John, D. C., Shah, T. D., Petruccelli, S. A., White, C., Dibbs, A. M., and Lee, B. Y. 2025. “The Health and Economic Burden of Employee Burnout to U.S. Employers.” In American Journal of Preventive Medicine. Elsevier BV. DOI: 1016/j.amepre.2025.01.011h