NASTY FLU A PAIN FOR SMALL BUSINESSES
A brutal flu season that has leveled millions of Americans may barely give the U.S. economy a case of the sniffles, but it’s crimping productivity, delaying product launches and battering sales for many businesses.
“This is causing real losses for companies,” says Andrew Challenger, vice president of outplacement firm Challenger, Gray & Christmas. “And if a large number fall sick (at a company), it will stop production.”
The flurry of illnesses is especially vexing for small businesses that can’t offload work to other staffers.
Elephant Learning, a Denver-based educational software company, had to delay the release of an updated version of its flagship math learning product from early January to late February or early March because all three of its software developers came down with the flu in December, company founder Aditya Nagrath says. Each was felled for about two weeks. The problems were compounded when Nagrath himself got sick in early January.
About 20% of the 10-employee company’s customers, who pay a monthly fee of $35, canceled the online service, Nagrath says.
“It’s been extremely frustrating,” he says. “You just feel like there’s nothing you can do to get control back.”
The current nationwide episode is comparable to the nasty 2014-15 flu season, which sickened 30 million
Americans over age 18, including about
18 million workers, according to estimates by Challenger and the Centers for Disease Control and Prevention. This season could well be worse.
“Overall hospitalizations are now the highest we’ve seen, even higher than
2014-15, our previous high season,” CDC Acting Director Anne Schuchat told reporters in a conference call this month. “Flu activity is still high and widespread across most of the nation.”
Based on a CDC estimate that the average employee misses four work days a year due to injury or illness, Challenger figures the total cost to employers could be $15.4 billion in lost productivity, or output. Yet the CDC has said the number of flu cases could reach 2009-10 levels, when the swine flu pandemic affected an estimated 24 million workers. That would push productivity losses to
$21 billion, Challenger says.
Such a toll theoretically could cut first-quarter economic growth by threetenths to four-tenths of a percentage point, from a projected 2.6% annual rate to 2.2% or 2.3%.
But that appraisal is likely far too high, economist Ryan Sweet of Moody’s Analytics says. Challenger calculated the productivity losses based on sick workers’ average wages. The government, however, tallies the nation’s gross domestic product by estimating the value of all goods and services produced. Employees aren’t always churning out products and services, and an ill worker’s tasks often can be temporarily assigned to colleagues, Sweet says.
There are other negative impacts on the economy. A sick worker typically stays home, reducing sales at restaurants and stores. But at least some of those sales are simply postponed, and others are offset by spending on drugs and hospital visits, Sweet says. Overall, the effect on consumer spending likely is a wash, he says.
All told, Sweet figures the flu season probably won’t have a measurable effect on U.S. GDP but could modestly shave first-quarter growth by as much as a tenth of a percentage point if it worsens and looks more like the 2009-10 episode than 2014-15.
That’s not making the bout any easier for many businesses. Eight of Fiftyflowers.com’s 23 workers at its Boise headquarters got the flu in January, including four customer service representatives, CEO Liza Atwood says. The employees were out five to eight days, and several were hit twice, with different flu strains. Atwood herself, along with technical and marketing staffers, picked up as many calls as they could, but some went unanswered, leading to lost sales.
“Having 35% of your workforce out is a challenge,” she says.
Impactivo, a social impact consulting firm specializing in health care, recommends that sick employees stay home until at least 24 hours after their fever has subsided to avoid spreading the flu among co-workers. Company CEO Maria Fernanda Levis-Peralta says this flu season’s impact on employee productivity “has been dramatic.”
Atwood says Fiftyflowers.com has a generous sick-leave policy. A 10-day absence due to illness is counted the same as one day. And an HR manager checks in with employees on sick leave, urging them to stay home the next day if they show any symptoms.
Some companies are coping with the dreadful season by easing policies. PDQ.com, a Salt Lake City software company, has always frowned on telecommuting. But after a few employees recently had to stay home to tend to sick children, it has become more flexible and is now leaning toward permitting remote work in some circumstances, CEO Shaw Anderson says.
“We can relieve the stress” for employees, he says.