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Substance abuse, especially marijuana and prescription drugs, is increasing to epidemic levels.1,2 So why are fewer and fewer employers conducting pre-employment drug testing? Quite simply, they fail to properly recognize the benefits.
According to a recent study, only 57% of employers conduct pre-employment drug testing of all job candidates, while 29% conduct no drug testing on applicants. However, the benefits of pre-employment drug testing are just as applicable today as they have always been. In fact, with the increase in drug abuse, healthcare costs, and employer liability claims, the benefits are even greater than ever before. They range from direct, short-term cost savings to indirect, long-term increase in quality work.4
Deterrence – Drug Users Don’t Want to Be Drug Tested
A few years ago, a heavy-equipment manufacturer, held a job fair near Savannah, Georgia. When the throng of potential employees learned that the next step of the application process would be a drug test, about half of them left.5 Had that group of potential employees initially numbered 30, then that would mean about 15 of them refused to continue because of drug testing. We cannot assume that all of them were drug users; however, we can safely assume that at least some of them aborted the application process because they were current drug users.
The value of drug testing can be measured in many ways, but perhaps the most significant way is knowing that drug abusers hate drug testing. Often when drug abusers learn that a company conducts drug testing they turn around and walk out the door without even completing the job application. Before they can get hired, use company resources for onboarding and training, cause an accident, file a workers’ compensation claim, or steal from a co-worker, they apply for work somewhere else where drug testing is not conducted. By not conducting pre-employment drug testing employers unwittingly become “that other company.”
Direct Cost Savings – Return on Investment Calculations
Let’s crunch some numbers. The average cost of a pre-employment drug test is $45. The average base pay for an entry level employee in the U.S. is $40,314 and it’s estimated that turnover costs for such an employee range from 30-50% of their salary.,  If we assume that the turnover cost averages out at 40% of an entry-level employee’s salary, the turnover cost for an employee is approximately $16,126. The National Safety Council reports that 25% of currently employed non-substance abusers have had more than one employer in the previous year, whereas 36% of workers with any substance use disorder have had more than one employer in the previous year.3 That’s a lot of turnover at a high cost to employers.
Consider a company that conducts 100,000 pre-employment screens. According to drug testing results from nation-wide labs, approximately 4.7 percent of all pre-employment screens are positive.4 Using 100,000 as our base, 4.7 percent equals 4,700 positive results. That is 4,700 job applicants who could cost the company $16,126 each if they decide to quit and find a different job within the year, which they are more likely to do than employees who are not regular drug users. If all of them are hired and subsequently decide to leave the company, that would lead to $75,792,200 in turnover costs alone. To conduct 100,000 pre-employment screens at $45 per test will cost $4,500,000. If these candidates are screened out before they can become employees, that testing saves $71,292,200. Divide that number by the cost of testing and that creates a savings ratio of just over 16-to-1.
No matter what the actual number of pre-employment drugs tests you perform, the ratio stays the same. So even at a smaller scale, pre-employment drug testing offers a 16-to-1 return on investment. And this is only considering turnover costs. Once workers’ compensation, health care, lost productivity, and extra sick leave costs are calculated, the ratio increases in an employer’s favor even more.
Substance abuse is not going away. In fact, it is safe to assume that it will continue to spread in the United States and globally. The number of illegal drug users has been increasing in recent years.5 The full cost of this shift towards wider spread substance abuse is yet to be discovered, but based on what we know now, the cost to employers will be significant. Employers have the right to test for drugs and maintain a safe work environment. Drug testing is not only smart for public safety and workplace safety; it is also fiscally responsible for employers. An updated drug testing policy, continued education based on science and statistical evidence, and continued pre-employment drug testing programs work!