Don't worry if you can't figure out the math. Strange as it may sound, it takes about $20 in sales to make up for each dollar a store loses to theft.

Theft will account for retail losses in excess of $30 billion this year, according to Department of Commerce statistics. Multiply that by 20 and you can see that retailers nationwide will need a staggering $300 billion extra in sales to make up that loss. Small wonder hundreds of retail stores go belly up every year.

To recoup their losses, retailers have two choices: sell $300 billion more in goods, or raise prices. Guess which method works best? That's right, the one that takes money out of your pockets. Think about that the next time you see somebody slip an item of merchandise under his shirt and head for the exit instead of the cashier. What that person is doing most certainly is your business!

Shoplifters account for more than 30 percent of theft (called shrinkage) from retail stores each year, according to a University of Florida study. Clerical errors and vendor fraud make up another 23 percent or so. That leaves about 46 percent, and guess who is responsible for that enormous slice of the theft pie each year?

Employees.

According to the university study, employees cost the retail industry more than shoplifters do, and the numbers have been rising over the past couple of years. What that means to you and me is higher prices everywhere we turn, from the grocery store to the fast food restaurant to the department store, and even to the la-di-da posh boutiques that already want your monthly salary, right arm and firstborn child in exchange for a designer scarf. Shrinkage doesn't just apply to retailers' profit margins, but to your dollars' buying power.

Like shoplifters, employees pilfer a wide variety of things, from paper clips to paper money, food, toys, clothing--you name it, and an employee somewhere has stolen it. Or tried to. Those video systems set up in your local department store are there for more than catching shoplifters. Those unblinking lenses are also eyeing the employees.

"One of the main reasons employees steal is because they know the chances of getting caught and prosecuted are slim to none," said Lt. Greg Long of the Port Wentworth Police Department.

Lt. Long said video cameras can help catch the thieves, but managers need to remember to use fresh tapes now and then so that what the camera records isn't snowed out. Videotape that has been recorded on for months, he said, "may look good on their system, but doesn't look good on anyone else's. Replace the tapes every six months."

Detective David Vales of the Garden City Police Department said, "A lot of places set up video with one thing or the other in mind--they're thinking of someone coming in to rob them with a gun, or employees stealing from them." Cameras should be set to watch employees as closely as they do customers, he said. Surveillance cameras should also be tamper-proof, Lt. Long said.

Background checks and polygraph examinations during the interview/hiring process are good protective measures against shrinkage from employees with sticky fingers.

Another excellent preventive measure is a strongly worded company policy that clearly promises swift and certain termination and even prosecution for thieving employees.

"You also need to put in the policy that employees must submit to a polygraph if there is a police investigation. Anyone who refuses is terminated," Lt. Long said. That's about the time a new ex-employee might get the feeling someone's watching him, because someone just might be--the police.

Polygraph tests are prohibitively expensive for very small businesses, and background checks aren't cheap. As is so often the case, the Internet can come in handy. Companies that perform background checks or let you surf an individual's past yourself (for a fee, of course), abound. Just be sure to check out the company you use to check out your employees.

The price of video surveillance varies depending upon the type and size of store and the number of employees, of course, but again, an enterprising entrepreneur can bargain hunt worldwide via the Internet.

"There is a way to reach a happy balance. Cost depends on how you go about it," Detective Vales said.

Random drug testing helps weed out employees who might have less moral barriers to stealing than others. And just being there, Detective Vales said, is a great tool for managers concerned about employee pilferage.

"Be there, move around, so they don't know when or where you're going to show up," he said. "If a guy takes out the trash, help him. A lot of inventory goes out the back door with the trash."

Frequent, irregularly-timed inventories also keep thieves at bay, since they don't know if it will be two days before you realize they've got six of your meat market's best t-bones hidden in their lunchbox, or two minutes.

While not cost-effective, Lt. Long said the best inventorying/cashiering system takes two people. "If someone makes out the daily deposit slips, then the second person comes along and checks the numbers on the slip and counts the money," he said. "It's expensive, because you have two people doing the same work, but in the long run, it saves the business money because it catches problems immediatley."

The same principal works for inventorying merchandise.

Businesses that take checks can require cashiers to initial checks presented by people they know, Detective Vales said. He recently worked a case where a check that was reported stolen turned out to have the cashier's initials on it. The cashier was able to say the check did belong to the customer who falsely reported it stolen. Had the check with the cashier's initials on it really been stolen, the cashier and not the customer would be on the hot seat.

Investigating employee theft costs the business owner and the customer, but it also costs every municipality. Law enforcement officers spend hundreds of thousands of hours annually investigating employee theft nationwide. And many do it for nothing.

Too many businesses settle for restitution and fire the culprit without prosecuting him. Getting the money or the merchandise back "solves the immediate problem," Lt. Long said. "But," he cautions, "it sets a precedent for other employees." The original culprit will simply get a job somewhere else and start all over again.