Opioid Epidemic Major Cause of Shrinking US Workforce – Princeton Economist
AP Photo/ Toby TalbotUS03:46 08.09.2017(updated 03:54 08.09.2017) Get short URL
Princeton University economists have claimed that the opioid epidemic may be responsible for as much as 20 percent of the decline in US labor force participation since 2002.
Distinguished economist and former US Assistant Secretary of the Treasury for Economic Policy Alan Krueger has published a study in which he claims that overprescription is one of the main causes of the sagging labor force participation rate.
“The opioid crisis and depressed labor-force participation are now intertwined in many parts of the US,” Krueger wrote in the study released on Thursday at the Brookings Institution conference in Washington.
Krueger tracked the prescription rates of painkillers and the labor force participation of counties across the US since the early 2000s and found a correlation between the two. He also found that regional differences in prescription rates were because of disparate medical practices and not health conditions.
According to the US Department of Labor, labor force participation topped out at 66.4 percent at the beginning of 2007. That same year saw the housing crisis and ensuing recession, sending labor participation in a steady decline that finally bottomed out at 62.4 percent in September 2015.
In that same window, the opioid epidemic (which had roots in the glut of chronic pain diagnoses and subsequent overprescription of painkillers in the late 1990s) continued to worsen. Opioid overdose deaths in the US increased from about 18,000 in 2007 to over 33,000 in 2015.
Traditionally, the decline in labor participation has been blamed on both retirements among an aging population and more young people choosing to attend college full-time instead of entering the workforce. Krueger says the opioid epidemic has had an underexamined impact on the trend as well.
“Addressing the decades-long slide in labor force participation by prime-age men should be a national priority,” Krueger wrote.
Furthermore, the trend creates its own positive feedback loop. Krueger cites the Substance Abuse and Mental Health Administration, which found that the unemployed are significantly more likely to become addicted to opioids, and those who become addicted become less likely to rejoin the labor force.
“I do think it is related to declining labor-force participation among prime-age workers,” Federal Reserve Chair Janet Yellen said to the US Senate in a July hearing about the opioid crisis. “I don’t know if it’s causal or if it’s a symptom of long-running economic maladies that have affected these communities and particularly affected workers who have seen their job opportunities decline.”
Labor participation rate differs from unemployment rate insofar as the participation rate includes both people with jobs and people who are looking for a job but do not currently have one, while the unemployment rate measures the number of people within the labor force who do not have a jobs.