Economists in recent days have taken note of a trend that’s been painfully obvious to many in HR: The opioid epidemic is preventing some employers in parts of the country from hiring and keeping workers.
Most notable among the new voices was Federal Reserve chairwoman Janet Yellen, who addressed a question that has puzzled labor economists —what is driving the decades-long decline in the labor-force participation rate for prime working-age men? (Translated from econo-speak: Why are fewer men ages 25 to 54 either employed or looking for work?)
Speaking to the Senate banking committee on July13, Yellen tied that decline to another troubling trend: the rising death toll from overdoses of prescription opioid painkillers. “I do think it is related to declining labor-force participation among prime-age workers,” Yellen said. Other economists have elaborated on this theme in recent weeks. For example: the Federal Reserve Bank of St. Louis, in its August 2017 “beige book” economic report, notes: “Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees,
with some citing candidates’ inability to pass drug tests or to consistently report to work,”
The link between opioids and employment isn’t just guesswork. Yellen and other economists cite the work of Princeton University economist Alan B. Krueger. His latest research, published in the Fall 2017 edition of the Brookings Papers on Economic Activity, “makes a strong case for looking at the opioid epidemic as one driver of declining labor force participation rates,” write Brookings Institution editors in a summary of the research.
Building on his own earlier finding that Krueger’s latest findings are built on his own earlier research looking at labor and medical datafor U.S. counties. Krueger found that over the last 15 years, after controlling for other variables ,“labor force participation fell more in counties where more opioids were prescribed.”