Could Opioids Be Affecting Workforce Participation?

Since the recession ended, workforce participation (the number of people working or actively looking for work) has stagnated, despite increases in job creation and decreases in unemployment. One economist believes there may be an unlikely cause: opioid addiction. 

"Use of both legal prescription pain relievers and illegal drugs is part of the story of declining prime-age participation, especially for men, and this reinforces our doubts about a rebound in the participation rate,” said David Mericle, senior U.S. economist at Goldman Sachs, who prepared a report on the issue earlier this week. 

According to CBS News, economists have speculated that the decline in workforce participation may be due to less demand for lower skilled workers and rising disability rates. However, Mericle argues that the fact that decreasing participation is happening at the same time as the opioid crisis cannot be ignored. 

"Data on substance abuse treatment episodes also reinforce the narrative: Of admissions of individuals not in the labor force, 58% described themselves as being out of the labor force for 'other' reasons—meaning they aren't students, disabled, retired, inmates or homemakers—and 47% of these admissions were for opioids, well above the average rate," he wrote in the report. 

Adults who are misusing or abusing opioids may drop out of the workforce or be fired, and not apply to another job because of concerns regarding their ability to meet the demands of work or even pass a drug screening. 

"Especially in companies that hire drivers, we hear a lot about how the drug tests are a problem there," Gad Levanon, chief economist for North America of The Conference Board, a business membership group, told CBS. "Many of [the applicants] don't pass it, so they can't hire them—and they don't know many aren't even trying.”

Opioid abuse is rampant among the same demographics that have been hard-hit by drops in workforce participation. For example, baby boomers misuse opioids at a rate of 7.4%—higher than any other generation. Opioid abuse is also most common in rural areas that are often struggling economically. One report cited by CBS showed that 22 of the 25 cities most affected by opioid abuse are in rural areas or the South.

Mericle did not attempt to identify whether economic hardship is a risk factor for opioid abuse, or whether opioid abuse was a contributing factor to the downturn in workforce participation. However, he did conclude that the opioid epidemic "is intertwined with the story of declining prime-age participation, especially for men."