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Opioid Use Shrinks U.S. Workforce

Where have all the workers gone? Princeton Professor Alan Krueger probed the low workforce participation experienced by the United States since the last recession and came to a disturbing conclusion: Much of it can be directly traced to the ongoing opioid epidemic plaguing this country.

“The increase in opioid prescriptions from 1999 to 2015 could account for about 20% of the observed decline in men’s labor force participation (LFP) during that same period,” Krueger declared.

The LFP rate first gained widespread public attention when it shrank significantly following the Great Recession of 2008.

Many factors other than drugs caused the drop in the LFP rate, including long-term unemployed who gave up hope of finding work, and an aging population for whom early retirement is an increasingly attractive option.

Another disturbing factor believed to correlate to the opioid epidemic is the fact that disability rolls have been growing. Research has found that these benefits compete favorably with what a low-skilled worker could earn and create a real disincentive to re-enter the labor market.

Other factors cited include the rise in incarceration and criminal records that limit employment opportunities, and the rise of college enrollments in low-quality institutions, according to Harvard University Professor Lawrence Katz.

In addition, as Katz recently observed, “Young men have shifted time use modestly from work to video games/computers where they are happy but derive little meaning.”

In 2016, Krueger found that nearly half of prime age men who are not in the labor force are taking pain medication. Two-thirds of those men – about two million in all – take prescription pain medication on a daily basis.

In his 2017 follow-up inquiry of some previous survey respondents, Krueger found that two-thirds of men not in the labor force and taking pain medication used Medicaid, Medicare, or Veterans Affairs health insurance to purchase their prescription pain medication, with the largest group relying on Medicaid.

The LFP rate in the United States peaked at 67.3% in early 2000, and has declined at a more or less continuous pace since then, reaching a near 40-year low of 62.4% in September 2015.

In recent years, the LFP rate among prime-age men has been notably low. In 2015, Italy was the only European country that had a lower LFP rate of prime age men than the U.S.

Workers age 55 and older are the only age group that has shown a notable rise in participation over the last two decades.

Don’t expect women workers to fill the gap, Krueger warns. “The rise in LFP of women drove the post-World War II increase in U.S. labor force, but there’s evidence to suggest that generational shifts, which drew increasing numbers of women into the workforce, have come to an end.”

Krueger’s research also found local variations in low LFP correlate to the geographic spread of opioid use. Over the last 15 years, LFP fell more in U.S. counties where more opioids were prescribed.

Regional variation in opioid prescription rates across the U.S. is due in large part to differences in medical practices, rather than varying health conditions, he notes.

“Pain medication is more widely used in counties where health care professionals prescribe greater quantities of opioid medication,” Krueger observes. As a result, a 10% increase in opioid prescriptions per capita also is associated with a 2% increase in the share of individuals who report taking a pain medication on any given day.

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