For years, economists and politicians have argued about the decline of participation in the work force.
Even now, with the unemployment rate at a record low of 4.3 percent, another statistic has caused economists to find new $10 words to describe why the labor force participation rate has continued to drop since the 2008 recession. If you search around on Google for the answer, the dreaded words “cyclical factors” show up with alarming frequency. Some people blame Obama, Bush, CNN or Justin Bieber, while others blame automation, the shift of manufacturing jobs overseas, etc.
Anthony Chan, chief economist for JPMorgan/Chase, is a guy who wakes up in the morning and checks things like outbound investment by China and does a nice job explaining obtuse terms like “cyclical factors” in plain English. He. too, has been puzzled by the drop in labor force participation, but had not really found a compelling explanation.
The reason economists like Chan are puzzled is that typically as the job market improves, workers re-enter the market and find jobs. That has not been the case, generally speaking, with this recovery and no real solid explanation has satisfied economists of any stripe.
Now Chan wonders if there may be one. Speaking at an Economic Update Luncheon in Fort Worth for the bank’s customers recently, Chan pointed to a study by the National Bureau of Economic Research, a group, he notes, that includes some knowledgeable and experienced economists.
The study connects the nation’s opioid crisis to the decline in workforce participation.
“The fact that some of the recent rise in drug deaths coincides with the Great Recession and its aftermath highlights the importance of understanding the connection between economic conditions and drug deaths,” the researchers, Alex Hollingsworth, Christopher Rohm, and Kosali Simon, wrote in the study.
Opioids are a class of drugs that include the illicit drug heroin as well as prescription pain relievers oxycodone, hydrocodone, codeine, morphine, fentanyl and others, according to the American Society of Addiction Medicine. In 2012, 259 million prescriptions were written for opioids, which is more than enough to give every American adult their own bottle of pills.
According to the Centers for Disease Control and Prevention, the number of opioid-related overdose deaths have quadrupled since 1999.
Even Federal Reserve Chair Janet Yellen has taken note, telling the Senate Banking Committee in July that the opioid epidemic has economic consequences along with its societal impact.
“I do think it is related to declining labor force participation among prime-age workers,” she said in her testimony. “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.”
And the impact goes beyond just keeping addicts out of the job market. There are plenty of studies that show workers who are addicted to opioids have higher health care costs, more frequent absences and often find themselves disqualified from jobs because of drug tests.
Opioid addiction is apparently difficult to shake with many organizations indicating that breaking the addiction can take years of work.
Getting America’s workforce back to full strength may take more than just providing jobs.
Robert Francis is editor of the Fort Worth Business Press.