Opioid economy

In the US, opiod abuse has become such an epidemic that is threatening the labour market.

Addiction to prescription drugs, mainly opiods, is a major problem in the US. In 2015, of all Americans using prescription pain relievers, 13%, or 12.5 million, did not take them as prescribed. This opiod addiction has caused the death rate from drug abuse to rise sharply since 2000. With 90 Americans dying from opioid abuse every day, the epidemic is a crisis of sufficient proportion that even Wall Street is now addressing the problem, reports The Fiscal Times.

The US economy and the labour market in particular is suffering accordingly, said Goldman Sachs senior US economist David Mericle in a recent report. Where it is quite probably showing up the most is in the labour force participation rate – the number of people either working or looking for work. After declining dramatically following the financial crisis, the participation rate has remained stubbornly flat at 63% for the past four years, despite the strong and steady increase in job creation that is pushing unemployment down to new lows.

The problem has puzzled economists: with job creation so strong, people should be out looking for available jobs, causing the participation rate to shoot up. The opioid epidemic is probably part of the answer to that conundrum, says Mericle. Too many are unstable due to opioid addiction to be able to look for work, although addiction is certainly not limited to the jobless.

The Federal Reserve’s Beige Book of last May gave support to Mericle’s thesis, indicating that a number of contacts noted that job applicants were unable to pass employment drug tests.

But the cost of the epidemic extends beyond the job market into health care, criminal justice and lost worker productivity: for 2013 alone, one recent study evaluated the cost at US$78.5 billion. Given that the crisis has intensified since, the price tag could only have risen.