If you wonder what is supposed to happen when the demand for labor outruns the available supply, take a look at the picture below. It’s a Starbucks plea for baristas—the usually young people who make your latte, americano, or coconut milk mocha macchiato every morning. True, this particular branch is located in small-town Colorado, a state in which the unemployment rate is around 2 percent, far below the approximately 6 percent considered “full employment” when I was teaching this stuff. Still, even after recent increases in hourly wage rates, and introduction of an attractive benefits package that includes free college tuition and health care, and free access to Spotify, which I am told is some sort of music app, Starbucks is having trouble filling its ranks.
The Seattle-based chain is not the only employer struggling to find staff. The problem is widespread. One construction executive told me he cannot find roofers, those who left the trade during the Great Recession having found easier and steadier work driving UPS and FedEx vans. A property developer with a $1 billion annual budget has the land on which to build to houses, but can’t find workers, skilled and unskilled, to build them. Amazon, which needs 50,000 workers to fill new positions, 40,000 of them full-time, many with starting salaries of about $13 an hour, will be holding a job fair next week and expects to face difficulties finding suitable candidates. Employers uniformly tell me that higher wages would not attract the workers they need. Before responding, “They would say that, wouldn’t they?” consider opioids.
As Fed chair Janet Yellen told a Senate committee recently, the opioid epidemic is contributing to the labor shortage. Opioids are just the thing to kill the pain of a tooth extraction. For two or three days. And a blessing for the terminally ill. But they are a bane for those who abuse them, and a factor to be considered when analyzing the labor market. Yellen testified, “We’ve had many decades of declining labor force participation by prime-age men. … We’ve seen now unfortunately that it is likely tied to the opioid crisis. … I don’t know if it’s causal, or it’s a symptom of long-running economic maladies that have affected these communities.” One iteration of the now-failed Senate health care bill included $45 billion to combat opioid abuse.
To understand what is going on, start with a few facts. The headline national unemployment rate is 4.4 percent, low by historic standards. But throw in workers who are involuntarily working part time, and those too discouraged to continue the job hunt, and the more relevant unemployment rate (known as U-6) comes to 8.6 percent. For every 25-to-55 year-old American male classified as unemployed, reckons demographer Nicholas Eberstadt, “there are another three who are neither working nor looking for work.”
Until now the list of reasons given for this high dropout rate varied with political persuasion. Conservatives blame welfare payments so generous that work is unnecessary, which they also say explains the increased ubiquity of devices with which young couch potatoes, average age 35, can play video games. These devices can now be found in 65 percent of U.S. households. Progressives, as American liberals now prefer to be called, blame the 8.6 percent U-6 unemployment rate on a lack of sufficient job opportunities, resulting from sluggish economic growth and consumer demand. All are wondering why many of the approximately 14 million men and women who make up the U-6 unemployment rolls can’t find work: There are 5.7 million job openings in the United States.
The answer might be opioids, heroin, and marijuana, but especially opioids. These painkillers are now recognized as a major contributor to the shrinkage of the nation’s workforce and, by extension, to the failure of its tepid growth rate of under 2 percent to heat up. Solid figures are hard to come by, but the best estimate is that in 2015 some 2 million Americans 12 years old or older had “a substance abuse disorder involving prescription pain relievers” to use the description of the American Society of Addiction Medicine, and almost 600,000 had a similar “disorder” involving heroin. Unlike past drug epidemics, which disproportionately affected gang-ridden black neighborhoods, this one affects largely white, rural communities that have been devastated by globalization, although the problem is creeping into middle-class urban neighborhoods.
Don’t blame the doctors who have been prescribing opioids carefully for decades, successfully managing moderate-to-severe chronic pain, especially among older adults, according to the American Public Health Association (APHA). For one thing, the vast majority of patients who become opioid addicts used illicit drugs before they became opioid users, so their addiction cannot be blamed solely on prescribed opioids. As the AEI’s Sally Satel points out in National Affairs, “Non-patients procure their pills from friends or family, often helping themselves to the amply stocked medicine chests of unsuspecting relatives suffering from cancer or chronic pain.” No Rx required.
For another, starting some 20 years ago doctors came under pressure from the American Pain Society, other health care organizations, and hospital administrators to respond actively to patients’ complaints about pain, many of which complaints they had previously ignored as minimal and non-threatening—“Take two aspirins and go to bed, or better yet, about your business.” Satel, a psychiatrist, points out that in response to mounting pressure, clinicians began “giving an entire month’s worth of Percocet or Lortab to patients with only minor injuries or post-surgical pain that required only a few days of opioid analgesia” to relieve pain. The result was a high, and a high satisfaction rating to cheer hospital bean-counters.
Then there is the gift that keeps on giving to analysts of our health care system, Obamacare. It linked “patient-satisfaction surveys” to the amount of Medicare and Medicaid reimbursements. How better to “satisfy” a patient than by issuing a prescription that the patient believes will make him or her feel good—until it doesn’t.
Still, doctors do have something to answer for. A study by Dr. Michael Barnett of the Harvard T.H. Chan School of Public Health found that doctors treating similar ailments can be classified as “high intensity prescribers” or “low intensity prescribers.” Patients of “high intensity prescribers” are 30 percent more likely to become long-term users than similarly situated patients of “low intensity prescribers.” “High-intensity providers” include doctors who prescribe tens of thousands of pills of Oxycodone, a leading opioid, without examining many patients, according to indictments obtained in New Jersey.
All of which brings us back to Yellen’s complaint that the opioid epidemic is wreaking havoc with the labor market. The APHA notes that “risks for abuse of prescribed opioid medications may be greatest among young men.” Those are the prime-age workers most in demand by employers—if “clean.” It seems that opioids and other drugs make it less likely than before that members of the reserve army of the unemployed are willing or able to put down their video games and pick up their tools in response to offers of higher compensation. Businessmen are reporting that anywhere from 25 percent to 50 percent of qualified applicants cannot pass a routine drug test. Especially in the manufacturing sector, where use of heavy machinery makes a lack of alertness a real danger, more’s the pity because those firms need the unskilled workers especially hard-hit by imports and the recession.
Some fail because they have been taking opioids, and not for a limited time as prescribed. Others are heavy users of heroin, to which they graduated from opioids for financial reasons—a 30mg Oxycodone pill sells for about $30 on the street; I am told that heroin to produce a similar high can be had for about $6. Many fail drug tests because they have been using marijuana in the past 30 days, especially in states that have legalized “recreational use.”
Applicants are often invited to return for retesting when they are clean. Few ever do. No drug test required to play a video game.