Opioid-related deaths are continuing to rise above the 33,000 fatalities recorded in 2015, a number that is higher than auto accidents and gun homicides combined. While the deaths have taken an immeasurable toll on families and communities, the rate of opioid abuse and overdose deaths has reached a critical level of potentially impacting the U.S. economy.
In a paper that will soon be published by the Journal of Health Economics, a team of researchers determined that while major negative shocks to the economy produce higher drug death rates, in better economic times the death rates from drug overdose decrease.
Alex Hollingsworth, Christopher Ruhm and Kosali Simon worked on the study that took into account periods of economic prosperity and downturns. Their most immediate conclusion was that for every one percent increase in unemployment in a given county, the opioid death rate rises by 3.6 percent.
Hollingsworth, a health economist at Indiana University Bloomington, discussed the hopeful possibility that if the U.S. economy were to rebound completely, “then we could potentially see decreases in these adverse outcomes.”
Even though the positive economic impacts are statistically less clear than the negative, “statistically we can’t really rule out that the effect is perfectly symmetric.”
This could be good news for policymakers, especially as President Donald Trump pledges to implement an economic plan that doubles GDP growth and creates 25 million jobs over the next decade.
Just as there are no silver bullets in economic recovery or addiction recovery, the possibility of economic improvements stemming the current opioid epidemic is extremely complicated, especially in looking at the historic data showing the latest increase in opioid abuse has set in over the course of 15 years.
There also appears to be a double-edged sword when it comes to addiction and employment, with economists raising concerns about how to get an addicted labor force back to work.
THE FED WEIGHS IN
Opioid addiction has been called an “all-American disease,” because it has hit virtually every community in every part of the country and every demographic group has seen a rise in opioid-related deaths over the past 15 years.
But the fact that working-age men are the demographic most hard-hit by the epidemic is creating some alarm among economists.
Since the height of the great recession in 2010, economic conditions are objectively much better. Millions of new jobs have been created and the unemployment rate has remained below 5 percent since May 2016.
But despite the job growth and a boom in U.S. economic confidence, the United States is still not at full employment. According to Federal Reserve chair Janet Yellen, part of what is holding the U.S. economy back is the opioid crisis.
During an appearance before the Senate in July, Yellen said she believes the opioid epidemic “is related to declining labor force participation among prime-age workers.”
While she could not ascribe direct causality, she speculated the drug crisis could be “a symptom of long-running economic maladies that have affected these communities and particularly affected workers who have seen their job opportunities decline.”
Research economist at the Cleveland Federal Reserve, Dionissi Aliprantis, noted that it is clear from his research that the great recession played directly into the rise in opioid addiction.
“Between the weakened labor demand from the great recession and the weakened labor market prospects for people, it looks like, at first pass, that’s contributing to the opioid crisis,” he said. In turn, there is evidence to suggest that the propensity to abuse opioids might be impacting labor force participation and employment prospects.
Aliprantis first sought out data on the connection between opioids and the workforce, looking into reports of a “drug-induced labor shortage.” At first, he assumed he would find only anecdotal evidence of employers in certain parts of the country struggling to find job candidates who could pass a drug test.
“It’s obviously awful and very painful on a personal level, but I didn’t think it would be a large enough phenomenon to actually be moving around labor force participation rates or unemployment rates in a significant way,” he explained. But what he found in looking at the data was that it is actually possible.
On top of the human suffering, the addiction crisis also appears to be putting a drag on the economy, he noted.
Since the recession, the number of prime-aged men between 25 and 54 who are not participating in the labor force has remained at historically high rates.
A research paper by Princeton University labor economist Alan Krueger showed that those numbers may be related to pain and pain management.
Nearly half of the working-age men who are not participating in the labor force take pain medication on a daily basis, Krueger reported. In two-thirds of those cases, they are taking prescription pain medication.
While the research does not directly piont to the addiction crisis, Krueger concludes that the pain, sadness and stress these working-age men experience constitute “a barrier to work.”
THE POOR ECONOMY, POOR HEALTH ANOMALY
Even though it seems intuitive to imagine economic downturns lead to poor health, Christopher Ruhm, economics and public policy professor at the University of Virginia has found that is historically not the case.
Typically during recessions, Ruhm found that people generally have healthier behavior during recessions, including drinking less and not using other substances that may put additional strain on tight budgets.
In recent years that relationship started to weaken, his research partner Hollingsworth explained. “It seems like now when times get worse people seem to be doing worse,” he said, which led to the teams research into the economic connection to drug deaths.
As an economist, Aliprantis worries about the specific nature of the opioid addiction crisis being aggravated by the great recession, because it amounts to a short-term economic shock followed by a long-term impact on the labor force.
“In this way, it’s as if the labor market shock from the great recession gets amplified,” he noted.
WHITE HOUSE OPIOID COMMISSION
In July, the White House opioid commission released an initial report calling for a whole of government effort and asking the president to “declare a national emergency” in order to surge the resources needed to combat the epidemic.
Shortly after the release of the report, President Donald Trump unofficially declared a national emergency, urging immediate action. However, nearly two months after that announcement, the president has fallen short of his pledge to formally declared a public health emergency.
Among the areas that needed the most attention were the health care system, more beds and inpatient facilities, more resources to get anti-overdose medication into the hands of first responders, and even more resources for law enforcement to interdict illegal opioids like heroin and fentanyl.
The areas of the economy that the opioid commission focused on, the public health sector and law enforcement in particular, were also part of the “unobservable” economic phenomena Hollingsworth took into account in his research.
In the study, Hollingworth and his team looked at the rise and fall other macroeconomic indicators aside from employment. They tracked declines in median income and labor force participation, which in turn contributed to shortfalls in tax revenue, meaning fewer resources factors that are inextricably linked to things tax revenue, which meant fewer resources for public services, health care, hospitals, law enforcement, and the like.
While taking different indicators into account, Hollingsworth acknowledged that he and his team were not able to pin down some exact economic mechanism contributing to the rise and fall of opioid overdose deaths.
So while improving overall macroeconomic conditions could help stem the spread of the opioid-related deaths, there is no single solution.
