Is an increase in drug use behind the slow recovery of the labor market?
Labor force participation rates are slow to rebound after plummeting during the pandemic.
A slower-than-expected rebound in the labor market might be due in part to higher rates of substance abuse, according to a new report from the National Bureau of Economic Research.
The report noted that labor participation rates in the U.S. dropped sharply because of the COVID-19 pandemic and have still not fully recovered. There are many possible factors in a lower-than-expected labor participation rate, but the researchers point out that substance abuse has also increased during this time period and postulated that the labor numbers and increase in substance abuse might be linked.
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“Estimates of the number of additional substance abusers during the pandemic presented here suggest that increased substance abuse accounts for between 9 and 26 percent of the decline in prime-age labor-force participation,” the report said.
Certain demographics affected
The report noted that the slow return to work was not just among older workers, some of whom might’ve decided to retire or took longer to decide to rejoin the labor force. “There has also been a large decline in the labor-force participation rate (LFPR) of prime-age workers between ages 25 and 54,” the report said. “While there has been some recovery, as of January 2022, the participation rate is still well below its pre-pandemic levels.”
In addition, non-college-educated workers were slower than other groups to return to work, according to the report. This matches other research that suggests American men without college degrees are more likely to have substance abuse issues.
“The falls in labor-force participation in early 2020 were larger for those without a college degree,” the study said. “The LFPR of non-college individuals dropped by 3.9 percentage points compared to a 2.8 percentage point drop for those with a college degree. Non-college labor-force participation has also been slower to rebound.”
Extra time and isolation—possible factors
The report also included a discussion of how substance abuse might have increased. It noted that with lockdowns and the closing of many workplaces, Americans of all types had more time on their hands. Also, drinking at home reduced the cost per ounce of alcohol, which could have led to higher consumption.
“Increased anxiety, isolation, joblessness, and other factors caused by the pandemic could have led to an increased desire to abuse drugs and/or alcohol,” the report said. “During the pandemic, there were also fewer options for ways to spend both time and money. Moreover, like many leisure goods, abusing drugs and alcohol requires time. This is especially true when accounting for both the time spent abusing the substances and the time spent recovering from their usage. Given this complementarity between time and drugs and alcohol, declines in the value of time may have effectively led to decreases in the total cost of substance abuse and, consequently, an increase in the number of abusers.”
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