Photographer: DOMINICK REUTER/AFP/Getty Images

Yellen Says Opioid Use Is Tied to Declining Labor Participation

  • Fed chair says she’s unsure whether opioids are symptom, cause
  • Yellen notes that mortality issues tied to opioid crisis

Federal Reserve Chair Janet Yellen, making her most expansive remarks on an opioid epidemic that’s ravaging American communities, indicated the problem is so pervasive it is holding back the nation’s labor market.

“I do think it is related to declining labor force participation among prime-age workers,” Yellen said of the opioid epidemic while answering questions during testimony before the Senate Banking Committee on Thursday. “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.”

Yellen’s comments come as overdose deaths are surging across the country. The opioid epidemic is the legacy of a major increase in painkiller prescriptions during the late 1990s, though it has transitioned to illicit drugs including heroin and fentanyl in recent years. Employers often cite it as a workforce readiness issue and its footprint spans age and socioeconomic demographics, though it has hit working- and middle-class communities in Appalachia and the Northeast especially hard.

The epidemic seems to be one reason that middle-age mortality is climbing for white Americans with less education, according to research by Princeton University economists Anne Case and Angus Deaton.

“We are seeing, as I mentioned, an increase in death rates -- which is extremely unusual,” Yellen said today, noting that the trend is “partly reflecting opioid use, and it is obviously a very serious and heartbreaking problem.”

Labor force participation in the U.S. has plummeted since the start of the 21st century, and male involvement in the workforce has been falling off ever since the 1950s. The fact that prime-age people, in particular, have fallen out of the workforce is a puzzle that has left the Fed wondering whether it can draw more people back into the labor market.

Asked whether there is a clear connection between opioids and an opportunity to go to a job, get employed, and have purpose in life, Yellen said that “all of those things are bound up in this opioid crisis,” and are “interacting in ways that are really quite devastating for these individuals and their communities.”

In the Fed’s regional survey known as the “Beige Book” released Wednesday, the St. Louis Fed reported that some manufacturers were citing “candidates’ inability to pass drug tests or to consistently report to work.”

— With assistance by Daniel Flatley

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