Substance Abuse during the Pandemic: Implications for Labor-Force Participation
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COVID-19 pandemic has intensified substance abuse, contributing to a decline in labor force participation among prime-age workers. Substance abuse, particularly involving opioids and meth, accounts for up to 26% of a 1.3pp drop in participation, with 391,000 additional non-participants linked to pandemic-related increases in substance use.
Could increased substance abuse during the pandemic be a factor contributing to the fall in labor-force participation?..The dramatic drop and sluggish recovery in the labor supply of prime-age workers can be seen in Figure 1. Early on in the pandemic, the LFPR dropped by about 3 percentage points, and although two-thirds of that decline has recovered,the rate is still about 1 percentage point below its pre-pandemic level.After its steady decline since the late 1990s, the LFPR of prime-age workers was trending upward before the pandemic.1 The straight dashed line in the figure shows the trend in labor-force participation over the January 2015 to February 2020 period. Assuming the prime-age LFPR would have increased at the same rate absent the COVID-19 pandemic, the LFPR is about 1.6 percentage points below trend….The first row of Table 1 reports the cumulative number of deaths from opioids, meth, and alcohol between April 2020 and June 2021 for individuals ages 25 to 54.13 The second row reports the number of deaths predicted using the pre-pandemic trend and seasonal components in Figure 2. Subtracting the second row from the first row gives an estimate of the additional number of deaths that occurred due to the COVID-19 pandemic. These are reported in the third row. There were 69,342 opioid deaths between April 2020 and June 2021, 14,820 of which were above the level predicted by the pre-pandemic trends. Similarly there were 2,702 excess meth-related deaths and 7,835 excess alcohol-related deaths. In total, during this period there were an additional 25,356 drug and alcohol deaths.... As the bottom three rows of Table 1 report, more than 27 million prime-age individuals are estimated to have a substance abuse disorder with more than 5 million of these individuals, 23%, being additional substance abusersabove the expected level based on past trend and seasonal effects…The LFPRs are calculated from the 2015-2018 NSDUH for prime-age individuals who either exhibit a disorder from using a particular substance or do not have a substance-disorder. The LFPR of individuals with an opioid-use disorder is 69.7 which is 13.2 percentage points below the prime-age rate for individuals who do not have a substanceuse disorder of 82.9%.Similarly, the LFPR for individuals with meth-use disorder is 66.7% which is 16.3 percentage points below the rate for individuals without a substance-use disorder. By contrast, there is no difference in LFPRs between alcohol abusers and non-abusers. Since the data shows no impact of alcohol abuse on labor-force participation, the increase in alcohol abusers will not have any impact on the number of additional individuals out of the labor force. For each substance, multiplying the number of abusers in Table 1 by the difference between the LFPR of abusers and non-abusers gives an estimate of the number of prime-age individuals who are out of the labor force (LF) due to substance abuse. For example, multiplying the 1,96 million additional opioid abusers reported in Table 1 by 13.2 percentage points implies that about 259,000 additional people are not in the labor force due to elevated levels of opioid abuse. The estimates indicate that all together there are over 2.7 million prime-age individuals not participating in the labor market due to substance abuse,391 thousand of which are additional non-participants due to the elevated levels of abuse during the COVID-19 pandemic. Table 3 summarizes the impact of the COVID-19 epidemic on labor-force participation of prime-age workers. Due to a 1.3 percentage point lower participation rate, there were 1.51 million fewer prime-age individuals in the labor force in June 2021 than in February 2020. The sixth row of the table reports the number of individuals predicted to be in the labor force in June 2021 using the pre-pandemic trend. Relative to the predicted number of 105.04 million, there were 2.02 million fewer participants...Under the assumption of no change in the death rate of abusers, the increase in opioid and meth usage during the pandemic accounts for a sizable fraction of the decline in LFPRs. The results are reported as the upper bound estimates in Table 4. These shares are determined by taking the estimated 391 thousand additional individuals not participating due to substance abuse reported in Table 2 and dividing it by the declines in the size of the labor force reported in Table 3. Additional non-participants due to elevated substance abuse are 25.8 percent of the 1.51 million person decline in the labor force between February 2020 and June 2021 and 19.4 percent of the decline from the predicted June 2021 levels based on the pre-pandemic trend. Next, we provide a lower-bound estimate assuming that the rise in opioid deaths during the pandemic was due to increased opioid use of existing abusers rather than a surge in the number of abusers….Using data on substance abuse deaths, increased substance abuse during the COVID-19 pandemic is estimated to account for between 9 and 26 percent of the decline in prime-age labor-force participation between February 2020 and June 2021. A decline that, as of January 2022, has still not fully recovered. Relative to levels predicted using the pre-pandemic trend, estimates indicate that increased substance abuse accounts for 7 to 19 percent of the decline. Interestingly, the falls in labor-force participation in early 2020 were larger for those without a college degree. 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. As of January 2022, more than 70 percent of the initial fall in the LFPR of college graduates has recovered with the rate now less than 1 percentage point below levels predicted by the pre-pandemic trend. In contrast, less than half of the initial drop for non-college has recovered. As of January 2022, the non-college rate is still 2.4 percentage points below trend. The large initial drop in labor-force participation by non-college individuals and its slow recovery may be due to differential rates of increase in substance abuse by education during the pandemic. Rates of opioid abuse are more than three times higher, and rates of meth abuse nearly six times higher, among those without a college degree. Given their higher prevalence for illicit drug use, the extent of drug abuse may have increased more for noncollege individuals during the pandemic leading to larger negative effects on their labor-force participation.
Core Finding "...The labor-force participation rates of prime-age U.S. workers dropped in March 2020—the start of the COVID-19 pandemic—and have still not fully recovered. At the same time, substance abuse deaths were elevated during the pandemic relative to trend indicating an increase in the number of substance abusers, and abusers of opioids and crystal methamphetamine have lower labor-force participation rates than non-abusers. Could increased substance abuse during the pandemic be a factor contributing to the fall in labor-force participation? 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 between February 2020 and June 2021...."
The Evidence
“…Figure 2 shows the deaths rates associated with overdoses from different substances The solid blue line in the figure displays monthly deaths from narcotics, which covers various types of opioids such as opium, heroin, fentanyl, and other natural and synthetic opioids, as well as deaths from cocaine. The blue dashed line shows the trend and seasonal narcotic deaths based on the pre-pandemic period The red solid and dashed lines show the death rates, actual and predicted, from alcohol (excluding those associated to drunk driving). Finally, the black lines are deaths from psychostimulants, primarily crystal methamphetamine (meth). Meth deaths have also been higher during the pandemic, although they have not been as elevated relative to their exponentially increasing trend as narcotic and alcohol deaths…” 
“…The first row of Table 1 reports the cumulative number of deaths from opioids, meth, and alcohol between April 2020 and June 2021 for individuals ages 25 to 54.13 The second row reports the number of deaths predicted using the pre-pandemic trend and seasonal components in Figure 2. Subtracting the second row from the first row gives an estimate of the additional number of deaths that occurred due to the COVID-19 pandemic. These are reported in the third row. There were 69,342 opioid deaths between April 2020 and June 2021, 14,820 of which were above the level predicted by the pre-pandemic trends. Similarly there were 2,702 excess meth-related deaths and 7,835 excess alcohol-related deaths. In total, during this period there were an additional 25,356 drug and alcohol deaths Next turn attention to the death rates. Under the assumption that these rates did not change during the pandemic, they are determined by dividing the number of deaths prepandemic by the number of abusers. These death rates, taken from Mulligan (2022), are reported in the fourth row of Table 1. The death rate for opioids, about 0.6 percent, is much higher than those for meth and alcohol, about 0.26-0.27 percent. For each substance, the number of abusers (individuals with substance-use disorder) can now be inferred by simply dividing the number of deaths by the pre-pandemic death rates. As the bottom three rows of Table 1 report, more than 27 million prime-age individuals are estimated to have a substance abuse disorder with more than 5 million of these individuals, 23%, being additional substance abusers above the expected level based on past trend and seasonal effects..”
“…Next turn to how much substance abuse lowers labor-force participation. The first row of Table 2 shows the difference between the LFPRs of opioid, meth, and alcohol non-abusers and abusers…”
Jeremy Greenwood, Nezih Guner and Karen Kopecky, "Substance Abuse during the Pandemic: Implications for Labor-Force Participation,"National Bureau Of Economic Research, April 2022, https://www.nber.org/papers/w29932
“….These shares are determined by taking the estimated 391 thousand additional individuals not participating due to substance abuse reported in Table 2 and dividing it by the declines in the size of the labor force reported in Table 3…. …Additional non-participants due to elevated substance abuse are 25.8 percent of the 1.51 million person decline in the labor force between February 2020 and June 2021 and 19.4 percent of the decline from the predicted June 2021 levels based on the pre-pandemic trend….”
“…Due to a 1.3 percentage point lower participation rate, there were 1.51 million fewer prime-age individuals in the labor force in June 2021 than in February 2020.The sixth row of the table reports the number of individuals predicted to be in the labor force in June 2021 using the pre-pandemic trend. Relative to the predicted number of 105.04 million, there were 2.02 million fewer participants. How many of these missing workers might be attributed to drug abuse?Under the assumption of no change in the death rate of abusers, the increase in opioid and meth usage during the pandemic accounts for a sizable fraction of the decline in LFPRs. The results are reported as the upper bound estimates in Table 4….”
“… The LFPRs are calculated from the 2015-2018 NSDUH for prime-age individuals who either exhibit a disorder from using a particular substance or do not have a substance-disorder. The LFPR of individuals with an opioid-use disorder is 69.7 which is 13.2 percentage points below the prime-age rate for individuals who do not have a substanceuse disorder of 82.9%. Similarly, the LFPR for individuals with meth-use disorder is 66.7% which is 16.3 percentage points below the rate for individuals without a substance-use disorder. By contrast, there is no difference in LFPRs between alcohol abusers and non-abusers. Since the data shows no impact of alcohol abuse on labor-force participation, the increase in alcohol abusers will not have any impact on the number of additional individuals out of the labor force. For each substance, multiplying the number of abusers in Table 1 by the difference between the LFPR of abusers and non-abusers gives an estimate of the number of prime-age individuals who are out of the labor force (LF) due to substance abuse. For example, multiplying the 1,96 million additional opioid abusers reported in Table 1 by 13.2. percentage points implies that about 259,000 additional people are not in the labor force due to elevated levels of opioid abuse. The estimates indicate that all together there are over 2.7 million prime-age individuals not participating in the labor market due to substance abuse, 391 thousand of which are additional non-participants due to the elevated levels of abuse during the COVID-19 pandemic. Table 3 summarizes the impact of the COVID-19 epidemic on labor-force participation of prime-age workers.