Fed Reserve Chair Yellen blames opioids for shrinking workforce

1.8 million workers were out of the labor force for "other" reasons at the beginning of this year.

Testifying before the Banking, Housing, and Urban Affairs Committee of the U.S. Senate on July 13, Federal Reserve Chair Janet Yellen delivered more than the semiannual Monetary Policy Report to legislators—also making expansive remarks on an opioid epidemic that is ravaging American communities and, she said, impeding the nation’s labor market.

“I do think [America’s opioid epidemic] is related to declining labor force participation among prime-age workers,” Yellen said in answer to questions from the committee members, according to a report by Bloomberg. “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.”

Indeed, about 1.8 million workers were out of the labor force for "other" reasons at the beginning of this year—meaning that they were not retired, in school, disabled or taking care of a loved one, according to Atlanta Federal Reserve data.

The reasons include pain and addiction. In fact, of that population of nearly 2 million, nearly half—roughly 881,000 workers—said in a survey that they had taken an opioid the day before, based on findings of an October 2016 survey, Where Have All the Workers Gone?, conducted by Obama-era White House economist Alan Krueger.

Employers often cite it as a workforce readiness issue. Its footprint spans age and socioeconomic demographics, although it has hit working- and middle-class communities in Appalachia and the Northeast especially hard, according to the Centers for Disease Control and Prevention.

And the problem is spreading. On the West Coast, the CDC has identified Washington state as a location where “statistically significant increases in drug overdose death rates" occurred from 2014 to 2015.

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

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.”