Visualizing America's Disappearing Workforce

In his September 2017 paper entitled "Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate", Alan B. Krueger of Princeton University explores the dramatic fall in labor force participation in the U.S. from 1997 to 2017.

As Statista"s Martin Armstrong shows in the infographic below, over the last twenty years, the rate has fallen the most for the under 20"s, with the share of 16 to 17 year olds in work dropping by 18.4 and 16.2 percentage points for men and women, respectively.

You will find more statistics at Statista

As Krueger reports, last year, Italy was the only OECD country which had a lower participation rate of prime age men than the United States. One of the reasons posited by the research is the opioid crisis currently ravaging the country. Labor force participation rates have fallen more in areas where more opioid pain medication is prescribed. According to the Centers for Disease Control and Prevention, the amount of opioids prescribed in 2015 was three times higher than it was in 1999.

As noted in the paper, while the direction of causality is not clear, a 2017 report by David Mericle entitled "The Opioid Epidemic and the U.S. Economy" states that “the opioid epidemic is intertwined with the story of declining prime-age participation, especially for men, and this reinforces our doubts about a rebound in the participation rate.”

But as we pointed out previously, after spending months, or maybe even years, running very complicated regressions that your simple mind could never possibly understand, Krueger would like for you to believe that it"s the growing opioid epidemic that is forcing men to sit on their couches all day rather than look for work.  Here"s a summary of his findings from the Brookings Institute:

The increase in opioid prescriptions from 1999 to 2015 could account for about 20 percent of the observed decline in men’s labor force participation (LFP) during that same period.

In “Where have all the workers gone? An inquiry into the decline of the U.S. labor force participation rate” (PDF), Princeton University’s Alan Krueger examines the labor force implications of the opioid epidemic on a local and national level.

Among other findings, the research suggests that:

• Regional variation in opioid prescription rates across the U.S. is due in large part to differences in medical practices, rather than varying health conditions. Pain medication is more widely used in counties where health care professionals prescribe greater quantities of opioid medication, with a 10 percent increase in opioid prescriptions per capita is associated with a 2 percent increase in the share of individuals who report taking a pain medication on any given day. When accounting for individuals’ disability status, self-reported health, and demographic characteristics, the effect is cut roughly in half, but remains statistically significant.

• Over the last 15 years, LFP fell more in counties where more opioids were prescribed. Krueger reaches this conclusion by linking 2015 county-level opioid prescription rates to individual level labor force data in 1999-2001 and 2014-16. For more on the relationship between prescription rates and labor force participation rate on the county-level.

Krueger also provided this very helpful map proving that opioid abuse is highly correlated to unemployment.  Of course, it couldn"t possibly be the case that opioid abuse is the result of high unemployment and the associated depression that goes along with it...no, the opioid abuse definitely came first.

So, what is Krueger"s solution to help reverse the seemingly perpetual decline in labor force participation rates?  If you guessed "Obamacare" then you"re absolutely right...and unfortunately, no, that is not a joke...here is the excerpt from page 38 of Krueger"s paper:

Third, addressing the decades-long slide in labor force participation by prime age men should be a national priority. This group expresses low levels of SWB and reports finding relatively little meaning in their daily activities. Because nearly half of this group reported being in poor health, it may be possible for expanded health insurance coverage and preventative care under the Affordable Care Act to positively affect the health of prime age men going forward.

And while we would never presume to be smart enough to question the very thorough, impartial research of a Princeton economist, we do wonder whether it"s in any way relevant that labor force participation rates seemingly started to decline in 1965...

...at exactly the same time that welfare spending started to surge?

It"s probably just a coincidence.