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Kentucky's Abysmal Labor Force Particpation is Not Because of the Opioid Crisis

September 6, 2017

 

The opioid crisis is a frequently used as a catch-all for Kentucky's policy problems, attributing it to everything from the states poor health outcomes to Louisville’s unprecedented homicide spike. Recently, Kentucky’s workforce development problems and low labor force participation rate have joined the long list of things attributed to the opioid crisis. As we can tell, despite anecdotes, there is no notable data to support this contention. In fact, as the opioid crisis has grown, Kentucky's labor force participation has increased. 

 

Kentucky has a heroin crisis, and it has an abysmal labor force participation rate, but there isn’t notable data to indicate that the crisis is a leading cause in our low labor force participation, which is one of lowest in the nation. Likewise, there is no indicator that suggests that addressing the opioid crisis, which is a worthwhile endeavor, will have a real considerable impact on the ills of the labor force.

 

Nationally, labor force participation began decreasing in 2001, falling from above 67% to 66% in September 2008 at the time of the financial collapse. The financial collapse caused the rate to fall severely, reaching a low of 62.4% in September of 2015. In August of 2017, the national rate was at 62.9%. 

 

Kentucky’s labor participation rate, which was already well below national average at the time of the recession at 61.5%, experienced a more gradual decline, and actually experienced a small increase in early 2009 as the unemployment rate exceeded 10%. This is thanks in part to the unfortunate fact that Kentucky’s labor force participation rate prior to The Great Recession was worse than the national rate at the recessions worst points. The labor force in Kentucky rose steadily after the financial collapse, peaking in December 2012, and decreasing rapidly over the next 28 months as nearly 100,000 people left the state’s labor force. Since May 2015, the unemployment rate has remained steady, hovering around 5%, but the labor force has grown considerably, with 2,067,399 Kentuckians participating in July 2017, and 1,956,863 of them employed. These are both the highest amount in over a decade. 

 

As of May 2017, Kentucky’s Labor Force Participation rate ranked 43rd nationally, up from 47th at the end of 2016. Though this is not quite something to brag about, most metrics indicate that Kentucky’s workforce is moving in a positive direction. 

 

At the same time, the opioid crisis has been getting worse. Nationally, deaths from opioids have increased every year since 2002, with most sources dating the start of the crisis during the 1990's as prescriptions for opioids increased. Deaths from heroin started to increase dramatically in 2011 and increasing at an alarming rate every year since. “From 2002 and 2015 there was a 6.2 fold increase in the total number of deaths,” according to the National Institute of Health.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Though Kentucky ranks 16th in overall drug use and addiction, the overdose death rate is very high. In 2015, the state had the third highest death rate in the United States at 29.9 per 100,000, an increase from 24.7 per 100,000 the previous year, and up from 15.3 per 100,000 in 2005. 

 

Illicit drug use has increased nation-wide, as have failed drug tests, but not primarily because of opioids. The overall rate of failed urine tests was 4.2% in 2016, up from 4% in 2015. Perhaps surprisingly, much of the increase is attributable to marijuana use, which represents approximately half of all failed urine tests administered by employers. Remarkably, failed tests related to opioids have actually DECREASED in the last two years. Undoubtedly, some fields experience much higher rates of failed tests, and anecdotal evidence from some employers have failure rates above 25%. If these test failures remain consistent with national trends though, most would be related to marijuana use which has increased steadily for several consecutive years, especially as states legalize medical and recreational use but it remains a part of testing. 

 

As the opioid crisis has grown, the overall labor force and employment in Kentucky has actually improved, not gotten worse, and though employers nationwide are seeing more failed drug tests, the number attributable to opioids is actually decreasing. Our state has a lot of workforce challenges, and the increasing number of heroin deaths certainly doesn’t help, but it is not a sufficient explanation for the challenges we face. The state has major opportunities coming up to continue improving our business climate by solving the pension crisis, and passing substantive tax reform that will put our economy on the right path. 

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