Fed chief Janet Yellen in Congressional testimony suggested that the opioid epidemic hitting the Ohio Valley states and elsewhere could be attributing to the historically low workforce participation rates for men.
While drug use and abuse is a public policy program, the Fed has dipped its toe into the debate with Yellen telling Congress, “I do think it is related to declining labor force participation among prime-age workers,” Yellen told Senators last week about the crisis.
However here is the key idea. “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 continued.
While the Fed was bailing out the banks with its once-in-a-lifetime QE programs, middle America was running out of unemployment benefits, on the verge of losing their homes and struggling to stay afloat.
To stave of a further crisis, the Obama Administration loosened requirements for workers to go on Social Security disability. Look at the data of new disability enrollees during the 2009-2011 period.
In 2009, Social Security disability claims jumped 21 percent over the year prior. In 2011 the feds were paying more than 23 million Americans some type of disability claim. That’s about 7 percent of the overall population, and 16 percent of the workforce, according to publicly available data. None of this data takes into account private workers’ compensation cases.
Of course you still needed to prove you were injured on the job and part of that claim almost automatically was having to be put on pain medication for an injury sustained in a manufacturing job like most of the employment opportunities in the Ohio area.
There are recent stories of doctors in the area prescribing millions of opioid pills over the period in question. This is what happens when the treatment is discontinued, but the addiction is too strong.
So it seems a bit disingenuous for Yellin & Co. to say if their job creation policy shortcomings — the low participation rates of males in the Cleveland Fed’s area — may be attributed to opioid addiction of the workforce.
Other Fed regional banks have touched on the issue as well.
“Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees, with some citing candidates’ inability to pass drug tests,” the St. Louis Fed reported in the July 12 Beige Book. The Boston Fed published research in September on the link between local economic despair and opioid use in New England.
The Fed knows how to administer stimulus to the banks when they get strung out on outrageous lending binges, but it has a tougher time with the victims of that policy when they need to numb from the pain of easing.