Opiod epidemic hurts U.S. businesses
CHAPEL HILL, N.C. — The nation's opioid epidemic triggered a drop in the number of people able to work, hurting companies' ability to grow and leading to an increased investment in technologies to replace those workers, a new study from UNC-Chapel Hill's Kenan-Flagler Business School found.
The study, which hasn't been published in an academic journal yet, says opioids "effectively make labor costlier" in some communities by shrinking the number of applicants available for jobs. That negatively affects company growth in areas heavily impacted by opioid addiction.
The study also shows that in areas with high levels of opioid abuse, companies have made more investments into technology and automation, which could cause "permanent negative effects on local labor markets."
The effects were most significant in states with higher levels of opioid prescriptions, of which North Carolina was one.
"The substitution away from labor to capital has implications for communities," said Elena Simintzi, an assistant professor of finance at Kenan-Flagler and a co-author of the study.
"Blue-collar workers who are middle-aged are more likely to get addicted, and these are the types of jobs that get subbed away with technology. That has a lasting effect in a community."
She added that many of these employees will then need to be retrained or take jobs in the service economy, which often pays less than traditional manufacturing.
This isn't the first study to tie opioid addition to labor participation rates.
The late Alan Krueger, a Princeton economist, wrote a paper that said opioids could account for "about 43% of the observed decline in men's labor force participation." Former Federal Reserve chairwoman Janet Yellen also suggested a link during her time at the Fed.
But UNC says this is the first study that looks at the impact on the companies that employ those workers.
In areas that had high levels of addiction, the study found a "negative and significant" relationship between opioids and the growth of companies there. In contrast, in states where levels of addiction were lower, the study didn't find a significant relationship between opioids and firm growth.
Simintzi said this especially hurt companies that employ low-skill manufacturing workers, as low educated workers and those who are at risk for injury on the job are more likely to become addicted to opioids. These companies are often competing with other firms in countries like China or Europe that don't have face these addiction issues, putting them at a disadvantage, she added.