Festival of Economics 2017June 1- June 4

PAIN AND LABOR FORCE DRAIN

Alan B. Krueger

Pain and Labor Force Drain

Alan B. KruegerPrinceton University & NBER

June 2, 2017

Trento Festival of Economics

Glossary of Terms

• Unemployed (U) = Was not employed in survey week, actively searched for a job in last month, and was available for work

• Labor Force (LF) = Employed + Unemployed

• Unemployment Rate = U / LF

• Labor Force Population Rate (LFPR) = LF/Population

• Note: U.S. statistics are for population age 16 and older

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U.S. Unemployment Rate Has Fallen to Below 5%While Italy’s Unemployment Rate Remains Above 11%

June 2, 2017 3

Italy

USA

March 2017

April 2017

But U.S. Labor Force Participation Rate Peaked in 2000And Has Declined by 4 Percentage Points

June 2, 2017 4

• The U.S. Labor Force Participation Rate (LFPR) has declined since 2007 mainly because of population aging and trends that preceded the recession

• Only Italy has a lower LFPR than the U.S. in O.E.C.D.

• LFPR is only moderately pro-cyclical, and little prospect of much of a cyclical recovery in the U.S. so long after the recession

• Decline in LFPR of young people primarily offset by schooling increase

• LFPR has been declining for prime-working-age men for decades. Prime-age men who are not in the labor force (NLF) report notably high incidence of pain, high use of pain medication, and low levels of emotional well-being and low life satisfaction.

• Participation rate stopped rising for women born after 1960. Employed and NLF women report similar levels of subjective well-being, but the subset of NLF women who are not “taking care of the house” report similar distress and pain levels as NLF men.

• Population aging will continue to reduce labor force participation. A rise in participation will require a reversal of secular trends and focus on health.

5

Observations on the Decline in Labor Force Participation in U.S.

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U.S. Labor Force Participation Rate Peaked in 2000

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25

30

35

40

45

50

55

60

65

70

75

80

85

90

1948 1958 1968 1978 1988 1998 2008 2018

Percent (Seasonally Adjusted)

Labor Force Participation Rates by Age & Gender

Apr-17

Women (25 Years & Over)

Men (25 Years & Over)

16-24 Years

Labor Force Participation Rates,by Age and Gender

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Note: Shading denotes recession.

Source: Bureau of Labor Statistics; National Bureau of Economic Research.

U.S. and Italy of Lowest Labor Force Participation Rates of Men in O.E.C.D.

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Italy

United States

U.S. and Italy of Lowest Labor Force Participation Rates of Women in O.E.C.D.

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Italy

United States

Labor Force Participation Rate of Men and WomenAge 25-54, 2015

10June 2, 2017

Most of the Decline in U.S. LFPR since 1997 is Accounted for by Aging of the Population

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𝓁 = 𝓁𝑖,1997 𝑤𝑖,2016 = 63.7%

The labor force participation rate fell by 4.2 percentage points from 1997 to 2016. Counterfactual: Assign 2016 LFPR for each of 16 age-by-sex groups to population shares. This calculation implies that 3.4/4.2 = 81 percent of the decline in LFPR accounted for by the shift in population shares.

𝓁 = 𝓁𝑖,1997 𝑤𝑖,1997 = 67.1%

1

2

3

4

5

6

7

8

9

Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15

Percent of Previous Month's Not in Labor Force (Seasonally Adjusted)

Transition Rate From Not in Labor Force

Apr-17

From Not in Labor Force to Unemployment

From Not in Labor Force to Employment

From Not in Labor Force to Labor Force

Cyclical Upswing Unlikely to Save Us: No Increase from NLF to LF – NLF-E Rising and NLF-U Falling

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Note: Shading denotes recession.

Source: Bureau of Labor Statistics; National Bureau of Economic Research.

Understanding Trends for Subgroups

• Young Workers

• Prime Age Men

• Women

• Subjective Well-Being

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0

5

10

15

20

25

30

35

40

45

50

Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15

Percent (Seasonally Adjusted)

Nonparticipation & Idle Rates by Gender, Ages 16-24

2016

Idle Rate: Men

Nonparticipation Rate: Women

NonparticipationRate: Men

Idle Rate: Women

Rise in School Enrollment Offset Most of Decline in LFPR for Young Men, and All of it for Young Women

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Note: Idle refers to neither enrolled in school nor participating in labor force. Shading denotes recession.

Source: Bureau of Labor Statistics; National Bureau of Economic Research.

Prime-Working-Age Men

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87

88

89

90

91

92

93

94

95

96

97

98

99

1948 1958 1968 1978 1988 1998 2008 2018

Percent (Seasonally Adjusted)

Labor Force Participation Rate: Men, 25-54 Years

Apr-17

LFPR has been Falling for Prime-Age Men for Decades

16June 2, 2017

Note: Shading denotes recession.

Source: Bureau of Labor Statistics; National Bureau of Economic Research.

LFPR Prime Age White Men, by EducationAnnual Averages

17

84%

86%

88%

90%

92%

94%

96%

98%

100%

195

4

195

6

195

8

196

0

196

2

196

4

196

6

196

8

197

0

197

2

197

4

197

6

197

8

198

0

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

Lab

or

Forc

e Pa

rtic

ipat

ion

Rat

e

<= HS

All

Many NLF Prime Age Men Report Poor Health(and Look Different from the Unemployed)

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Not in

Employed Unemployed Labor Force

(%) (%) (%)

Men

Excellent 20.0 19.5 12.3

Very Good 36.3 29.2 20.6

Good 31.9 35.1 24.4

Fair 10.7 13.9 25.4

Poor 1.2 2.3 17.3

Number of Respondents 7,277 468 683

Women

Excellent 20.9 16.3 16.6

Very Good 37.0 25.6 24.0

Good 30.9 36.3 28.0

Fair 10.0 18.1 19.3

Poor 1.1 3.7 12.1

Number of Respondents 7,453 637 2,265

Note:

Table 6: Self-Reported Health Status for Workers Ages 25-54

Sample is Well-Being Module pooled over 2010, 2012, and 2013 for individuals

Source: Bureau of Labor Statistics (American Time Use Survey); author's calculations.

ages 25-54. Data are weighted using Well-Being Module final weights.

by Labor Force Status

More than 1/3rd of NLF Men Have a Severe Disability

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Not in

Employed Unemployed Labor Force

(%) (%) (%)

Specific Disability:

Difficulty Dressing or Bathing 0.2 0.4 7.5

Deaf or Difficulty Hearing 0.9 1.5 4.0

Blind or Difficulty Seeing 0.4 0.9 4.0

Difficulty Doing Errands Such as Shopping 0.3 0.9 15.0

Difficulty Walking or Climbing Stairs 0.8 2.1 19.8

Difficulty Concentrating, Remembering, or Making Decisions 0.8 2.5 16.3

Any Disability 2.6 5.9 33.8

Multiple Disabilities 0.5 1.5 18.7

Number of Respondents 1,947,027 135,904 256,068

Note:

Table 7: Disability Rate for Men Ages 25-54 by Labor Force Status

Source: Bureau of Labor Statistics (Current Population Survey).

Sample is monthly Current Population Survey data pooled from January 2009 to August 2016 for men ages 25-54.

Specific disabilities are not mutually exclusive.

NLF Men Report High Incidence of Pain and Pain Medication – Esp. White <BA NLF Prime Age Men

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White<BANLF

3.1557.0%50.3%374

• Prime age NLF men spend 30% of their time alone, compared with 18% for employed prime age men and 19% for NLF young men.

• Deaton & Kahneman (2010) – Alone time negatively correlated with daily emotional well-being

Pain Medication by Gender and Labor Force Status

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Follow-up Krueger Pain Survey – Sept. 30-Oct 2, 2016

Survey of 571 NLF prime-working-age men using an internet panel provided by Survey Sampling Inc. Weights developed to match CPS in terms of age, race and Hispanic ethnicity.

47% of NLF prime-age men took pain medication on the previous day, similar to ATUS-WB

65% of those who took pain medication reported that they took prescription pain medication (in 36 percent of these cases they took both over-the-counter and prescription pain medication).

40% responded “Yes” when asked, “Does pain prevent you from working on a full-time job for which you are qualified?”

66% reported a disability. The higher disability rate than in CPS partly resulted because 16% wrote in “Other” in addition to the BLS’s six conditions. Also possible that men participate in Internet surveys are more likely to suffer a disability, or that the CPS understates the number of prime age men with a disability.

35% reported receiving SSDI

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Subjective Well-Being – ATUS-WB 2010, 2012-13

• Experienced Well-Being (ATUS-WB)

• Overall Evaluation

Cantril Ladder: “Please imagine a ladder with steps numbered from zero at the bottom to ten at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you.

If the top step is 10 and the bottom step is 0, on which step of the ladder do you feel you personally stand at the present time?”

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Subjective Well-Being of Prime Age Men,By Labor Force Status

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Not in

All Employed Unemployed Labor Force p-value

Happy 4.18 4.20 4.25 3.95 0.010

Tired 2.23 2.25 1.51 2.52 0.000

Stressed 1.59 1.57 1.56 1.81 0.038

Sad 0.62 0.55 0.74 1.15 0.000

Pain 0.87 0.76 0.82 1.92 0.000

Meaningful 4.24 4.27 4.23 3.92 0.002

U-Index 0.15 0.14 0.17 0.22 0.002

Cantril Ladder 6.87 7.03 5.69 6.08 0.000

Total Number of Activities 25,079 21,661 1,393 2,025

Note: Sample is Well-Being Module pooled over 2010, 2012, and 2013. Emotional affects and U-Index weighted using

Well-Being Module adjusted annual activity weights. Cantril Ladder question was asked in 2012 and 2013 and

was weighted using Well-Being Module final weights. Each respondent was asked about three activities in

Well-Being Module. p-value is from an F-test that the means for all three labor force statuses are equal.

Source: Bureau of Labor Statistics (American Time Use Survey).

Table 9c: Subjective Well-Being for Men Ages 25-54

Women

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Labor Force Participation Rate for Women,by Age and Birth Cohort

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Age

Lab

or

Forc

e Pa

rtic

ipat

ion

Rat

e

Subjective Well-Being of Prime-Age Women,NLF Group as a Whole is Happier

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Not in

All Employed Unemployed Labor Force p-value

Happy 4.31 4.28 4.30 4.40 0.037

Tired 2.57 2.58 2.32 2.60 0.028

Stressed 1.72 1.77 1.69 1.57 0.001

Sad 0.66 0.60 0.85 0.78 0.000

Pain 0.98 0.83 1.05 1.43 0.000

Meaningful 4.43 4.40 4.64 4.49 0.007

U-Index 0.16 0.17 0.17 0.14 0.028

Cantril Ladder 7.13 7.24 6.23 7.03 0.000

Total Number of Activities 30,825 22,192 1,897 6,736

Note:

was weighted using Well-Being Module final weights. Each respondent was asked about three activities in

Well-Being Module. p-value is from an F-test that the means for all three labor force statuses are equal.

Source: Bureau of Labor Statistics (American Time Use Survey).

Table 10c: Subjective Well-Being for Women Ages 25-54

Sample is Well-Being Module pooled over 2010, 2012, and 2013. Emotional affects and U-Index weighted using

Well-Being Module adjusted annual activity weights. Cantril Ladder question was asked in 2012 and 2013 and

But NLF Women who are Not Keeping HouseAre Almost as Miserable as Male Counterparts

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Prime-Working-Age Women, NLF

Not in LF - only "keeping house"

Not in LF - excluding "keeping house"

Happy 4.63 4.17

Tired 2.36 2.82

Stressed 1.35 1.78

Sad 0.44 1.11

Pain 0.71 2.13

Meaningful 4.68 4.30

U-Index 0.09 0.19

Cantril Ladder 7.62 6.40

N 3,709 3,027

Notes: ATUS well being module, pooling years 2010, 2012, and 2013. Affects and U-index weighted using the well being final activity weights. Cantril ladder question was asked in 2012 and 2013, and was weighted using well being final person weights. N is total number of activities (3 per respondent) for each group. p-value is from an F-test that the means between the three labor force statuses are the same.

NLF Prime Age Women Who are Not Keeping House are Even More Likely that NLF Men to Take Pain Meds

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Table 8a - Prevalence of Pain and Pain Medication, By Activity of NLF Women

Not in LF - Only Keeping House

Not in LF - Excluding Keeping House

All Prime Age Women

Average Pain Rating (0-6) 0.71 2.13

Time Spent with Pain > 0 24.4% 52.1%

Took Pain Medication Yesterday 21.3% 49.4%

N 1,242 1,023

Labor Force Doldrums, Deaths of Despair & U.S. Election – Realm of Speculation –

30

Since 2000 the Rate of Deaths from Opioid Overdoses in the U.S. has Increased 200%

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Analysis of Republican Super Tuesday Primary

“We still don't know what exactly is causing middle-aged white death rates to rise, but it seems that Donald Trump has adeptly channeled this white suffering into political support.

Understanding why this part of America is so unhappy — why some white people are literally dying faster — may help explain how Trump became such a powerful force in this election.”

Jeff Guo, W.Post, March 4, 2016

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33

Drug, Alcohol, and Suicide Mortality, Men and Women Ages 50-54 – Deaths of Despair

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15

25

35

45

55

65

75

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Dea

ths

pe

r 1

00

,00

0

USA

France

GermanySweden

UK

Italy

Source: WHO and Case and Deaton (2017).

Conclusions

• Physical, mental & emotional health conditions as well as pain are a severe barrier to work for many prime age NLF men.

• Don’t know direction of causality, but it is a barrier to participation regardless.

• Stronger macro-economy unlikely to be sufficient to draw many NLF back to LF by itself.

• Opioid addiction is a major social and economic problem. Focus on interventions such as pain management, physical therapy & mental health services. Could raise LFPR and improve psychological well-being.

• Preventative health care could also be part of the strategy.

June 2, 2017 35