PAIN AND LABOR FORCE DRAIN

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1 Alan B. Krueger PAIN AND LABOR FORCE DRAIN Festival of Economics 2017 June 1- June 4

2 Pain and Labor Force Drain Alan B. Krueger Princeton University & NBER June 2, 2017 Trento Festival of Economics

3 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 June 2,

4 U.S. Unemployment Rate Has Fallen to Below 5% While Italy s Unemployment Rate Remains Above 11% Italy March 2017 USA April 2017 June 2,

5 But U.S. Labor Force Participation Rate Peaked in 2000 And Has Declined by 4 Percentage Points June 2,

6 Observations on the Decline in Labor Force Participation in U.S. 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. Primeage 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 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. June 2,

7 U.S. Labor Force Participation Rate Peaked in 2000 June 2,

8 Labor Force Participation Rates, by Age and Gender Labor Force Participation Rates by Age & Gender Percent (Seasonally Adjusted) Men (25 Years & Over) Years Women (25 Years & Over) Apr Note: Shading denotes recession. Source: Bureau of Labor Statistics; National Bureau of Economic Research. June 2,

9 U.S. and Italy of Lowest Labor Force Participation Rates of Men in O.E.C.D. United States Italy June 2,

10 U.S. and Italy of Lowest Labor Force Participation Rates of Women in O.E.C.D. United States Italy June 2,

11 Labor Force Participation Rate of Men and Women Age 25-54, 2015 June 2,

12 Most of the Decline in U.S. LFPR since 1997 is Accounted for by Aging of the Population l = l i,1997 w i,1997 = 67.1% l = l i,1997 w i,2016 = 63.7% The labor force participation rate fell by 4.2 percentage points from 1997 to 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. June 2,

13 Cyclical Upswing Unlikely to Save Us: No Increase from NLF to LF NLF-E Rising and NLF-U Falling Transition Rate From Not in Labor Force Percent of Previous Month's Not in Labor Force (Seasonally Adjusted) From Not in Labor Force to Labor Force From Not in Labor Force to Unemployment From Not in Labor Force to Employment Apr-17 1 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 Note: Shading denotes recession. Source: Bureau of Labor Statistics; National Bureau of Economic Research. June 2,

14 Understanding Trends for Subgroups Young Workers Prime Age Men Women Subjective Well-Being June 2,

15 Rise in School Enrollment Offset Most of Decline in LFPR for Young Men, and All of it for Young Women Nonparticipation & Idle Rates by Gender, Ages Percent (Seasonally Adjusted) Nonparticipation Rate: Women Nonparticipation Rate: Men Idle Rate: Women Idle Rate: Men 0 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 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. June 2,

16 Prime-Working-Age Men June 2,

17 LFPR has been Falling for Prime-Age Men for Decades Labor Force Participation Rate: Men, Years Percent (Seasonally Adjusted) Apr Note: Shading denotes recession. Source: Bureau of Labor Statistics; National Bureau of Economic Research. June 2,

18 Labor Force Participation Rate LFPR Prime Age White Men, by Education Annual Averages % 98% 96% 94% All 92% 90% <= HS 88% 86% 84% 17

19 Many NLF Prime Age Men Report Poor Health (and Look Different from the Unemployed) Table 6: Self-Reported Health Status for Workers Ages by Labor Force Status Not in Employed Unemployed Labor Force (%) (%) (%) Men Excellent Very Good Good Fair Poor Number of Respondents 7, Women Excellent Very Good Good Fair Poor Number of Respondents 7, ,265 Note: Sample is Well-Being Module pooled over 2010, 2012, and 2013 for individuals ages Data are weighted using Well-Being Module final weights. Source: Bureau of Labor Statistics (American Time Use Survey); author's calculations. June 2,

20 More than 1/3 rd of NLF Men Have a Severe Disability Table 7: Disability Rate for Men Ages by Labor Force Status Not in Employed Unemployed Labor Force (%) (%) (%) Specific Disability: Difficulty Dressing or Bathing Deaf or Difficulty Hearing Blind or Difficulty Seeing Difficulty Doing Errands Such as Shopping Difficulty Walking or Climbing Stairs Difficulty Concentrating, Remembering, or Making Decisions Any Disability Multiple Disabilities Number of Respondents 1,947, , ,068 Note: Sample is monthly Current Population Survey data pooled from January 2009 to August 2016 for men ages Specific disabilities are not mutually exclusive. Source: Bureau of Labor Statistics (Current Population Survey). June 2,

21 NLF Men Report High Incidence of Pain and Pain Medication Esp. White <BA NLF Prime Age Men White <BA NLF % 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 20

22 Pain Medication by Gender and Labor Force Status June 2,

23 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 June 2,

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.

24 Subjective Well-Being ATUS-WB 2010, 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? 23

25 Subjective Well-Being of Prime Age Men, By Labor Force Status Table 9c: Subjective Well-Being for Men Ages Not in All Employed Unemployed Labor Force p-value Happy Tired Stressed Sad Pain Meaningful U-Index Cantril Ladder Total Number of Activities 25,079 21,661 1,393 2,025 Note: Sample is Well-Being Module pooled over 2010, 2012, and 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). 24

26 Women June 2,

27 Labor Force Participation Rate Labor Force Participation Rate for Women, by Age and Birth Cohort Age June 2,

28 Subjective Well-Being of Prime-Age Women, NLF Group as a Whole is Happier Table 10c: Subjective Well-Being for Women Ages Not in All Employed Unemployed Labor Force p-value Happy Tired Stressed Sad Pain Meaningful U-Index Cantril Ladder Total Number of Activities 30,825 22,192 1,897 6,736 Note: Sample is Well-Being Module pooled over 2010, 2012, and 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). June 2,

29 But NLF Women who are Not Keeping House Are Almost as Miserable as Male Counterparts Prime-Working-Age Women, NLF Not in LF - only "keeping house" Not in LF - excluding "keeping house" Happy Tired Stressed Sad Pain Meaningful U-Index Cantril Ladder N 3,709 3,027 Notes: ATUS well being module, pooling years 2010, 2012, and 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. 28

30 NLF Prime Age Women Who are Not Keeping House are Even More Likely that NLF Men to Take Pain Meds 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) Time Spent with Pain > % 52.1% Took Pain Medication Yesterday 21.3% 49.4% N 1,242 1,023 29

31 Labor Force Doldrums, Deaths of Despair & U.S. Election Realm of Speculation 30

32 Since 2000 the Rate of Deaths from Opioid Overdoses in the U.S. has Increased 200% 31

33 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,

34 33

35 Drug, Alcohol, and Suicide Mortality, Men and Women Ages Deaths of Despair Deaths per 100, USA UK France Germany Sweden 25 Italy Source: WHO and Case and Deaton (2017). June 2,

36 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,

Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate

ALAN B. KRUEGER Princeton University Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate ABSTRACT The U.S. labor force participation rate has declined