The opioid crisis and the role of employers

Key Takeaways

• The opioid crisis can have adverse effects on employers in various ways, including lower employee productivity, increased health care costs, reduced sales, and a limited pool of qualified job candidates.
• Employers respond to the opioid crisis by increasing their skill requirements when hiring new employees.
• The raised hiring standards may disproportionately impact less-skilled workers, including those who have never experienced opioid use disorders.

• Policymakers should consider that employers can play a critical role in preventing and addressing the opioid crisis.

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The United States is experiencing the worst opioid epidemic in its history. From 1999 to 2021, nearly 645,000 Americans died of an opioid overdose, and the number of fatal opioid overdoses increased more than tenfold during this period (CDC, 2022). While the public health crisis is clear and has been well reported, the epidemic’s toll on the workplace has garnered less attention.

According to a survey conducted by the National Safety Council, three-quarters of U.S. employers report that their workplace has been directly affected by employee use of opioids (National Safety Council, 2019). Among all respondents, 38 percent have experienced worker absenteeism or impaired worker performance, and 31 percent have experienced a near-miss accident, injury, overdose, or arrest because of employee opioid use.

The crisis can impose a substantial financial burden on businesses through lost productivity, increased health care costs, and greater costs for workers’ compensation claims. It might also be harder to hire qualified workers who can pass drug screenings.

In order to best measure the economic impact of the opioid crisis, it is crucial to understand how businesses are affected and responding to it. This is particularly important in understanding who is bearing the costs of the crisis, quantifying the magnitude of the burden, and designing interventions to address these issues.

But estimating the economic impact on businesses is empirically challenging because of common causes. Economic downturns, for example, can contribute to both increased opioid use and poorer firm performance. Reverse causality is another challenge. When places with higher opioid use also show worse firm performance, it is difficult to figure out which is causing the other.

To overcome these challenges, we conducted an analysis leveraging an important move in 2010 when Purdue Pharma introduced a reformulated version of OxyContin to make it more difficult to abuse. As a widely abused prescription opioid, OxyContin’s reformulation was one of the most substantial reductions in the supply of abusable prescription opioids to date (Alpert et al., 2018).

Prior studies showed that making OxyContin harder to abuse led many users to switch to more addictive and illegal opioids, such as heroin. For example, a study by Cicero and Ellis (2015) surveyed 153 recreational OxyContin users. Among these respondents, 33 percent reported that they substituted OxyContin with other substances due to the abuse-deterrent formulation. Within this subgroup, 70 percent reported transitioning to heroin as an alternative. Consistent with these survey results, Alpert et al. (2018) and Evans et al. (2019) found evidence that OxyContin’s reformulation resulted in a sharp increase in heroin overdose deaths.

Building on these findings, our paper, “The Opioid Crisis and Firm Skill Demand: Evidence from Job Posting Data” (Kim et al., 2024), examines how businesses were affected by this transition toward illicit opioids triggered by the 2010 OxyContin reformulation. Specifically, we study the impact of this intervention on firms’ sales and revenue as well as their job skill requirements for new hires over the period from 2010 to 2019. For our analysis, we focus on publicly traded companies, the shares of which are available for anyone to buy and sell on the open market. Publicly traded companies account for one-third of U.S. employment in the non-farm business sector (Davis et al., 2006).

Figure 1 shows the average number of opioid prescriptions per capita in each county per year prior to the OxyContin reformulation. Following the approach suggested by Alpert et al. (2018), our model compares outcomes among companies located in counties with higher initial rates of prescription opioid use to outcomes among companies located in counties with lower initial rates. The idea is to investigate whether businesses in counties with higher initial prescription opioid use — which are likely more affected by the shift towards illegal substances resulting from reformulation — experienced larger changes in their financial outcomes and job skill requirements.

Note: This map shows the average number of opioid prescriptions per capita per year in each county over the pre-reformulation period 2006–2009. The population-weighted mean number of opioid prescriptions per capita in our sample over this period was 0.7 per year. Data obtained from the Centers for Disease Control and Prevention (CDC).

For our analysis, we construct unique firm-level data that follow each firm over a decade using data from two sources: online job posting data that provide detailed information on job positions and specific skill requirements and data on firm revenue. In addition to the firm-level data, we use separate data sets measuring retail store sales in each county.

We show that the shift toward illicit opioids induced by the OxyContin reformulation hurt employers. On average, the reformulation led to a 1.6 percent decrease in annual sales in each retail store. We also find a 4.3 percent decrease in annual firm revenue.

How do employers respond to the opioid crisis?

One important strategy that employers may use to adapt to the challenges posed by the opioid crisis is to adjust job skill requirements. For instance, employers may use skill requirements as a tool to screen out candidates at a high potential risk of opioid use disorder. Alternatively, in cases where more job candidates fail drug screenings, employers may choose to enhance skill requirements as an additional measure, alongside drug testing, to mitigate potential productivity loss resulting from increased illicit opioid use.

Aligned with these predictions, we find a large and long-lasting impact on skill requirements following the OxyContin reformulation. Our results indicate that the reformulation led to an 11 percent increase in the average number of cognitive skills, such as statistical analysis, mathematical capability, and industry knowledge, and an eight percent increase in the average number of computer skills required in each online job position posted by each firm.

Policy implications

Our study has important policy implications. First, it underscores the distributional effects of the opioid crisis on workers. Our findings reveal that employers increase their skill requirements for new hires in response to the crisis, disproportionately affecting less-skilled workers. Importantly, even those less-skilled workers without a history of opioid use disorders can also be impacted by these changes in skill requirements. Therefore, interventions aimed at addressing the adverse impact of the opioid crisis, such as those designed to improve employment outcomes, should not be limited to individuals with opioid use disorders.

Second, our study highlights the need for diverse types of resources tailored to targeted populations. Policy discussions surrounding the opioid crisis have largely concentrated on health outcomes and resources for the prevention and treatment of opioid use disorders. However, our results suggest that providing occupational training programs to enhance the skills of less-skilled workers could be a meaningful approach to mitigating the adverse impact of the opioid crisis on this group. Moreover, integrating occupational training with opioid use treatment may improve treatment results, as employment can serve as a motivational factor for completing treatment and decrease the risk of relapse after treatment (Petry et al., 2014). 

Third, our study implies that employers may have strong incentives to prevent and address opioid use disorders not only among their employees but also within their communities. Our findings suggest that employers are adversely affected by the opioid crisis not just in terms of employee productivity but also through local opioid use, as an increase in local drug abuse can result in reductions in local consumption and the number of qualified job candidates.

 When policymakers consider policies to combat the opioid crisis, it’s crucial they consider the role businesses can play. For existing employees, employers can wield considerable influence across all stages of the continuum: prevention, intervention, treatment, and recovery. For instance, employers can implement educational programs to raise awareness about the risks of opioid use, create a safe work environment, reduce stigma, and promote opioid use disorder treatment and recovery support services.

In addition, employers can provide training for employees on administering naloxone, a medication that can reverse an overdose from opioids. And giving jobs to people in recovery can help strengthen their economic prospects; it may also benefit employers by expanding the pool of job applicants and enabling those workers to help other employees in recovery. Creating recovery-friendly and recovery-ready workplaces is particularly important for achieving and maintaining recovery (Shaw et al., 2020; The White House, 2023).

Roughly 60 percent of adults who report past-year opioid misuse are currently employed (SAMHSA, 2021), and the workplace is a significant part of employees’ daily lives. Employers are uniquely positioned to play a pivotal role in preventing and treating opioid use disorder, both within and beyond their workplaces.

References

Alpert, A., Powell, D., & Pacula, R. L. (2018). Supply-side drug policy in the presence of substitutes: Evidence from the introduction of abuse-deterrent opioids. American Economic Journal: Economic Policy, 10(4), 1-35.

Centers for Disease Control and Prevention, National Center for Injury Prevention and Control. (2022). Understanding the Opioid Overdose Epidemic. 

Cicero, T. J., & Ellis, M. S. (2015). Abuse-deterrent formulations and the prescription opioid abuse epidemic in the United States: lessons learned from OxyContin. JAMA psychiatry, 72(5), 424-430.

Davis, S. J., Haltiwanger, J., Jarmin, R., Miranda, J., Foote, C., & Nagypál, E. (2006). Volatility and dispersion in business growth rates: Publicly traded versus privately held firms [with comments and discussion]. NBER Macroeconomics Annual, 21, 107-179.

Evans, W. N., Lieber, E. M., & Power, P. (2019). How the reformulation of OxyContin ignited the heroin epidemic. Review of Economics and Statistics, 101(1), 1-15.

Kim, B., Kim, M., & Park. G. (2024). The Opioid Crisis and Firm Skill Demand: Evidence from Job Posting Data. Unpublished Working Paper.

National Safety Council. (2019). Poll: 75% of Employers Say Their Workplace Impacted by Opioid Use. 

Petry, N. M., Andrade, L. F., Rash, C. J., & Cherniack, M. G. (2014). Engaging in job-related activities is associated with reductions in employment problems and improvements in quality of life in substance abusing patients. Psychology of Addictive Behaviors, 28(1), 268-275.

Shaw, W. S., Roelofs, C., & Punnett, L. (2020). Work environment factors and prevention of opioid-related deaths. American journal of public health, 110(8), 1235-1241.

Substance Abuse and Mental Health Services Administration. (2021). Key substance use and mental health indicators in the United States: Results from the 2020 National Survey on Drug Use and Health (HHS Publication No. PEP21-07-01-003, NSDUH Series H-56). Rockville, MD: Center for Behavioral Health Statistics and Quality, Substance Abuse and Mental Health Services Administration.

The White House. (2023, November 9). Biden-⁠Harris Administration Announces New Actions to Support Recovery-Ready Workplaces and Strengthen Our Economy [Press release].