Give Us Your Poor, Your Unemployed, Your Dope Fiends

Tyler Durden's picture

The Great Recession had one effect on Americans you don’t hear much about - regular illicit drug use increased by approximately 2.5 million users in 36 months, from 2007 to 2010.  The year 2011 (the most recent data available) saw a slight decline to an estimated 8.7% (from 8.9%) of all Americans regularly using illegal drugs, but, as ConvergEx's Nick Colas notes, this is still 19.5 million people who would find it difficult to pass a pre-employment drug test.  The NIH’s National Institute of Drug Abuse & Addiction 2012 survey found that 17.2% of unemployed adults are current users of illicit drugs versus 8.0% who are full-time employed.  While this is certainly only a partial explanation of the current still-high domestic unemployment rate, it does highlight how well-intentioned state-by-state decriminalization of drugs such as marijuana can work against a better national employment picture.

Via ConvergEx's Nick Colas,

Drug testing is commonplace in American business.  Every year, millions of employees and prospective hires submit to either random testing or required pre-employment screening.  Passing is a prerequisite of employment for new hires and can lead to dismissal in the case of an existing employee.  Whether you want a job as a truck driver in the Bakken or an investment banker in New York, chances are very good that you will have to submit to, and pass, a test for marijuana, cocaine, amphetamines, heroin/opiates and PCP. Put another way, the specimen cup is the gateway to employment.

One of the less-discussed features of the Great Recession relates to the same topic: more Americans became regular users of illegal drugs during this period than at any point in the last decade.   A few salient datapoints from the last published National Survey on Drug Use and Health (2011):

  • Some 22.5 million Americans reported using illicit drugs in the prior month.  That is 8.7% of the over-12 year old domestic population, with the 2010 survey showing a similar 8.9% usage rate.  Prior to the 2007 Financial Crisis and subsequent recession, that number was 8.0%.
  • The entire pickup in illegal drug usage over the 2007 – 2011 timeframe is from an increase in reported use of marijuana.  Seven percent of the over-12 population reported using the drug in the prior 30 days in 2011, up from 5.8% in 2007.  Seizure data from the FBI, tracked by the U.S. Census, supports the survey results.  In 2010 (most recently available data) U.S. law enforcement seized 4.5 million pounds of marijuana from smugglers, dealers and users, up from 3.0 million pounds in 2006. 
  • Among the unemployed, reported illicit drug usage was 17.2% of that population, versus 8.0% for their counterparts who are employed full-time.  It is worth noting that the survey protocol is in-person, with participants answering questions by filling out a computerized questionnaire.  They receive $30 for completing the survey.  Given the sensitive nature of questions over illegal drug use, it is entirely possible that the survey understates such use – perhaps materially –despite assurances of anonymity and confidentiality.

Putting these two points – pervasive drug testing and rising rates of drug usage – together raises a useful question: how much of the current still-high rates of U.S. unemployment is due to prospective employees who cannot pass a drug test?  It is a question that the Boston branch of the Federal Reserve actually highlighted in their contribution to the most recent Beige Book.  One of their contacts mentioned that they were having trouble hiring low-skill workers, in part due to failed drug tests and quoted the source as saying that this problem, along with spotty attendance, “May result from behaviors developed during extended periods of unemployment.”

So how concerned are workers and prospective hires about the possibility of a failed drug test?  To answer that question we went to the same place I imagine most of them go: Google. 

Some observations using Google Trends (and several supporting charts immediately following the text):

  • Searches for the phrase “Failed drug test” on Google have increased 2-5x from pre-recessionary levels in 2005-2006.  Likewise, “Positive drug test” searches have doubled over the same period.  Oddly, “Beat a drug test “ is roughly flat over the same period.  Modern chemical testing is tough to “Beat” and users – drug and Google alike – may know that.
  • The Google maps which highlight above-average levels of search volume by state show a clear correlation between state-level unemployment (table included) and “Failed”/”Positive” drug test search volume.  High unemployment states such as Michigan and most of the southern USA are clearly also areas where Google sees a higher level of interest in these queries.
  • California is a disproportionate contributor to the nation’s still-high unemployment picture, so it deserves special mention here.  The most recent unemployment rate in California is 9.8%, well above the national rate of 7.8%.  And Google searches for “Failed”/”Positive” drug test results are above average as well.  But lest you think the state’s well-known medical marijuana laws have somehow seeped into broad enough usage to skew the unemployment picture, think again.  There have only been some 66,000 cards issued for medical marijuana use since the inception of the current program eight years ago.

So, given the Google Trends data, it seems clear that an increasing number of Americans are concerned about how their drug usage may affect their employment prospects.  At the same time, U.S. corporations are unlikely to change their policies towards the issue.  The Department of Labor actively promotes drug testing on its “eLaws Advisors” website, chronicling both the costs (billions of dollars annually) and successes achieved by companies with stringent drug testing requirements for new and existing workers.  That means that drug testing is not only a condition of any Federal employment, but also in safety sensitive jobs, where agencies such as the Department of Transportation hold sway.

The intersection of government drug policy and employment is in the recent trend for U.S. states to decriminalize marijuana possession.  Recall that this is far and away the most popular illegal drug among Americans.  As of January 2012, California, Nevada, Oregon, Washington state, Colorado, Nebraska, Minnesota, Alabama, Ohio, North Carolina, New York, Connecticut, Massachusetts, Rhode Island, and Maine all have varying laws which make the possession of small amounts of marijuana either legal or subject to a de minimus penalty.  In New York, for example, possession of 25 grams or less on a first offence is a $100 fine and considered a “Violation,” akin to a traffic ticket.

But for all these lessening of the strictures, marijuana use will still trigger a positive drug reading on the standard pre- and current employment urine test.  The minimum standard used by most employers, courtesy of the U.S. government’s Substance Abuse and Mental Health Services Administration (SAMHSA), tests for:

  • Marijuana/Hashish
  • Cocaine in all forms
  • Amphetamines
  • Opiates such as Heroin
  • PCP

The critical issue is that while states might set their own laws, the Federal government still rates marijuana as a Schedule 1 drug, alongside heroin, LSD and Ecstasy (MDMA).  As recently as December 2012, both SAMHSA and the Department of Transportation - where drug testing is understandably important - reiterated that marijuana remains part of their established “Panel” (those five drugs mentioned above) and that they do not recognize any medical use or state exemptions for criminality.  Even Colorado, which last November passed some of the most relaxed drug laws in the country, allows employers to continue to test for, and terminate/not hire, marijuana use.

In summary, drug use and testing does not (of course) explain the still high levels of national unemployment on their own.  Issues of cyclical sluggishness and select structural issues still hold the reins here.  But as policymakers struggle to keep the country’s unemployment rate on a downward trajectory, it does seem clear that national drug policy and state-level lawmaking are working at cross-purposes.  With drug use among the unemployed at levels double their full-time employed peers (17% versus 8%), and marijuana use on a solid uptrend, national drug policy and macroeconomic priorities appear to be on different – and conflicting – tracks.