Bartholomew County has one of the lowest unemployment rates in the state — 2.5 percent in March, tied for sixth lowest.
While this is typically a healthy economic sign, mixed with a high level of opioid misuse it places Bartholomew County in an extreme position, a local finance professor said.
Counties experiencing tight labor markets can’t afford to lose laborers, and opioid abuse has strained a tight labor market in Bartholomew and many other Hoosier counties by taking away potential workers.
The opioid epidemic is costing the state and individual communities significant amounts of lost economic productivity, according to a new study by Ryan Brewer, associate professor of finance at Indiana University-Purdue University Columbus, and Kayla Freeman, a doctoral candidate in finance at the IU Kelley School of Business in Bloomington.
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In times of full employment, when economic productivity is constrained by a shortage of labor supply, any reduction of workforce size translates to economic losses for the state, the researchers wrote.
“Opioid misuse reduces workforce size, which results in lost productivity and wages, and leads to lost GSP (gross state product),” Brewer and Freeman wrote in their study, released May 14 in a special issue of the Indiana Business Review, published by the Indiana Business Research Center.
The study lists Bartholomew County in the worst level of intersection between the opioid crisis and the labor market.
Bartholomew County, which qualified for that extreme designation in each of the past three years, has been ahead of the curve in Indiana in that respect.
Although the worsening opioid crises made last year’s designation the norm across the state, attained by 76 of the state’s 92 counties, a year earlier Bartholomew was one of 29 Indiana counties at that level. It was one of just nine in 2015, according to the study.
The study quantified the economic impact of the crisis from 2003 to 2017, a period that included an estimated 12,300 state residents who died from opioid overdoses. The study said:
Indiana suffered a $43.3 billion economic impact during the 15-year period
The state suffered a $4.3 billion impact last year, about $11 million daily
Indiana suffered $1.72 billion in lost gross state product in 2016
Bartholomew County suffered nearly a $34 million impact in 2017, and $239.8 million from 2003 to 2017
Key points
While the study quantified the economic impact of the opioid crisis on the state and counties through the data collected, what was impossible to quantify was the social impact, Freeman said.
“Does it make Indiana less appealing to come in?” she said about prospective businesses and employees.
Indiana is not alone in having opioid and labor challenges, however, and some states are worse off, Brewer said.
Nonetheless, Hoosier communities need to work together across different levels to figure out solutions, Brewer said.
“This (study) is an important piece of information for leaders at the highest levels — CEOs, mayors, the governor,” said Brewer, who described the study a community project.
Brewer said he had heard anecdotal stories of local employers frustrated by the inability of prospective workers to pass drug tests as a condition of employment, which piqued his interest in the topic.
He began looking at the issue last summer, but the full study with Freeman began in earnest at the beginning of the year, Brewer said.
One of the data pieces that struck Brewer as eye-opening, he said, was that the mean age for opioid overdoses was in the 30s. That’s an age far younger than the average age of death of a smoker (72) and represents a lot of potentially productive employment years lost, he said.
A silver lining in Indiana’s opioid crisis is that the state’s unemployment rate continues to drop and more than 1 million people of working age are not in the workforce, Brewer said. That means there is opportunity for more economic growth, he said.
What’s important, Brewer said, is creating pathways for those afflicted by opioid addiction to become rehabilitated and able to re-enter the workforce.
Local reaction
“The whole opioid crisis has affected the potential employment pool in a lot of areas,” said Jeff Jones, executive lead for the Alliance for Substance Abuse Progress (ASAP) in Bartholomew County, a group that has been working on solutions for local crisis for more than a year.
“(Employers) acknowledge that substance abuse or drug-related issues are a major factor in the overall productivity and ability to fill open jobs. I felt the study put a dollar figure on many of the things — the impact in employment — that we hadn’t seen before,” he said.
Jones described the study as the most comprehensive look at the local and state impact of opioid abuse he has seen, and said the data would be helpful to ASAP as it continues its work.
“It helps validate that it does affect everyone, and helps justify the many projects that are being launched to address the definite impacts of the crisis,” Jones said.
The study findings were shocking, Columbus Mayor Jim Lienhoop said, because of the sheer size of the financial impact to Bartholomew County — at nearly $34 million last year.
However, it also validated local efforts to find solutions, he said.
“It makes me feel like we’re on the right track,” Lienhoop said.
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A new Indiana University study of labor markets (tight labor markets are considered healthy, slack/loose labor markets considered unhealthy) and opioid crisis levels of Indiana counties shows the impact of their intersection. Here is Bartholomew County’s designation for the most recent seven years.
2011: Opioid crisis level, slack labor market
2012: Opioid crisis level, slack labor market
2013: Opioid crisis level, tightening labor market
2014: Extreme opioid crisis level, tightening labor market
2015: Extreme opioid crisis level, tight labor market
2016: Extreme opioid crisis level, tight labor market
2017: Extreme opioid crisis level, tight labor market
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Ryan Brewer and Kayla Freeman searched, evaluated and culled data from state and federal resources, such as the Centers for Disease Control and Prevention, the Indiana State Department of Health, the Kaiser Family Foundation, STATS Indiana and the Substance Abuse and Mental Health Services Administration, to determine the economic impact of the opioid crisis on Indiana and each of its 92 counties.
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