How opioids are impacting the workforce in eastern Ky.

Published 6:19 am Wednesday, July 4, 2018

MANCHESTER, Ky. (AP) — The pickings have gotten slimmer when Mike Bowling needs to hire someone for his convenience stores in London and Manchester, where he also has a tobacco store.

“This is the hardest I’ve ever seen getting workers and keeping workers,” said Bowling, who has been in business 18 years. “You just ain’t got nobody to pick from.”

It’s clear to Bowling that Kentucky’s drug crisis has affected the workforce, causing higher turnover, bringing additional costs to train new employees and fueling employee thefts.

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Recent research bears out that the state’s high use of painkilling drugs called opioids appears to have reduced the labor pool.

In a paper published by the Federal Reserve Bank of Cleveland, economists Dionissi Aliprantis and Mark E. Schweitzer estimated that participation in the labor force by men in their prime working years — ages 24 to 54 — was 4.6 percent less on average in counties with high rates of opioid prescribing than in counties with low prescribing rates.

Opioids are pain drugs such as oxycodone.

The estimated impact was even greater among men who had a high-school education or less. In that group, the participation rate in the labor force was 7.4 percent less among white men in high-prescribing counties and 9.7 percent less among non-white men, the researchers estimated.

The research suggests that “poor labor market outcomes are highly correlated with prescription opioid availability,” Kyle Fee, a senior analyst with the Cleveland Fed, said in a report last month that cited the research.

The estimates covered the whole country, but hold particular significance for eastern Kentucky, which has counties with some of the highest opioid prescribing rates in the nation and a relatively low percentage of people in the workforce.

Of the 169 counties in the Cleveland Fed’s region, the top 10 in the number of opioid prescriptions per 100 people were all in Kentucky in 2011, and nine were in eastern Kentucky, according to Fee’s report.

Prescribing rates dropped significantly in eastern Kentucky counties between 2011 and 2016, but remained well above the national rate.

The national rate in 2016 was 66.5 prescriptions for each 100 people. That compared to 251 in Owsley County, 249 in Bell, 239 in Whitley, 226 in Floyd, 220 in Pike, 219 in Johnson, and 209 in Perry, according to Fee’s report.

The Cleveland Fed’s coverage area includes 56 counties in Kentucky — all those east of a line from Northern Kentucky to Somerset. It also includes all of Ohio, the western third of Pennsylvania and 6 counties in northern West Virginia.

Other research has logged concerns by employers that opioid use and abuse has caused problems in filling jobs.

The impact of the opioid crisis on the workforce was one key issue raised by people who took part in focus groups last year that covered eastern and southern Kentucky and other areas of Appalachia.

“Participants gave examples of both small businesses and larger manufacturing firms that were unable to recruit workers who could pass drug screening,” according to the study by Oak Ridge Associated Universities for the Appalachian Regional Commission.

The estimates by the Cleveland Fed researchers on how opioid prescriptions affect participation in the workforce did not parse out the reasons for the impact, such as whether people couldn’t hold a job because of addiction.

What keeps a substantial number of people out of the labor market “is left unclear because we would need a lot more detailed information on individuals” to figure that out, Schweitzer said.

“We have no way to determine how many people are out because they are abusing drugs and the number who are out because they had an injury that they aren’t recovering from,” he said.

The study also didn’t attempt to estimate how use of illicit opioids such as heroin affect workforce participation.

“It’s hard to imagine that stuff coming in helps,” however, Aliprantis said.

In a separate report issued this month, the Organisation for Economic Co-Operation and Development cited opioids as a factor in why the labor participation rate in the U.S. was lower in late 2017 than the average of all 35 nations in the group.

The organization said the correlation with non-participation “in areas most beset by opioid addiction suggests that addiction ultimately impairs participation.”

The research helps explain one factor in the low percentage of people in the workforce in eastern Kentucky.

A study released in September 2016 said the participation rate in the region was 44.74 percent, compared to 59.8 percent for the state as a whole and 63.9 percent nationally.

The study, supported by a consortium of development groups and colleges, surveyed thousands of workers and employers in 27 eastern Kentucky counties.

Heather Burton, chief operating officer of double kwik, which operates more than 40 convenience store in the region, said she believes the lower number of people in the workforce hinders efforts to hire for entry-level jobs at the stores.

The company, a division of Childers Oil Company, starts employees at the stores above minimum wage and offers benefits that include paid vacation and a 401(k) program, but some stores still have difficulty hiring, Burton said.

“We do have shortages,” she said.

The stores — most of them open 24 hours — sometimes have to operate with fewer employees than the company would like, which affects customer service, requires managers to pull extra shifts and pushes up overtime costs, said Patty Clatworthy, regional director and training director for double kwik.

“Everyone has to work harder and some things get left undone and that makes it harder for the next shift,” Clatworthy said.

The company has worked to develop a culture of career development, in part to cut turnover, but having more people in the workforce would help in hiring, Burton said.

“I think it would be impactful,” she said.

Development officials in eastern Kentucky said there are a number of reasons people could be out of the workforce, including a lack of transportation and a level of public-assistance benefits that participants see as more lucrative than many entry-level jobs.

The 2016 workforce survey said another key factor was a significant number of long-term unemployed and discouraged workers — people who had given up searching for jobs in a place where they’ve been scarce.

The economy of the region has been hurt by a staggering drop in jobs since 2012 in the coal industry, once the linchpin of private-sector jobs in many counties.

Coal employment in eastern Kentucky averaged 13,679 in 2011 but was just 4,042 in 2017, according to the state Energy and Environment Cabinet.

That drop has rippled through the entire economy.

Total employment in the region dropped by 21 percent from 2006 to 2016, according to the 2016 workforce survey, helping explain why some people have stopped looking.

“The jobs are not there,” said Jared Arnett, executive director of a region-wide development initiative called Shaping Out Appalachian Region, or SOAR.

The lower participation rate in the workforce likely has a greater effect on hiring for entry-level and lower-wage jobs than for jobs that require higher skills and pay more, officials said.

“When it comes to the retail and service industries, they struggle,” Arnett said.

SOAR and other groups, along with elected officials and businesspeople, are working to diversify the region’s economy, and projects are underway that could bring hundreds of jobs, including Braidy Industries’ aluminum-rolling plant in Greenup County, EnerBlu’s high-tech battery factory in Pike County, and Silverliner’s project to build tanker trucks in Pike County.

And despite the region’s relatively low workforce participation rate, officials said there are plenty of good workers available, including many former coal miners.

Those former miners have a variety of skills that would transfer well to industries such as manufacturing, transportation and warehousing, the 2016 job study said.

That study also said the labor force in Eastern Kentucky has a strong work ethic and is loyal. Of employers surveyed, 78 percent said they were satisfied or very satisfied with the region’s workforce.

“They will work their hearts out if you come here,” Jeff Whitehead, head of the Eastern Kentucky Concentrated Employment Program (EKCEP), said of people in the region.

Several officials said they think the perception of how much the opioid problem affects the workforce is bigger than the reality.

The effort to hire for Silverliner, which plans to begin full production this fall, shows there is a large pool of willing workers in the region who can pass a drug test, officials said.

Trish Adams, industry liaison for EKCEP, which held a job fair for Silverliner, said there were 1,500 applicants for about 60 initial jobs.

The agency helped assess about 150 applicants. That included an unannounced drug screen; only two or three failed, Adams said.

Silverliner owner Chris Tomlinson, who also has another company that operates in more than a dozen states, said he’s had as much success finding good workers in eastern Kentucky as elsewhere.

“The job skills in eastern Kentucky are second to none,” Tomlinson said.