Jerome Powell says America’s workforce faces serious challenges. Education levels are climbing only slowly, and both globalization and drug addiction are taking a toll on the labor market.

“When you have people who are not taking part in the economic life of a country in a meaningful way, who don’t have the skills and aptitudes to play a role or who are not doing so because they’re addicted to drugs, or in jail, then in a sense they are being left behind,” the Federal Reserve chairman told CBS News’ “60 Minutes” in an interview aired Sunday.

Recent research backs up Powell’s contention: even though unemployment is at 3.8 percent, a five-decade low, some corners of the American labor force are suffering from a many-pronged malaise. A National Bureau of Economic Research working paper explores the ties between education, globalization and declining opportunity, while a Cleveland Fed study suggests that opioid use could be sidelining workers.

Americans used to pick up and move when their local labor markets soured -- but that’s changed, research by University of California, Davis’ Katherine Eriksson, Katheryn Russ and Minfei Xu and George Washington University’s Jay Shambaugh points out. Worker mobility is much lower today, which probably intensified regional economic pain when factories moved jobs overseas in search of cheaper labor.

“When the China shock hit the United States from 1990-2007, the areas most exposed had lower wages, lower levels of education, less innovative capacity as measured by patents per capita, and higher unemployment rates prior to the shock,” the authors write. “People in these areas were less likely to move, firms less likely to innovate or switch into different industries.”

Stuck in Place

Why don’t people move in search of opportunity? It’s a thorny question with a lot of possible answers, but two factors could play a big role. First, less-educated workers are less likely to move, and trade-related economic disruptions hit places with low training levels. Second, high-growth places have high rent and land costs, so it might be too expensive to follow the better jobs.

If disadvantage is concentrating and leaving people behind, the opioid epidemic has been fuel to the flame. Higher prescription rates have come alongside plunging prime-age employment, according to a Cleveland Fed paper out this month: they find that for a 10 percent increase in the prescription rate, local employment rates fell by half a percentage point for men and 0.17 percentage point for women.

“For prime age men, they would imply a reduction in the labor force participation rate of 1.3 percentage points, or 44 percent of the decline from 2001 to 2015,” the authors write.

While it’s hard to say whether opioid abuse is causing bad labor market outcomes or vice-versa, the authors make an argument for the former. They find that short-term increases in unemployment don’t push up abuse, and find that both areas with weak and strong labor markets “react equivalently” to bigger exposures to legal opioids.

The result builds on earlier work. For another paper that associates lower participation and opioids, see this 2017 research by Princeton University’s Alan Krueger. For a more contrarian take, check out this 2018 Janet Currie piece, which finds no simple tie in which prescriptions drive labor force outcomes.