Driving down the main commercial artery in Muncie, Ind., it seems the job market is doing well. The local unemployment rate stands at 3.8 percent, and there are hiring signs posted outside the McDonald's, a pizza joint and at stop lights.
Around 2007 — the last time the market was so tight — job applicants came streaming through the offices of Express Employment Professionals, a staffing agency that screens and places about 120 workers a month, mostly at the local manufacturing firms.
"Even with the low unemployment rates that we had at that time, there were still plenty of applicants," says Express' owner, Nate Miller. "Now, we're down to that 3 to 4 percent unemployment throughout all of Indiana, but there's very few applicants, and the question is: Where did they go?"
Where did they go? That is a big question for economists from Federal Reserve Chair Janet Yellen on down. Nearly all working-age men ages 24 to 54 were in the labor force through the 1950s and '60s. Now that rate is 88.5 percent.
Demographic changes such as the retirement of baby boomers and a tendency to stay in school longer explain part of the trend. But increasingly, the Fed and Goldman Sachs have said in various reports that they believe opioid addiction might be a factor.
Miller agrees. Employers tell him they could build and sell more, if they could hire and keep more workers, but his staffing business can't keep up because a third of job applicants fail the pre-employment drug test — these days, almost always for opioids.
"We know employers who just don't want to know," Miller says. " 'Don't drug test them, we don't want to know.' It's not necessarily the best practice, but it is something that they do because they need people, and they need them so badly."