Whether through employee turnover, incarceration, or prevention and treatment, drug addiction places a significant impact on the economy of the United States.
The Costs of Addiction & Substance Use Disorder on the American Economy
Estimates of the cost of addiction and substance abuse on the U.S. economy vary somewhat, but low-end estimates are over $400 billion annually. Estimates run into well over $1 trillion per year in economic impact.
The cumulative price tag includes costs related to lost productivity, healthcare, criminal justice fees, and early death.
Lost productivity refers to absenteeism (when an employee cannot be at work because they are under the effects of a substance) and presenteeism (when an employee is physically at work but cannot function because they are under the effects of a substance).
Both absenteeism and presenteeism (which also includes accidents and injuries on the job as a result of impaired function due to substance abuse) cost the U.S. economy about $191.6 billion a year.
Substance abuse can naturally lead to addiction and overdose (distinct medical conditions), but it can also precipitate other more chronic healthcare concerns, like cancer, liver disease, lung disease, and heart disease.
Put together, the healthcare costs for substance abuse and related medical conditions comes out to $167.8 billion a year due to emergency room visits and hospitalizations, medical interventions, rehabilitation programs, and mental health services. The National Institute on Drug Abuse estimated that in 2019, expenses associated with substance abuse were in excess of $200 billion.
There are many forms of criminal behavior that are associated with substance abuse, such as property crime (stealing property to resell for drug money), violent crime, and various other drug-related offenses. It costs the criminal justice system $61 billion a year to deal with all the crimes that arise from substance abuse in the form of incarceration, law enforcement work, court proceedings, and probation services.
Addiction and substance abuse also place a heavy financial burden on the social services sector, which includes services like public assistance, child welfare programs, and foster care.
There are many more costs related to substance abuse that cannot be accurately measured. Emotional distress, loss of family members and relationships, and reduced quality of life, for example, do not come with calculable price tags.
Top Sectors Impacted by Addiction
Substance abuse and addiction can have an impact on any sector within the workforce, and there are some sectors that are particularly susceptible and affected by drug or alcohol use.
The effects may be felt in the form of accidents and injuries (or even deaths) or in terms of a loss of productivity, absenteeism, high turnover, and a negative work environment for colleagues. Some businesses have experienced a negative public image because of the actions of an employee who was under the influence of substances.
The healthcare industry is one that is greatly affected by addiction. The pressure and stress on the doctors, nurses, and other staff working hospitals and clinics can cause burnout, anxiety, and depression. Some employees make use of the prescription drugs easily available in their workplaces to self-medicate.
Construction & Manufacturing Industry
Jobs in the construction and manufacturing industries are often very physically demanding, leading employees to deal with chronic pain. Injuries are a common occurrence in this line of work, with many employees having to work through their injuries and pain in order to remain gainfully employed.
As a result, rates of substance abuse in the manufacturing and construction sectors are quite high. This leads to issues of accidents and absenteeism, putting stress on employees who are not using drugs themselves.
Transportation & Logistics Industry
Commercial transportation and logistics is also another industry where rates of substance abuse are high. Long-haul truckers, for example, are expected to remain awake and vigilant for hours at a time. While many use coffee and energy drinks to remain alert behind the wheel, the industry has struggled with some drivers using amphetamines and cocaine to keep sleep at bay.
Like with construction, employees who use drugs to ostensibly perform better at their jobs risk creating an even more unsafe environment for themselves and everyone around them.
Hospitality & Food Service Industry
Another high pressure industry is the hospitality and food services industry, where employees have to work on their feet in fast-paced, demanding, and occasionally hazardous conditions for hours at a time, sometimes for low pay. Workers in certain establishments have access to a constant supply of alcohol, which some might use to stay awake, alert, and social, even past the point of exhaustion.
Law & Finance Industry
Traditionally white-collar jobs, such as those in law and the financial sector, are infamous for the pressure employees experience. Many people have suffered burnout, being expected to spend more time at the office than with their families.
Alcohol consumption is a cultural expectation (and even an obligation) in certain offices. Cocaine is also notoriously used.
The Impact on Law Enforcement & the Criminal Justice System
Of the $510.8 billion price tag that substance abuse puts on the American economy, $61 billion comes from the criminal justice system. This covers everything from surveillance and undercover operations to drug raids and other forms of investigation.
In order to secure arrests and convictions, law enforcement agencies set aside huge financial resources for their drug enforcement operations, which can account for a sizable majority of a police department’s budget. When arrests are made, there are processing costs involved, covering everything from the initial paperwork and booking to physically placing the people arrested for drug-related criminal activities in correctional facilities.
Beyond the incarceration stage, the criminal justice system has to bear its own part of the financial burden. Prosecutors, attorneys, judges, court staff, court-appointed specialists, and court facilities all cost money. Additionally, drug cases can be complex, placing an even higher financial burden on the courts.
Probation and parole services are often used as alternatives to incarceration for people convicted of first-time or low-level drug offenses. However, such services still cost money. There is monitoring, counseling, drug testing, and case management, all of which require court-appointed specialists.
Rehabilitation & Recidivism
Drug treatment programs are not directly a part of the criminal justice and law enforcement systems, but they are frequently integrated into the practice of trying to rehabilitate non-violent, low-risk drug offenders to keep them out of the drug pipeline that would lead them back to prison. While such programs can be hugely effective at saving lives and rehabilitating people back into their communities, they still cost money and have to be budgeted as part of the cost of addiction.
These programs do not work for everyone, and sometimes people are caught in a cycle of reoffending and reincarceration (recidivism), which places further financial strain on the police and the courts. Sometimes, the same individuals are arrested and sentenced over and over again (and the police officers, the prosecutors, the defense attorneys, the judges, and the court staff get paid again).
Recidivism is an ongoing problem, and it costs communities a lot of money.
The Impact on Public Assistance & Social Services
The public assistance and social services sectors have huge roles to play in addiction treatment, and that means they also bear some of the financial effects of addiction. The 2017 report by the National Institute on Drug Abuse found that $191.6 billion a year goes to programs like these:
- Welfare: The public assistance system that offers financial aid to low-income individuals and families. Substance abuse is a significant factor in the development and cycling of poverty. People and families who are affected by drug addiction may be reliant on welfare programs for their most basic needs.
- Housing: The public housing system connects low-income people and families with affordable, stable housing. Many people experiencing homelessness abuse drugs to emotionally cope with the trauma of having nowhere to live. This is partially what compels the high rate of need for public housing programs.
- Healthcare: This includes basic medical treatment to people who are uninsured or underinsured. Many people, who also may have chronic and untreated health conditions, are at risk for self-medicating with controlled substances. This naturally increases the need for more healthcare services to people who cannot otherwise afford to go to a doctor.
- Mental health services: These services address the significant degree of overlap between low-income individuals who have ongoing mental health needs and who also use drugs and alcohol to self-medicate in lieu of having regular, monitored prescription drugs. As these people enter recovery programs, mental health counselors and therapists do a lot of work in rehabilitating past damage caused by drugs.
The 2017 National Institute on Drug Abuse report calculated that $167.8 billion is spent by the mental health services sector to address issues of drug abuse and treatment.
The associated costs include:
- All forms of treatment, such as inpatient care, outpatient treatment, and medication-assisted treatment
- Prevention services, in the form of education, early intervention, and awareness programs
- Research, which is necessary to develop new treatments and prevention strategies to stay ahead of trends in drug consumption
Top Substances Abused & Their Financial Impact to The Economic Landscape in the United States
These are some of the top substances abused in the U.S. and how their abuse impacts the economy:
The Centers for Disease Control and Prevention estimates that alcohol abuse has a financial impact of about $249 billion on the American economy. The total is derived from the costs associated with lost workplace productivity, healthcare, use of the criminal justice system, and early death.
Lost productivity (based on absenteeism, presenteeism, and turnover) was responsible for $179 billion. Healthcare costs, covering addiction, overdose, and chronic diseases directly related to alcoholism, accounted for $28 billion.
The criminal justice system, which deals with property crime and violent crime as a result of alcohol use disorder, as well as traffic incidents resulting from one or more drivers being under the influence of alcohol, spends $25 billion a year.
The economic cost of cannabis abuse on the American economy is hard to judge, as the drug is not legal in all states. However, cannabis is nonetheless the second most abused drug in the country, with more than 22 million adults reporting past-month use in a 2019 Substance Abuse and Mental Health Services Administration survey.
Some research, like a 2017 article in the Health Affairs journal, estimated that cannabis abuse in America costs between $10.7 billion and $22 billion every year, in the form of healthcare, criminal justice expenses, and lost workplace productivity. There were also indirect costs, such as premature death and emotional distress as a result of unhealthy cannabis consumption.
With more states legalizing cannabis sale and use, and other states moving toward decriminalizing its recreational use, the economic cost of cannabis abuse is likely to keep growing.
In 2013, prescription opioid abuse cost the United States almost $78.5 billion, according to a study in Medical Care journal.
Lost productivity in the workplace accounts for $28.9 billion. Healthcare costs, which also covers health conditions caused by chronic misuse of prescription opioids, costs $31.3 billion. Costs to the criminal justice system account for $3.5 billion, and costs related to premature death as a result of prescription opioid abuse cost $15.8 billion.
What Can Be Done to Curb the Cost of Substance Use Disorder?
Prevention, early intervention, treatment, and policy changes are all key in curbing the economic cost of substance use disorders.
Programs are typically delivered in schools, offices, and community hubs, like churches, libraries, and community centers. Materials educate both children and adults about the dangers of substance abuse, how to recognize the signs of substance abuse, and what to do if a loved one may be abusing drugs or alcohol.
By investing in education, it is hoped that this will deter more people from experimenting with controlled substances, which could save billions of dollars in costs down the road.
Public Awareness Campaigns
Public awareness campaigns are a form of preventing substance abuse, educating the public through ads on social media, television, print, radio, and other mediums. They are meant to raise awareness about the dangers and risks of substance abuse, as well as to let people know that help is always available.
Investing in public awareness campaigns should defray some of the future economic toll of addiction.
Early Intervention Services
While addiction treatment is an investment, early and effective treatment can catch a substance abuse problem before it spirals too far out of control and accumulates additional costs in healthcare, criminal justice, and ultimately early death.
Studies have shown a more than $58 return on every $1 spent on early intervention services for addiction. Every $1 spent on treatment also saves $7 in criminal justice costs and $4 in healthcare costs down the road.
Addiction treatment programs are meant to support a patient in the long-term (lifelong) process of recovery. They are typically delivered in individual, group, and family formats, providing support and accountability to keep relapse at bay once formalized treatment ends.
Successful recovery programs will keep a patient out of the relapse-treatment cycle, which itself costs money. These programs also teach patients how they can rebuild their lives after managing their addiction, including job training that helps these people re-enter the workforce.
Policy changes will also be a way of reducing the availability of illegal or illicit drugs, as well as closing off avenues of drug production and trafficking. These changes can include increased regulation of certain drugs, increased funding of prevention and treatment programs, and increased penalties for those convicted of perpetuating the access to, and availability of, drugs.
A Societal Solution
There’s no question that investing in prevention and treatment for substance use disorders saves money in the long run. And this is just in terms of dollars and cents.
Addiction brings a bevy of other costs — damaging relationships, ruining futures, and ending lives. Comprehensive addiction treatment can change this, opening up the possibility of renewed lives in recovery for individuals and a better future for communities.
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