Federal Reserve

The head of the Federal Reserve believes opioid abuse could be holding back the US economy

Key Points
  • Opioid abuse and the decline in labor force participation are related, Fed Chair Janet Yellen says.
  • "I don't know if it's causal or symptomatic of long-running economic maladies," she says.
  • Goldman Sachs said last week opioid abuse is partly why more people aren't seeking work.
Federal Reserve Chair Janet Yellen testifies before a Senate Banking Committee hearing on the 'Semiannual Monetary Policy Report to the Congress' on Capitol Hill in Washington, July 13, 2017.
Carlos Barria | Reuters

Federal Reserve Chair Janet Yellen just weighed in on the opioid crisis in the U.S.

In her testimony before the Senate Banking Committee on Thursday, Yellen said rampant opioid abuse in the U.S. is related to the decline in labor force participation among prime-age workers.

"I don't know if it's causal or symptomatic of long-running economic maladies that have affected these communities and particularly affected workers who have seen their job opportunities decline," Yellen said in response to questioning from Sen. Joe Donnelly, D-Ind., on the issue.

The United States is "the only advanced nation that I know of where in these communities we're actually, especially among less-educated men, seeing an increase in death rates partly reflecting opioid use," she added.

Death rate from drug abuse has exploded over the last 15 years

Source: Centers for Disease Control, Goldman Sachs Global Investment Research

Opioid overdose contributed to more than 33,000 deaths in 2015, according to the Centers for Disease Control and Prevention, and kills more than 90 Americans every day.

Missouri AG: Fraud and deceit by drug makers led to opioid epidemic

The U.S. Bureau of Labor Statistics reports the labor force participation rate has fallen since the Great Recession and has stagnated near 63 percent for the last four years.

Last week, a Goldman Sachs economist suggested opioid addiction is part of the reason more people aren't actively looking for work. "The opioid epidemic is intertwined with the story of declining prime-age participation, especially for men, and this reinforces our doubts about a rebound in the participation rate," David Mericle said.

Mericle added the economic consequences of opioid addiction extend beyond the labor market, including sizeable costs of health care and criminal justice.

On Wednesday, Yellen, speaking with the House Financial Services Committee, suggested that advancements in technology and globalization could eliminate the middle class.

— CNBC's Evelyn Cheng contributed to this report.

WATCH: GS thinks opioid crisis affecting economy

Goldman Sachs thinks the opioid crisis is so bad it's affecting the economy