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January 10, 2014

Mass incarceration, marijuana and deeper dives into national employment data

The title and topic of this post is driven by the curious news today, reported here by the AP, that US employers "added a scant 74,000 jobs in December after averaging 214,000 in the previous four months," but that also "the unemployment rate fell from 7 percent in November to 6.7 percent, its lowest level since October 2008."  The standard "official reason" for low job growth but a big dip in the unemployment rate is "because many Americans stopped looking for jobs."  But I started then thinking about whether and how the thousands of people now employed in state-legal (but federally-prohibited) marijuana businesses are counted in this national data.  Could it be that a significant number of people working in the state-legal marijuana industry are now counted as unemployed and/or not looking for work (just as I assume all illegal cocaine dealers are counted)?

These thoughts are based in part on this one notable Montana study, which students in my marijuana seminar found when they assembled information about job creation in marijuana industry. Though the data in this 2011 study may be hinky because it was produced by the Montana Medical Growers Association, the study estimated that 1,400 new jobs had been created in the sparcely populated state of Montana alone and that "approximately 70% of employees [in the Montana marijuana industry] were previously unemployed."  Extrapolating from these numbers, it seems plausible that there may already be 50,000 or more Americans already working in state-legalized medical marijuana businesses, and these employment numbers are certain to grow in states like Colorado and Washington now with a huge new recreational marijuana market.

But do all Americans now working in the (cash only) state-legal marijuana industry count as employed in the federal data?  I would suspect not given that the federal law still regards all these folks as illegal drug dealers on par with a guy on a street-corner trying to peddle crack.  Perhaps more worrisome for those concerned about the abuse of federal benefits, how many Americans have acquired jobs in the state-legal marijuana industry but remain happy and eager to report they are "still looking for (fully legal) work," and thus are collecting federal unemployment insurance while actually working in the marijuana industry?  Or instead, once formerly unemployed folks get a job within a state-legal (but federally-prohibited) marijuana business, do they tend then to just report that they have given up looking for work?

As the title of this post suggests, I am asking these questions about the mariujuana industry and employment data in part because shrewd labor-force data-crunchers have long known that the massive increase in incarceration during the 1990s played a huge role in making national unemployment data look better than the reality.  During from 1985 to about 2005, hundreds of thousands of unemployed (and mostly low-skilled) Americans were added to our prison population, taking them out of the labor force entirely and thus (artificially) driving down the unemployment rate statistic.  (In addition, the need to build and staff ever more prisons was a terrific government stimulus program for low-skilled labor.)  But in the last decade or so, the national prison population has been relatively stable: each year roughly 700,000 new persons get admitted to prison and another 700,000 get released.  However, the reality of prison life and the challenges of a criminal record mean that every person newly released from prison each year is all but certain to have a harder time finding legal employment than every person newly admitted to prison that year.

Put differently, growing the prison-industrial complex often makes for better superficial national job numbers, while keep America's prison population stable (or getting it to decline) can end up hurting simplistic national job numbers.  (That reality is one of many reasons it is often so much easier to get politicians to support laws that fuel prison growth rather than laws that fuel prison reduction.)  

With these statistical realities in mind, I am now wondering and worrying in light of the latest national employment data whether a reverse data-collection problem could be at work with the marijuana-industrial complex as long as pot prohibition is still the law at the federal level.  Could significant growth of a state-legal "marijuana-industrial complex" actualy produce federal data that makes national employment data look worse than it really is? 

Obviously, I am not a labor economist, and I could be waaaaaay off base here.  But I suspect and fear few serious US labor economists are even considering these realities much, if at all, as they think about the modern American labor force and its needs in the years ahead.   More broadly, the only key takeaway from this post should be that just as mass incarceration is a labor issue as well as a criminal justice issue, so too do I think marijuana law and policy is a labor issue as well as a criminal justice issue.

January 10, 2014 at 12:47 PM | Permalink


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Therefore, the summation of those employed to investigate & enforce weed offenses, and those who watch, feed & house those incarcerated for such offenses, is to be added to those in 10th Amendment states who grow, harvest, transport and sell weed for medicinal or recreational users. Would the numbers be impacted if offenders were sentenced to a year in Denver?

Posted by: Utilito | Jan 10, 2014 1:09:28 PM

Well, Bill Otis always says nobody is in prison just for weed. And we do now have new government jobs to regulate the new legal industry. And if marijuana use in fact increases other crime, as alcohol clearly does, there should still be plenty for the cops on the street to do. No?

Posted by: Doug B. | Jan 10, 2014 1:28:44 PM

As with all statistics, understanding the process is key.

The unemployment number is a survey (large enough to have a relatively small margin of error, but still some). The survey essentially asks the participants to characterize their own job status. The question does not state whether a person who is a self-employed drug-dealer or marijuana-grower is employed, it is up to the dealer/grower to make the determination of whether he/she is employed.

There is a related survey of employers released at the same time that is the source of the "new jobs" number. I suspect that there are some people showing up as employed on the unemployment number that do not turn up on the jobs number because they work in the gray or black market and thus their employer is not ever surveyed.

Posted by: tmm | Jan 10, 2014 6:09:53 PM

Does anyone honestly believe that wasting $20 Billion and arresting 3/4 Million Americans annually for choosing a substance Scientifically proven to be safer than what the govt allows, is a sound policy?

Posted by: Mike Parent | Jan 11, 2014 12:09:54 PM

You can end Mass Incarceration by converting Catholics over to Church of the New Song or CONS. As a former Catholic I was often the victim of a nun's ruler if I tried to sneak out of Mass early.

Posted by: Liberty1st | Jan 11, 2014 12:16:16 PM

Doug B. --

"Well, Bill Otis always says nobody is in prison just for weed."

Actually, I have NEVER said that nobody is in prison just for weed.

What I have said in that very, very few people get sentenced to prison for simple possession. But big time traffickers still go to prison, you bet.

Posted by: Bill Otis | Jan 12, 2014 4:16:56 PM

Washington state is about to be a huge pot trafficker. Can the whole state be incarcerated?

Posted by: Doug B. | Jan 12, 2014 5:39:46 PM

The biggest cause of unemployment is the Harvard Law indoctrinated left wing extremist in the White House. Once he leaves in 2017, the economy is tightly wound up, and will spring forward at the speed of sound. That is if the American people learn from their mistake, and elect a patriot. Marijuana has a small effect compared to the devastation of the Harvard Law indoctrinated lawyer running the country.

It is ironic. Only the investor class is doing well. They sent him massive contributions anticipating the effect of his policies.

Posted by: Supremacy Claus | Jan 13, 2014 3:12:30 AM

I used to agree with Supremacy Clause's view of Obama and the investing class. When he came into office I bought several Shorted stocks. They were basically Dow Index stocks but not all of them. I figured the numbnut would bring the stock market down and by shorting the stocks I would make money. The Dow was at about 9600 at the Bushie low when I did this. Well it never went down so I lost. Now the Dow is at 16000 plus headed up. Who would have thunk? So this time if a Bush wins the White House I will short the market and if an Obama kind of guy wins I will stay in and hope it goes up.

Posted by: Liberty1st | Jan 13, 2014 10:25:25 AM

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