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.