Legalizing marijuana leads to fewer worker comp claims, Temple research finds

Temple University associate professor Johanna Catherine Maclean is an economist who studies the impact of substance use on the labor market. Maclean’s recent research has focused on how medical and recreational marijuana legalization affects the ability to work productively, using the frequency of workers’ compensation claims as a measure.

As the landscape of medical and recreational marijuana statutes continues to shift as states such as New Jersey legalize the substance, Maclean is a leader of this emerging area of research. “These medical and recreational marijuana policies are quite new, so we have a lot more to learn,” she said. “These are policies in motion.”

We studied older adults, whom we call 40 to 62, and looked at all self-reported workers’ compensation income. What we found is that, following a state’s legalization of recreational marijuana, there’s about a 20% reduction in the probability that a person reports having any income from workers’ compensation. We mainly focused on workers’ compensation because we viewed it as one proxy for work capacity, which we define as the ability to work productively.

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We don’t think that using marijuana is actually improving people’s health. We think it may allow some of these older folks with chronic conditions to better manage their symptoms.

So the big barrier in this work on drug use is that we don’t really get information on why folks are using the drug. I think what’s happening is some people, in particular older people who are more likely to suffer from conditions with painful symptoms that impede work capacity, are using marijuana to treat things like chronic pain, mental health conditions, sleep disorders, and so on and so forth.

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There’s also some literature from other economists that shows when you legalize marijuana either for medical or recreational use, we see changes in utilization of therapeutic substitutes, like opioids, in insurance claims data. That might mean, say, before you were using opioids to manage your chronic pain. But when we adopt a medical or recreational marijuana law, we see a reduction in prescriptions for refills for things like opioids.

There’s many states, like Pennsylvania, that have a medical law, but not a recreational law. If you look at the set of qualifying health conditions for medical marijuana, they are relatively restricted. Generic chronic pain is not included in Pennsylvania. So there’s a belief that there are many people who could benefit from the medical use of marijuana, but they’re not eligible based on the qualifying conditions.

Or perhaps there’s a stigma that prevents people from accessing medical marijuana. When there’s a medical law, you must seek a recommendation from a health-care professional and there’s some cost there that creates a barrier. When you have a recreational law, that barrier isn’t there. I don’t have to tell a doctor that I’m anxious, have a sleep disorder, or have PTSD. All I have to do is go to the dispensary and purchase it, and show that I’m 21.

Medical and recreational marijuana statutes largely do not provide protection for workers from that behavior. We find that when states adopt a medical marijuana law, residents of the state experience about a 7% reduction in the probability of receiving any income from workers’ compensation. That’s slightly larger, 13.3% workers aged 40+, that we looked at under medical marijuana policy.

When we look at only those states that have a medical marijuana law that provides employment protection for workers — that is, employees can’t get fired if they screen positive — the effects are larger. We see a 13.3% reduction in the probability of receiving any income from workers’ compensation for those states. So that leads me to think that protection for workers is valuable, and if you offer that protection, more people will use the product medically.

We saw that nonfatal workplace injuries actually declined following recreational marijuana adoption. So that suggests that people are not getting into problems at work because they’re high.

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I do think a really interesting question for the future is how employers are going to treat this issue moving forward. Drugs stay in the body for different amounts of time, and also have different implications for your workplace safety and productivity. My understanding is that marijuana can remain testable in the body for about three weeks where cocaine is going to exit pretty quickly.

Marijuana, one might think, is potentially less harmful to the workplace than other substances like alcohol, cocaine, or heroin that may stay in one’s system for a shorter period of time. How might that impact the optimal way to test for drugs at the workplace? If we test for things that stay in the body for a longer period of time, we might be encouraging employees to substitute away from a substance that stays in the body longer.

A colleague of mine, Joe Sabia at San Diego State University, looked at the impact of medical marijuana laws on wages. What he and his coauthors found is, generally, there’s not a strong relationship between medical marijuana law adoption and wages, although when they look at younger male workers, they find some evidence of a decline in wages.

High costs of workers’ compensation is a common concern for employers. Also, when a worker is absent, if the employer has to have a temporary worker come in and work in place of the employee who is out, that’s costly. It’s also generally disruptive to the workplace.

Workers are earning about two thirds of their wage when they go on workers’ compensation, so that means they’re taking an earnings loss. Perhaps it’s good for the worker as well to stay working. If they don’t have to have the separation from work, or have a shorter separation, or don’t need the formal health care that they may otherwise need if they have access to marijuana, this can reduce costs along all those margins for the employer.

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