Workplace Drug Testing and Worker Drug Use

A large literature suggests that employee substance use in the workplace may impose high costs to firms in the form of lower productivity, increased absenteeism, and more workplace accidents (see National Research Council 1994 for a review). Partially as a response to these costs, employers have responded by implementing a variety of policies and programs designed to reduce employee substance use. In addition to education programs and written standards such as “Zero Tolerance” policies, employers have in the past two decades increasingly turned to drug testing programs. Currently, about 46 percent of all workers report that their employer performs drug testing, although other sources indicate that as many as 90 percent of Fortune 200 firms use some type of drug testing (Flynn 1999). The rationale behind workplace drug testing is straightforward: by raising the expected costs of workplace substance use, the programs aim to deter consumption of dangerous substances by current and prospective employees. Indeed, anecdotal evidence suggests that both supporters and opponents of workplace drug testing—which increased substantially throughout the late 1980s and remained steady throughout the 1990s—believe that testing deters employee drug use. Despite this, there are only three studies that have used nationally representative data to provide evidence on whether large-scale employer drug testing deters employee drug use (Hoffmann and Larison 1999; SAMHSA 1999; French, Roebuck, and Alexandre 2004). Each of these finds that drug use is lower among individuals whose firms test for drugs. Some have interpreted the negative testing/use correlation as representing a causal deterrent effect of testing on worker drug use. Admittedly, a strong negative relationship between testing and use is consistent with such an interpretation. However, the same observed negative correlation is also consistent with a handful of equally plausible alternative explanations that have not been adequately ruled out by previous research. For example, the presence of a workplace drug testing program may simply proxy for other omitted firm characteristics. Previous research has not adequately addressed concerns about these and other omitted variables biases, and as such the claim that a negative testing/use relationship reflects a causal deterrent effect warrants further investigation. This research question has become increasingly important, as in recent years firms have begun to question the merits of drug testing. This opposition has arisen, in part, because drug testing is a huge industry in the United States, costing employers six billion dollars per year (Costantinou 2001). Of course, if drug testing reduces workplace substance use (either through a deterrent effect among current workers or through firm screening), then the programs may well be worth their expense. One important evaluation question, then, is: Do workplace drug testing programs really reduce substance use? In this paper, we revisit this question by using more comprehensive data than has been used previously to more fully evaluate alternative explanations for the negative relationship between testing and use.