Drug testing and discrimination

By Eric Crampton 21/05/2014

If employers assume that minorities are more likely to take drugs than are other groups, and if you think that drug-taking makes for a worse employee, they could be fuelling a really bad equilibrium. Individuals can’t easily signal that they’re clean without simultaneously seeming weird (by, for example, voluntarily offering to undergo drug testing), so they pool with drug users and are less likely to get a job offer.

This happens whether or not the employer is right about the relative rates of drug use. If the employer is wrong, that employer will bear some losses by failing to hire quality candidates, and especially when labour markets are tighter. But, worse, initial misperceptions on relative drug use can turn into a bad self-reinforcing equilibrium: if everyone is going to think you’re a stoner regardless of whether you do drugs, why not at least enjoy the consumption benefits? We then get the same kind of pernicious equilibrium that Glenn Loury talks about in his work on discrimination.

One way of breaking that equilibrium is to allow employers to require drug testing: it lets clean employees quickly demonstrate that they’re clean and consequently breaks the pooling equilibrium. Drug-using potential employees are worse off, because they can’t mask type as easily, but those who aren’t benefit by the separation.

That’s the theory. Abigail Wozniak shows that the empirics hold up. Here’s an early ungated version of her paper; here’s the NBER Working Paper.

Nearly half of U.S. employers test job applicants and workers for drugs. A common assumption is that the rise of drug testing must have had negative consequences for black employment. However, the rise of employer drug testing may have benefited African-Americans by enabling non-using blacks to prove their status to employers. I use variation in the timing and nature of drug testing regulation to identify the impacts of testing on black hiring. Black employment in the testing sector is suppressed in the absence of testing, a finding which is consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7-30% and relative wages by 1.4-13.0%, with the largest shifts among low skilled black men. Results further suggest that employers substitute white women for blacks in the absence of testing.

It feels good to oppose mandatory testing, thinking that it somehow is nicer for minority groups. But that opposition mostly works to encourage employers to substitute over to groups that they believe are less likely to take drugs. Another for the continuing series here on feeling good while doing harm.

I note this now because Twitter tells me that Radio New Zealand will be talking drug testing in 15 minutes.


0 Responses to “Drug testing and discrimination”

  • To my mind this paper and blog shows why policy makers need to take an interdisciplinary approach to societal problems and that economics is only one aspect to consider.

    What we are seeing here are prejudiced employers pushing back against societies preference for fairness. By drug testing the subjects of prejudice, provision of information is shifting employment practices. That drug testing is the best way to provide this shift is in my mind doubtful. That problem would be more effectively solved (probably at less cost) by training or disciplinary action against the managers concerned.

    I accept drug tests are necessary where the are clear safety requirements, such as interstate transport, and only if everyone including the board and management staff are included; and tests must include screen and full GC-MS analysis of any positive results. The full analysis is required because the common screening tests are not accurate. In addition, in NZ (and one would expect in the USA) there are additional privacy and ethical concerns around screening tests.
    Keeping in mind that the problem here is prejudiced managers and the impact of their hiring decisions on minority groups. We need to think about the testing, and the privacy and ethical concerns.
    First the testing. Screening drug tests are often not accurate, the NZ standard requires a screening test followed by a full gc/ms analysis of any positive results (which will be expensive as this is a sophisticated skilled analysis requiring expensive equipment). The link below gives information on the magnitude of the problem; 10-15% false positives and 15-20% false negatives. (That means if a population has 1% drug takers, and you have 10-15 positive tests per 100 tests only one will be a true positive).
    “Drug Tests Often Trigger False Positives: Poppy Seeds, Cold Medications Can Trigger False Alarms

    New Zealand’s ESR also confirms the necessity for full analytical testing; quote and link below.

    ESR Quote, “NB: It is important to be aware that there are now available in New Zealand alternative tests that do not comply with the Australian/ New Zealand Standard. Such tests include “On site” urine tests (dip sticks, cartridges, cups), laboratories conducting the “Screen only” tests and Oral Fluid (or saliva) tests. These options can give the wrong result and the results would not withstand legal challenge”.


    Second. There are additional privacy and ethical concerns around screening tests. ESE makes the following comment regarding New Zealand law.
    ESR (highlight mine),
    “In order to meet privacy and human rights obligations, workplace drug and alcohol testing must have the following general features:
    testing is for the express purpose of ensuring the safety of employees and those likely to be affected by their actions in the workplace
    employees are not selected for testing on discriminatory grounds…”.

    It seems that in New Zealand screening minority groups is illegal.

    In summary: There are practical and ethical reasons to be
    thoughtful about the practice of drug screening tests. To my mind, the key issue here is that policy makers reflect scientific best practice and community requirements for fairness. I doubt that screening minority groups is ethical or accurate, and it will be costly to undertake correctly. The original paper certainly gives evidence that prejudice is a problem in hiring decisions in the USA. That problem would be more effectively solved (probably at less cost) by training or disciplinary action against the managers concerned.

    This case also shows why policy makers need to take an interdisciplinary approach to societal problems and that economics is only one aspect to consider.

    • Maurice, I never said that economics should be the *only* consideration here. But the general popular view is that drug testing hurts minorities, and this nice bit of empirical work shows that it instead helps employment outcomes for minority groups.

      There are four logical positions. You can believe that employer drug testing is ethically sound or ethically dubious: that’s a values question. The empirical question is on the effects of the policy. Previously, those who thought it ethically dubious could have thought there were no real trade-offs: it was ethically bad and also had bad consequences. But the paper shows otherwise. It can still be ethically dubious, but it also improves minority job prospects. In that case we have to weight the ethics against the consequences.

      I don’t think that anybody in the States runs this as a “just screen minorities” programme; that would almost certainly be illegal. But screening everybody benefits those who would otherwise wrongly be assumed to be using drugs, and that’s primarily benefiting minority applicants.

      It’s totally fine to think that something has beneficial effects but is still ethically bad. For a long time I opposed the death penalty despite being pretty sure that it saved lives through deterrence effects. I’m now less convinced by the empirics on that as they’ve been shown to be pretty non-robust. Knowing the real-world effects of a policy always helps in assessing these trade-offs though.

  • ESR should update their FAQ that Maurice links to. The FAQ refers to an older version of the AS standard. Newer version requires an on-site creatinine test to ensure urine samples haven’t been diluted. ESR also offers oral fluid ( saliva ) testing, so they probably should no longer disparage such testing. I suspect they may also perform LC-MS, LC-LC/MS, etc. as well GC-MS.

    ESR offer documents that identify the relevance of various samples, and employees should probably be aware of the prior use detection timelines for each sample type ( Saliva = 12 – 24 hours, Urine = 4 hours to 20 days, Hair = 7 – 365+ days ).

    Normal workplace testing should usually only involve saliva ( especially after a safety-related incident ) or urine ( random, pre-employment, etc. ). Employees should be aware that hair testing will identify historical use, sometimes up to 2 years.

    Most NZ employers would be very careful to ensure testing programmes are legal and non-discrimatory, and probably discuss their plans with existing employees. Employees don’t want to be working alongside drug or alcohol-addled colleagues, especially if personal safety is compromised.

  • Please keep in mind that the original paper was looking at pre-job screening of minority groups in response to management prejudice in the USA. Certainly ensuring workplaces are safe is important but any testing must be fair and correct. False positives are a recognized problem with screening tests.

    The current ESR documents are clear as to the use of alternatives to the AS/NZS standards. You can download ESR’s document “Drug testing in the workplace (Copyright date 2010). I expect the current version.


    Although ESR does offer a saliva test and a hair test, the tests do not appear as the standard accredited test. The ESR document goes on to say, “The results obtained from an on-site test are presumptive and “not negative” results need to be confirmed by further laboratory testing for the results to be valid. Employers need to be aware of limitations with the use of on-site screening.”

    I suggest contacting ESR if you are interested in details.