Employee Drug Testing is Effective

Using the U.S. military's policy of random drug testing and zero tolerance, we find that a strict employer anti-drug program is a highly effective means of deterring illicit drug use among current users as well as potential users.

Employers are increasingly concerned about illicit drugs in the workplace. Besides being illegal, drug abuse is costly in many ways, from lost productivity to frequent accidents. The percentage of medium-to large-sized companies that have instituted some form of drug testing program almost doubled from 1988 to 1993--from nearly 32 percent to over 62 percent.

How effective are these programs in deterring current and potential employees from using marijuana, cocaine, and other drugs? In The Effectiveness of Workplace Drug Prevention Policies: Does 'Zero Tolerance' Work? (NBER Working Paper No. 7383), Stephen Mehay and Rosalie Liccardo Pacula explore the deterrence effect of the military's anti-drug program. The military combines mandatory random drug testing and zero tolerance, an especially aggressive approach relatively rare elsewhere in the economy. "Using the U.S. military's policy of random drug testing and zero tolerance, we find that a strict employer anti-drug program is a highly effective means of deterring illicit drug use among current users as well as potential users, " the authors write.

Indeed, drug use by military personal and civilian workers mirrored one another before the military instituted drug-testing in 1981. Yet now, drug abuse among military workers is far less prevalent than among their civilian counterparts. Surveys suggest that employees in the military are about 16 percent less likely to report using drugs in the past year than their civilian counterparts. Drug prevalence rates in the military fell from 27.6 percent in 1980 to only 3.4 percent in 1992. After taking into account selection bias (potential drug-using recruits are aware of the drug-testing program and steer clear of a military career), the deterrence effect of the military's program ranges between 4 percent and 16 percent, the authors calculate.

A drug-testing program curbs drug abuse through three channels: The fear of getting caught; the probability of getting punished; and the severity of the penalty. The structure of the drug-testing program largely determines its effectiveness. For example, in some programs drug tests are mandatory only after an accident, limiting their deterrence value. Far more effective are programs requiring all workers to submit to random drug tests. The military's initial anti-drug programs had some second chances built into them, but since 1995 all the services have instituted a draconian penalty for getting caught--job loss.

Nevertheless, drug use hasn't been eradicated from the military, and the researchers wonder whether a strict anti-drug policy is really worth the cost. The primary cost of a zero tolerance policy is the cost of replacing terminated workers. They note that the military's approach in the early 1980s, which coupled lower random testing rates and a more lenient two-strikes-and-your-out policy, still showed a sizeable deterrence effect. "These results suggest that policies that would be feasible today in the private sector can be expected to reduce drug use in a cost-effective manner," they say.

-- Christopher Farrell