|Economic Impact of Smoking Restrictions in Workplaces and Public Places
(An excellent pamphlet on the economic impact of smoking restrictions has been produced by Luk Joossens and others for Smokefree Europe and can be downloaded from http://www.smokefreeeurope.com/economic_report.htm)
The tobacco lobby and sections of the hospitality trade claim that ending smoking in workplaces and enclosed public places, including pubs and restaurants, would have a negative effect on trade and employment.
However, the objective evidence does not support this argument.
A comprehensive review of 97 studies published before September 2002 on the economic effects of the smoke free policies on the hospitality industry found:1
Of the 35 studies on this topic published that found a negative impact, none were funded by a source clearly independent of the tobacco industry, and none both used objective measures and were peer reviewed.
The 21 best designed studies found that smoke-free restaurant and bar laws had no negative impact on revenue or jobs.
New York’s Smoke-Free Air Act came into effect on March 30, 2003. New York’s hospitality industry lobbied vigorously against the legislation, claiming that it would have a disastrous effect on bars and restaurants.
In March 2004, a report on the impact of the legislation was issued by the New York City Department of Finance, the Department of Health and Mental Hygiene, the Department of Small Business Services, and the Economic Development Corporation. It concluded that:
“One year later, the data are clear. . . Since the law went into effect, business receipts for restaurants and bars have increased, employment has risen, virtually all establishments are complying with the law, and the number of new liquor licenses issued has increased—all signs that New York City bars and restaurants are prospering.”
Key findings from the report were that:
Business tax receipts in restaurants and bars were up 8.7%;
Employment in restaurants and bars increased by 10,600 jobs (about 2,800 seasonally adjusted jobs);
97% of restaurants and bars were fully smoke-free;
New Yorkers overwhelmingly supported the law. 2
The 2004 Zagat New York City Restaurant Survey of nearly 30,000 New York restaurant-goers found that 23 percent of respondents said they are eating out more often because of the city’s smoke-free workplace law, while only four percent said they are eating out less. Zagat’s press release concluded:
“The city’s recent smoking ban, far from curbing restaurant traffic, has given it a major lift.”
Elsewhere in the United States
A study was conducted by researchers at the Harvard School of School of Public Health of the Commonwealth of Massachusetts’ comprehensive statewide smoke-free law, which took effect July 5, 2004. It found that:
“Analyses of economic data prior to and following implementation of the law demonstrated that the Massachusetts state-wide law did not negatively affect statewide meals and alcoholic beverage excise tax collections.3
A study conducted by researchers at the University of Kentucky’s College of Nursing and the Gatton College of Business and Economics of the Lexington-Fayette County, Kentucky comprehensive smoke-free law that took effect April 27, 2004 found that:
“In general, selected key business indicators in Lexington restaurants, bars, and hotels have not been affected by the smoke-free law. When taking factors into account such as population size, unemployment, and seasonal variation, there was a slight increase in restaurant employment; bar employment remained stable and hotel/motel employment declined in the 10 months after the smoke-free law took effect. There was no effect of the smoke-free law on payroll withholding taxes (workers’ earnings) in restaurants, bars, or hotels/motels in the 10 months after the law went into effect, after taking seasonal variation into account. The smoke-free law was not related to business openings or closures in alcohol-serving establishments or at non-alcohol serving establishments.”4
In Delaware, the Clean Indoor Air Act came into effect in November 2002. Data from the Delaware Alcohol Beverage Control Commission showed that the number of restaurant, tavern and taproom licenses increased in the year after the law took effect. Data from the Delaware Department of Labor show that employment in the state’s food service and drinking establishments also increased over the same period.5
In California, taxable sales receipts for bars and restaurants have increased every year since 1997 (the year before the state’s smoke-free bar law took effect) through 2002 (the most current year full data is available).196 In addition, total employment at bars and restaurants has also increased every year since 1997.20 7While bars have seen a decrease in total employment since 1990 (seven years before the smoke-free laws implementation), this trend in bar employment has not been affected by the smoke-free bar law.
The Irish law which ended smoking at the workplace (including bars and restaurants) came into force on 29 March 2004. The Licensed Vintners Association (LVA) which represents 95% of Dublin publicans commissioned research to evaluate the economic impact of the ban. In a press release of 9 July 2004 the association stated that:
“Research carried out by marketing research company Behaviour and Attitudes confirms the negative economic impact of the Smoking Ban on the Dublin licensed trade, with turnover down by as much as 16%, and overall employment levels cut by up to 14% since the introduction of the Smoking Ban.” 8
However, figures released in February 2005 by the Central Statistics Office of Ireland (www.cso.ie) do not support the claims made by the Licensed Vintners Association.
Data on the revenues of bars in Ireland are available at monthly basis until December 2004. The Retail Sales Index (RSI) is the official short-term indicator of changes in the level of consumer spending on retail goods and is published every month by the Central Statistics Office (CSO). The official figures show that the value of bar sales in Ireland were at 107.4 in the period after the ban (from April to December 2004) compared to 111.3 in the equivalent period a year earlier (from April to December 2003).9
This decrease in revenues of 3.5% (not the much higher figure claimed by the Irish LVA and lobbyists in the UK) simply continues a trend which started back in 2001, well before smokefree legislation was introduced. The volume of sales in bars in Ireland increased until 2000, but decreased by 3% in 2002, 4% in 2003 and 5% in 2004.
Review by Health Scotland
An excellent review of the health and economic impacts of smoking restrictions in public places was carried out for the Scottish Executive by researchers at the Health Economics Research Unit and Department of Public Health at the University of Aberdeen10
The executive summary of the report states that:
“Studies of the impact of smoking restrictions on the hospitality sector (hotels, bars and restaurants), using objective data such as sales tax and employment, have failed to find any statistically significant effect. The evidence from these studies is not as robust as the evidence relating to health effects, in terms of quantity of published studies, study design and sample size. However, the findings are consistent in demonstrating small and mainly positive effects
These studies were carried out in the context of claims that there would be a negative impact of 30%. The studies were designed with sufficient power to detect effects of this size and they demonstrated that impacts of this size had not occurred in any of the locations studied.”
Britain: Report of the Chief Medical Officer
In his Annual Report for 2003, the Government’s Chief Medical Officer, Professor Sir Liam Donaldson, said that a comprehensive smokefree law could benefit the British economy by up to £2.7 billion.
This could include up to £680m saved by having a healthier workforce, which could produce more goods, £140m saved through fewer sick days, £430m saved because less production would be lost to cigarette breaks and £100m saved by not having to clean up behind smokers.
The CMO said evidence from abroad showed bans in pubs and restaurants have not proved to be bad for business. He added that visits to Ireland, California and New York, which have already banned smoking in public places, showed a ban could be enforced without the hospitality trade being damaged - as had been feared. He said he found bars and restaurants "thronging with people". 11
1 Scollo M, Lal1 A, Hyland A and Glantz S, Review of the quality of studies on the economic effects of smoke-free policies on the hospitality industry, Tobacco Control, 2003;12:13-20
2 NYC Department of Finance, NYC Department of Health & Mental Hygiene, NYC Department of Small Business Services, NYC Economic Development Corporation, “The State of Smoke-Free New York City: A One-Year Review”, March 2004, http://www.nyc.gov/html/doh/pdf/smoke/sfaa-2004report.pdf
3 Connolly G, et al, Evaluation of the Massachusetts Smokefree Workplace Law: A Preliminary Report
, Division of Public Health Practice, Harvard School of Public Health, Tobacco Research Program, April 4, 2005. http://www.hsph.harvard.edu/php/pri/tcrtp/Smoke-free_Workplace.pdf
4 Hahn E, et al, Economic Impact of Lexington’s Smoke-free Law: A Progress Report
, University of Kentucky College of Nursing and Gatton College of Business and Economics, April 18, 2005. http://www2.mc.uky.edu/TobaccoPolicy/UK%20Progress%20Report%20FINAL.pdf
5 Meconi, Vincent, Secretary of the Delaware Department of Health and Social Services, “Secondhand Smoke Deserves Regulations,” Delaware State News
, (December 30, 2003). See also American Lung Association of Delaware, “Delaware’s Clean Indoor Air Act – The 1st Anniversary Story”: http://www.alade.org/main.htm
6 California State Board of Equalization, "Taxable Sales in California", http://www.boe.ca.gov/news/tsalescont.htm
7 State of California Employment Development Department, Labor Market Information
, “Employment by Industry Data,” http://www.calmis.ca.gov/file/indhist/cal$haw.xls
8 Licensed Vintners Association, Independent research shows impact of smoking ban among Dublin Publicans, Press Release 9 July 2004 http://www.lva.ie/easyedit/files/09July04.doc accessed 7 February 2005