Economic Impact of Smoke-free Law

Contact: Louise DuPont

 

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Very few food service establishments closed either before or after the smoke-free law went into effect. Since there were very few openings or closings in the hotel industry over the study time period, researchers could not examine the effect of the law on hotels/motels.

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LEXINGTON, Ky. (April 18, 2005) -- Lexington ’s bars and restaurants have not been hit in the wallet by the city’s smoke-free ordinance, according to a new economic impact study.

An ongoing study of the ordinance being conducted by the University of Kentucky concludes that Fayette County’s restaurant and bar business has remained stable. In fact, one economic indicator for the restaurant business is improving, according to the study.

Key findings include:

  • Restaurant employment has increased since the law went into effect.
  • The average number of bar workers has remained stable.
  • And hotel/motel employment decreased in the five months (May-September 2004) after the law went into effect, compared to the pre-law period from January 1999 to April 2004. However, there was no significant change in average monthly hotel/motel payroll withholding taxes in the 10 months after the smoke-free law went into effect.

“Our analysis to date has found that the smoke-free law has not had a significant impact on overall employment, business closures or openings, or payroll withholding taxes in the restaurant or bar industries”, said Eric Thompson, co-investigator on the study and director of the Bureau Business Research in the Department of Economics at the University of Nebraska-Lincoln.

The study, funded by the UK internal research grants program, is under the direction of Ellen Hahn, associate professor in the College of Nursing and College of Public Health, and Don Mullineaux, professor and director of the School of Management, UK Gatton College of Business and Economics. Thompson is working with them on the study.

Moreover, data from the Lexington-Fayette County Health Department from July 2000 through February 2005, demonstrated no significant change in openings or closings in restaurants in Fayette County in the 10 months after the smoke-free law went into effect.

Very few food service establishments closed either before or after the smoke-free law went into effect. Since there were very few openings or closings in the hotel industry over the study time period, researchers could not examine the effect of the law on hotels/motels, Thompson said. However, the researchers examined changes in establishments that served alcohol and those that did not.

As with the overall sample, there was no significant change in openings or closings among establishments that served alcohol and those that did not, either before or after the smoke-free ordinance took affect or when controlling for seasonal changes.

“The decrease in hotel/motel employment after the smoke-free law is a puzzle, since we did not find any significant decline in hotel/motel payroll withholding taxes during this time period,” said Mullineaux, co-principal investigator of the study. “We will be continuing to study this anomaly.”

Mullineaux said the analysis of employment took into account population size, unemployment, and seasonal influences, allowing researchers to control for the impact

of these factors on the local job picture over the study time period, aside from any prospective effect of the smoke-free ordinance.

The report can be found online.


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