Debunking the WISPIRG Study: Part 2

New York and California…

Logically speaking, these are hardly the states that should be used to compare ban economics with Wisconsin, but here we are.

The problem with looking at these two states is that these particular states are very complex entities compared to Wisconsin (or Ohio, Illinois, Minnesota etc). There are a number of very important factors to consider when examining the economics of these states that aren’t addressed by the ban supporters.

The New York claim:

“New York City’s restaurants and bars added 10,600 jobs while sales tax receipts increased by 8.7 percent since going smoke free, according to the New York City Department of Finance.”

The California claim:

California’s 131 smallest bars – those the tobacco industry claimed would be hurt the most – showed a 35 percent increase in business one year after California’s smoke-free law was implemented, according to California’s sales tax collection agency.

Well, while the data looks compelling at first, it’s not that easy. We’ll look at California first.

The claim, put forth in a study by Sheryl Magzamen, MPH, and Stanton A. Glantz, PhD, hardly objective sources as both are active anti-tobacco advocates who have been involved in a number of anti-smoking activities. However, there is a fatal flaw in the claim that WISPIRG is touting.

The flaw here is that per the 1998 smoke free law (Labor Code 6404.5) that extended the California state-wide ban to bars, establishments with five or fewer employees were exempt from the ban. Logically, would this not apply to the “131 smallest bars” that they cite?

In fact, they sealed their own fate here by reinforcing the obvious. If a ban on bars was enacted and the smallest establishments (i.e. bars with five or less employees) were exempted, wouldn’t it make sense that they would see a surge in business? This is just common sense, yet nowhere is this information made available in the WISPIRG study. To the average reader who isn’t familiar with the terms of the California law (the people who read the article in the local newspapers after WISPIRG made their press release) the data tells a much different story than the actual truth.

As for the New York study that was put out by the NY Department of Health et al., the biggest disparity is the fact that the study only addressed New York City rather than the whole state. When citing data to support a ban in Wisconsin, you would almost be better off citing data from Venus than New York City.

The WISPIRG study cites an 8.7% rise in post-ban tax receipt revenue (actually 6.4% inflation adjusted), but that is only for New York City and doesn’t reflect the state as a whole (particularly Upstate New York). When I pulled up tax records for New York State and factored out New York City, I found that revenue growth for 2002-2003 and 2003-2004 (the same periods used in the previous figure) were stagnant at .25% and .23% respectively. Hardly data that would support a “positive economic growth” claim.

This data is also supported by the NY Federal Reserve’s Regional Economic Indicators and is best displayed by this graph comparing New York City growth vs. Upstate which shows that NY City’s payroll employment rose and was in-line with the national numbers while Upstate stagnated and actually showed losses.

Additionally, this data can be supported by this 6-page list of establishments hurt or shut down completely after the ban’s enactment. You can also look to newspaper articles from area outside NY City for evidence of harm done. For example, this article which appeared in the Boston Globe had this to say:

Bars in places like Dunkirk, near the Pennsylvania border, and in towns along the New Jersey border to the south have complained of losing business to states that do not have similar smoking restrictions.

and this:

Brad Dixon, owner of the Solsville Hotel, near Syracuse in central New York, said that after one fine he is “trying to go legit” but notes losing money to other bars, including one right across the street, that still allow smoking inside. Business on the weekends has been cut in half, he said.

“It’s unfair,” Dixon said. “They’re enforcing it on a complaint basis only at the Health Department, and they have only four employees. I’m not going to turn in the guy across the street.”

Once again, this information does not coincide with the claims that the New York’s smoking ban has been a positive force on the economy. With this in mind, can anybody legitimately say that the data supports the “no economic damage” claims as far as Wisconsin (or other similar states) is concerned?

It would seem that we can safely disregard both of these examples in the WISPIRG study.