Beer-Industry Jobs

Industry Views

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Beer-Industry claims that tax increases have destroyed jobs

are not supported by the facts


Beer industry spokesmen claim that increases in beer taxes harm the economy, punish consumers and the industry, and lead to massive reductions in employment.  The Beer Institute's website asserts that "the doubling of the beer tax in January 1991, from $9 to $18 per barrel" displaced 31,000 workers.  Official data from the U.S. Department of Labor flatly contradict this claim.


Between 1990 and 2000, beer industry wholesale trade employment rose by more than 8,000 jobs, including increases between 1990 and 1992 (a year before and after the tax increase).


U.S. Department of Labor, Bureau of Labor Statistics


Employment at the manufacturing level declined by 7,600 between 1990 and 2000.  However, that decline clearly represents a steady reduction in jobs that began before 1960.  Since then, those jobs have been cut in half (from some 70,000 in 1960 to 32,100 in 2000).  According to the Bureau of Labor Statistics, manufacturing jobs held steady between 1990 and 1992 at close to 40,000, then fell again between 1992 and 1998.  These job reductions have resulted from increased mechanization and other efficiencies, as well as the dramatic consolidation within the beer industry during the past decades; not from beer tax increases!  The graph below shows a steady decline in beer-industry manufacturing jobs since 1960.


U.S. Department of Labor, Bureau of Labor Statistics


The graph below illustrates that jobs in the manufacturing sector of the beer industry declined from 39,700 to 32,100 between 1990 and 2000.  The number of production workers held steady between 1990 and 1995.


U.S. Department of Labor, Bureau of Labor Statistics


We calculate a net gain in beer-industry jobs following the 1991 federal beer-tax increase.  However, even if jobs had been lost, other factors may have contributed strongly to the losses in the beer sector.  For example, national unemployment went from 5.6% in 1990 to 7.5% in 1992 (hardly the result of the beer-tax increase).  A recessionary economy helped depress sales of beer; and growing concern about health and safety concerns related to drinking may have moderated consumption.  In any case, jobs lost to the beer industry would likely have been created elsewhere in the economy, as money not spent on beer flowed to other goods and services.  In fact, as beer consumption decreased between 1990 and 1992 (from 27.5 to 25.9 gallons per capita USDA/Economic Research Service), per capita consumption of bottled water rose from 8.0 to 8.2 gallons, carbonated soft drinks rose from 46.2 to 48.2 gallons, fruit juices from 7.9 to 8.4 gallons, fruit drinks from 6.3 to 6.5 gallons, and canned and bottled iced tea from 0.1 to 0.2 gallons.  Arguably, retail employees at groceries and convenience stores, who had previously been handling more beer, then began handling more non-alcoholic beverages instead.


Other Employment Facts


According to the U.S. Department of Labor, grocery store employment declined by approximately 33,000 jobs between 1990 and 1992 (consistent with overall job loss in the economy), but rebounded in 1993.  Those jobs have increased steadily since then.

Liquor store employment also decreased between 1990 and 1992 (from 118,400 to 114,800), but employment declines in this sector of the economy began in 1982, long before federal tax increases on liquor in 1986 and on liquor, wine, and beer in 1991 (U.S. Department of Labor, Bureau of Labor Statistics).  These data clearly challenge the liquor industry's exaggerated claims of job losses.  The Distilled Spirits Council of the United States' website asserts that 98,000 jobs, directly or indirectly generated by the liquor industry, were lost after the tax increases on liquor in 1986 and 1991.


U.S. Department of Labor, Bureau of Labor Statistics


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