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Could Taxing Soda Create Jobs?

New research suggests that slighted soda drinkers would actually boost employment by spending their cash elsewhere.

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Soda taxes could improve public health.  (Photo by Spencer Platt/Getty Images)

Taxing soda and other sugar-rich drinks--a measure lawmakers and voters have weighed to combat the nation's growing obesity epidemic--would have no negative effect on jobs, a study finds.

Researchers at the University of Illinois (Chicago) found that a 20 percent increase on the price of sugar-sweetened beverages would have an overall positive impact on the labor market.

 

The American Beverage Association has long pushed back against such a tariff on the price of soda, arguing that the decreased demand for the drinks would cause job losses in the industry. But the new study evaluates the overall job market, including the effect on jobs in the non-sugary-drink sector as well as the added positions in state and local governments that result from the new revenue. The study finds that the employment gains in other sectors of the economy far outweigh the job losses for soda makers.

"People who don't spend a dollar on a sugar-sweetened beverage still have that dollar to spend elsewhere," said Lisa Powell, the study's primary author and a professor at UIC.

That dollar could go to support the fruit-juice industry and the milk and dairy industry, or it could go back to the bank. But that dollar is still a dollar to be spent, along with the added revenue from the sugar-sweetened beverage tax, a factor that was not taken into account by studies released by the American Beverage Association, Powell said. While soda makers may face job losses, perhaps a truck driver begins to transport milk due to the new increased demand from the soda tax, she said.

 

When asked for a comment, ABA reiterated its original findings about job losses in the beverage industry, and added that taxes on sugary drinks have not garnered the support of voters nationwide.

"Americans have made it clear they don't support taxes and other restrictions on common grocery items, like soft drinks," said ABA spokesman Chris Gindlesperger in an email. "Soda taxes have unintended consequences on middle-class jobs and small businesses. For these and other reasons, tax proposals continue to fail wherever they are introduced."

The UIC researchers looked at Illinois--their home state--and California to study the effects of soda taxes on the labor market. California is one state where voters have considered but defeated soda-tax ballot measures, and San Francisco is considering another tax measure again this fall. The researchers found an increase of 4,509 jobs in Illinois and 6,252 jobs in California.

The study was conducted independently through a grant from the Healthy Eating Research Program of the Robert Wood Johnson Foundation, which is a philanthropic organization devoted to improving public health.

 

"It's important for health; it is a substantial amount of money, and it looks like it would not hurt jobs and may even modestly help," said Jim Marks, senior vice president at RWJF. "The question is, will in any jurisdiction, will the leaders and the public support such a tax in a way so that it can implemented and see its effects in the real world?"

While sugar-sweetened beverages have been linked with obesity, diabetes, and other health problems, ABA also says its members are not directly responsible for the nation's obesity epidemic. Obesity has been on the climb while the sugar content of drinks has fallen. Despite the debate around the overall public health effect, numerous soda-tax measures around the country include provisions to spend a portion of the revenue on childhood wellness and anti-obesity programs.

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