Employment Impact of Sugar-Sweetened Beverage Taxes

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This study predicts that a tax on sugar-sweetened beverages (SSBs) would not result in overall job loss in California and Illinois.

The Issue:

Sugar-sweetened beverages (SSBs) are the leading source of added sugar in the diets of children in the U.S., and can contribute to type 2 diabetes, heart disease, and obesity. Some cities and states are addressing these health challenges by considering SSB taxes. This study uses a macroeconomic simulation model to assess the impact that a 20 percent SSB tax could have on employment in two states: California and Illinois.

Key Findings

  • A 20 percent tax on SSBs would result in an increase of 4,406 jobs in Illinois and 6,654 jobs in California, a 0.06 percent and 0.03 percent change in employment, respectively.

  • Declines in beverage industry employment were offset by new employment in non-beverage industry and government sectors.

Conclusion:

This study examines two states, which may not be representative of the entire country. However, these findings suggest that SSB taxes should not have a negative impact on state-level employment.

About the Study:

This study assessed the net employment impact from the implementation of SSB taxes in Illinois and California through simulation using the Regional Economic Models, Inc. (REMI) model. The analysis accounted for changes in SSB demand, substitution to non-SSBs, income effects, and government expenditures of tax revenues.

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