A total of 29 states and Washington, DC, have laws that prohibit smoking in restaurants and bars (1). Most remaining states without statewide smoke-free laws are home to many cities and counties that have local laws requiring restaurants or bars to be 100% smoke-free. In many of these states, momentum is building to extend the protection offered by local smoke-free laws to all citizens. However, owners of restaurants and bars are concerned that laws prohibiting smoking in their establishments will hurt business. Opponents of smoke-free laws argue that smoke-free policies decrease the number of customers that go to restaurants and bars or the frequency with which they visit those establishments, thus reducing revenue and ultimately, employment.

Research in the past 2 decades has provided clear evidence that smoke-free laws have no adverse effects on the economic performance of restaurants or bars (2–22). Continued expansion of smoke-free laws in the United States would benefit from additional studies demonstrating neutral or even positive effects of such laws on the hospitality industry (2). The primary objective of this study was to estimate the association between local smoke-free air laws and economic outcomes in restaurants and bars in 8 states without statewide smoke-free air laws to obtain information about the likely economic impact of a statewide smoke-free air law in the selected states. The 8 states studied were Alabama, Indiana, Kentucky, Mississippi, Missouri, South Carolina, Texas, and West Virginia. A secondary objective of this study was to examine the economic impact of a 2010 statewide smoke-free restaurant and bar law in North Carolina.

In all states except West Virginia, we found no significant association between smoke-free restaurant laws and restaurant employment (Table 1). In West Virginia, we found a significant increase in restaurant employment in smoke-free counties compared with counties that were not smoke-free.

The estimated coefficient of 5.49 (Table 1) implies an increase of 5.49 restaurant jobs after implementation of a county-wide smoke-free law. Each county in West Virginia that adopted a smoke-free law in restaurants had an average of 527 restaurant jobs before the law. Therefore, smoke-free restaurant laws in West Virginia were associated with an average increase of about 1% in restaurant jobs per county. The first-stage F statistics indicated that the instrument (lagged nonrestaurant employment) was strongly related to the endogenous variable (nonrestaurant employment). Among the 9 states, the lowest F statistic value (F = 208) was for Kentucky, which far exceeds the rule-of-thumb threshold of 10 that is commonly used (29).

In all models, lagged restaurant employment was significant, suggesting that employment in restaurants was highly correlated over time. The coefficients of lagged restaurant employment indicate that employment was moderately (South Carolina, coefficient 0.57) to highly (Texas, coefficient 0.93) persistent from quarter to quarter. Nonrestaurant employment was significant and positive in 3 states: Alabama, North Carolina, and South Carolina. Per capita cigarette sales was significant and negative in 6 of 9 states, suggesting that states with greater amounts of smoking have fewer restaurant jobs on average.

Similar to the results for restaurant employment, lagged bar employment was significant and positive, indicating that bar employment was moderately (South Carolina, 0.62) to highly (Texas, 0.92) persistent from quarter to quarter(Table 2). Nonbar employment was significant but positive in only 2 states, Alabama and Missouri. Annual per capita cigarette sales were significant and negative only in North Carolina. The first-stage F statistics again indicated that the instrument was not weak; the minimum value was 182 for Mississippi. We found no significant association between smoke-free bar laws and bar employment in any state.

The first-stage F statistics in the Texas models were low: 1.59 in the restaurant model and 0.06 in the bar model. We found no qualitative differences between the OLS and IV estimates, however. In Missouri and Texas, implementation of a smoke-free air law for bars or restaurants (or both) was not significantly associated with a change in per capita sales (Table 3). In all 3 sales models, per capita sales in the previous period were a significant predictor of per capita sales in the current period.

In this study, we estimated the economic impact of local smoke-free laws in 216 communities in 8 states that did not have statewide smoke-free laws: Alabama, Indiana, Kentucky, Mississippi, Missouri, South Carolina, Texas, and West Virginia. We found no significant association between smoke-free laws and economic outcomes in restaurants and bars in 7 of the 8 states. In West Virginia, restaurant employment increased by a significant 1% after implementation of a smoke-free restaurant law. Based on these findings, we would not expect statewide smoke-free laws to have an adverse economic impact on restaurants or bars in these states. We also examined the association of a statewide smoke-free restaurant and bar law on employment in North Carolina. We found no evidence that North Carolina’s statewide law had affected restaurant or bar employment. This result is consistent with a study that found no impact from North Carolina’s smoke-free law on gross revenues in restaurants or bars (30).

Our findings are consistent with previous studies (2–22) and the conclusions of the US Surgeon General (31), all of which indicate that smoke-free laws do not negatively impact restaurant and bar business. More importantly, smoke-free laws improve both employee and population health. Indeed, averting the adverse health consequences of secondhand smoke exposure among nonsmoking adults and children is the primary goal of any smoke-free policy. Comprehensive smoke-free laws that completely eliminate smoking in indoor public places and workplaces, including restaurants and bars, have been shown to reduce secondhand smoke exposure among nonsmoking hospitality workers (31) and the general population of nonsmokers (32). Such laws have also been shown to reduce sensory and respiratory symptoms and improve lung function in nonsmoking hospitality workers (19), help workers who smoke to quit (31), and may reduce smoking initiation among youth (33).

A strength of this study is that it was based on data from 216 cities and counties and 9 states during an 11-year period; it is the largest economic impact study of smoke-free laws to date. The panel model estimation approach takes advantage of variation across communities over time and controls for general economic activity, tax-paid cigarette sales, seasonality, endogeneity, and autocorrelation. However, it is unlikely that we accounted for every factor that might have affected the restaurant and bar industries in each state. Nonetheless, the consistency of the results across states strengthens the conclusion that smoke-free laws have not had an adverse economic impact on employment and sales in restaurants and bars.

A limitation of this study is that sales data were available for far fewer states and cities or counties than employment data, especially for bars. Additionally, employment data were missing for many counties in each state, which limits the generalizability of the results, particularly for bars. This analysis, like many previous analyses, examined the average economic impact of smoke-free laws on restaurants and bars in an area and did not assess the economic effects of these laws on individual establishments. Finally, the models did not control for spill-over effects either between adjacent communities or between restaurants and bars (2). Spill-over effects may be relevant in communities that require restaurants but not bars to be smoke-free.

Consistent with similar studies, this study found no significant adverse economic effects on restaurants or bars from laws prohibiting smoking in those venues. At the time of this writing, Alabama, Kentucky, Mississippi, Missouri, South Carolina, Texas, and West Virginia did not have statewide laws banning smoking in restaurants and bars; Indiana enacted a statewide law prohibiting smoking in most workplaces, including restaurants but not bars, on July 1, 2012. On the basis of our results, we would not expect restaurants and bars in these states to experience adverse economic consequences should such a statewide smoke-free law be passed. Rather, all citizens would enjoy the health benefits of being protected from exposure to secondhand smoke while patronizing or working in restaurants and bars.