SMOKE‐FREE LAWS AND EMPLOYEE TURNOVER

1.INTRODUCTION While health and safety regulations are often set at the state and federal level, many local jurisdictions also have the power to enact workplace regulations. In particular, there is a growing trend toward local regulation of workplace smoking. Today, nearly 570 local municipalities and 21 states plus the District of Columbia have enacted 100% smoke-free laws in workplaces. Enacting the first local "clean indoor air" laws in 1973, Arizona led the way among states. These local workplace regulations have the potential to influence the aggregate level of industry activity, business costs, and labor market behavior of workers. This is particularly true of the bar and restaurant industries, and other recreation and entertainment industries, since business owners in these industries frequently choose to allow smoking. Health advocates support local smoking ordinances as a public health strategy to enhance the safety of workplaces. (1) But like all such safety regulations, including safety regulations at construction sites, mines, or manufacturing plants, smoke-free laws have potential to introduce economic inefficiencies. Free from safety regulation, workers may choose to trade workplace safety for higher wages or other desirable features of a job. Minimum safety standards cause some workers to accept something less than what they would consider an optimal mix of safety, wages, and other employment features (Pakko, 2005). One implication is that the introduction of a smoke-free law may cause some workers to leave employment at bar and restaurant businesses in municipalities with smoke-free laws, although the introduction also may encoruage other workers to seek employment. Recent literature has examined the influence of smoke-free laws in terms of customer demand to patronize businesses in the hospitality industry (Corsun, Young, and Enz, 1996; Glantz and Smith, 1997; Hyland, Cummings, and Nauenberg, 1999; Pakko, 2005). Other recent literature has measured private market provision of smoke-free environments to accommodate consumer preferences and the differential effect of smoke-free laws on restaurant and bar profitability (Dunham and Marlow, 2000, 2003, 2004). The purpose of this study was to examine how laws influence employee turnover, which is a key determinant of operating cost for the industry. We examine whether the likelihood of employee separation from a job at a full-service restaurant is influenced by the introduction or presence of a local smoke-free law, after controlling for other factors that influence employee separation. II. METHODOLOGY The likelihood of a worker separating from their job falls with tenure as workers learn more about the rewards and conditions of a particular job and employers learn more about the performance of workers (Bartel and Borjas, 1977; Jovanovic, 1979; Viscusi, 1980). Personal characteristics such as education, age, health, and sex further influence the likelihood of separation (Bartel and Borjas, 1977; Meitzen, 1986; Mincer and Jovanovic, 1981; Royalty, 1998). The introduction of a smoke-free law also could influence the match between an existing worker and their job. The law may represent a shock to the "match" for existing workers, leading to an increase in separation rates. While many workers may prefer to work in a smoke-free workplace, other job attributes such as earnings from tips also may change as a municipal smoke-free law is implemented. Dunham and Marlow (2003) note that restaurants negatively impacted by smoke-free laws are more likely to increase job responsibilities for their workers. Some existing workers may find the new bundle of job attributes inferior to the previous arrangement. This is particularly true of any group workers, such as workers who smoke, who may have found a smoking-allowed work environment to be an amenity. The long-run effects of smoke-free laws on employee separation rates are less clear, however. …