Tariffs

Beer Industry Blames Tariffs for 40,000 Job Losses

Who could have predicted this?

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Brewers and bartenders are the latest groups of Americans found to be bearing the burden of the Trump administration's trade war.

A new report from The Beer Institute, an industry trade group, blames the 10 percent aluminum tariffs enacted last year for the loss of about 40,000 beer industry jobs. The estimate casts a wide net, including not only beer-making jobs but also those indirectly created through retail and distribution, as well as so-called "induced jobs" that are the result of spending on behalf of beer industry employees and businesses.

According to the report, the beer industry directly employs 70,000 workers, with 437,000 workers in supporting industry jobs, 912,000 workers in retail jobs, along with workers across the economy buoyed by additional spending. In total, the beer industry generates roughly 2.1 million jobs.

The justification for import taxes is usually that they will protect American jobs from foreign competition. Tariffs on a specific good, like aluminum, might help workers in the industry which produces that good. However, workers in industries that use that good as an input suffer. 

"I have heard from brewers large and small from across the country who are seeing their aluminum costs drastically increase, even when they are using American aluminum," Jim McGreevy, president and CEO of The Beer Institute, said in March, when the group released a separate report detailing $250 million in higher costs created by tariffs and tariff-associated price increases.

Tariffs loom large over the beer industry, but the most recent report says slower sales could also play a role in the industry's recent job losses. As Reason reported in March 2018, The Beer Institute estimated that aluminum tariffs would cost the United States 20,300 jobs in the beer industry. If that original projection was accurate, the tariffs account for about half of total job losses. 

Either way, the economic slowdown is consistent with other studies showing the economic costs of the tariffs.

Tariffs increase input costs for companies and raise prices for consumers. In June 2018, Tax Foundation, a nonpartisan tax policy think tank, found that Trump's tariffs on steel, aluminum, and some Chinese imports would cost the United States over 45,000 jobs, reducing economic output by $11.8 billion. The Federal Reserve Bank of Atlanta estimated the combination of higher input costs and more uncertainty reduced American capital investment by $35 billion in 2018, and a study from economists at Princeton, Columbia, and the Federal Reserve Bank of New York found that the trade war costs consumers roughly $1.4 billion a month.

For example, when the George W. Bush administration taxed imported steel in 2002, making foreign steel more expensive helped save 175,000 jobs in steel-producing industries in the United States. Yet at the same time, increasing the price of steel cost almost 200,000 jobs in industries that use steel in the production process. Tariffs are generally an expensive way to protect workers: according to economists at the Peterson Institute for International Economics, each job protected by these new tariffs costs U.S. consumers and businesses $900,000.

But there is good news. The Trump administration recently eliminated the steel and aluminum tariffs on metal imports from Canada and Mexico after Republicans in Congress made clear they would not approve the new United States-Mexico-Canada trade deal until those tariffs were lifted. But after a year of paying higher taxes on imported aluminum, it's clear that American breweries—like many other industries—did not emerge as winners from Trump's trade policies.

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  1. There is 0, ZERO, evidence of 40,000 job losses due to tariffs on beer kegs, most of which are Stainless Steel, not aluminum.

    Quoting directly from the beer industry report

    “The total number of brewing facilities
    has grown by 1,191 in two years – most
    being very small brewers or brewpubs
    At the same time large and regional
    brewers account for about 58 percent
    of total employment, this is about the
    same as in 2016”

    “It is interesting to note that while overall
    volumes of beer sales are actually down by
    about 2.4 percent over 2016, brewing jobs have
    increased by 8.0 percent. This represents
    tremendous growth in micro and brewpub
    employment as well as growth in higher margin
    products from all brewers.”

    So, brewing jobs are up. A quick tour of nashville would tell you that. Microbrews don’t use lots of kegs, they bottle only. Hence a reduction in the need for stainless steel kegs. And an increase in glass bottle making jobs.

    1. And a huge increase in the demand for construction with stainless steel vats, pipe and fittings, and pumps used in brew pubs.

    2. I was wondering this myself. Micro and Craft breweries are exploding in popularity right now. Is this “job loss” indicative of the effects of tariffs or of an industry in flux?

      I’m no fan of tariffs myself, but I think it’s silly to lay all the blame at the feet of a policy I’m not fond of. There is a lot more going on here.

      1. In other news, sales of Growlers up 48,000% in the last decade

      2. Micro and Craft breweries are exploding in popularity right now.

        I’d say it’s peaking. It’s at or near full market saturation at this point.

        1. It’s already peaked and is declining.

    3. So, brewing jobs are up at small brewer and brew pubs that don’t use aluminum but use glass bottles or dispense right from the tank. Got it. But what about those breweries that do use aluminum?

      1. No breweries use aluminum, except for cans. Beer cans sales are down

      2. dispense right from the tank

        What? Who the hell does that?

    4. Microbrews don’t use lots of kegs

      That’s not what I’ve seen. They use plenty themselves in their taprooms or adjoining restaurants or they send them out to local bars and restaurants.

      1. OK, bear with me now, they buy those kegs, and they don’t need any more. They go from the vat to the bar. They aren’t slung onto trucks and driven 1,000 miles from Golden Co and slung back onto the concrete in a warehouse in Memphis, hoisted into a storage rack , and then loaded and unloaded again on the way to your local Buffalo Wild Wings.

        The kegs at the micro brew travel a few feet, they are washed out, and reused, and suffer a lot less wear and tear. there are a lot less of them needed in transit. Overall, keg consumption goes down, not to mention that the majority of their sales go into bottles or growlers, not kegs.

        1. OK, bear with me now

          Yikes, sweaty. Oof. Let’s unpack this. Who hurt you? 😉

          they buy those kegs, and they don’t need any more.

          Unless they’re growing.

          The kegs at the micro brew travel a few feet,

          or a few miles, but it doesn’t matter that much.

          they are washed out, and reused

          So are the ones from the big breweries.

          growlers

          That comes from a keg.

        2. Also, it is more expensive, higher gravity beer. One keg of premium high gravity beer replaces the sales and alcohol volume of 2-3 kegs of Natty Lite

          1. True. And since most places only charge a little more for the better stuff (like $1-2 a glass more or something like that) you come out a little better by drinking one microbrew vs. two big brewery beers. But at restaurants people drink the living shit out of that Blue Moon.

            You know, people put down the traditional low-flavor American adjunct lager, but I still appreciate a couple of them. Old Budweiser ain’t half bad and you can’t go wrong with a fresh cold Miller High Life. And since moving to the east coast, I was turned on to Yeungling, which is pretty damned good when it’s fresh on tap. The green bottles are a mistake though, just like Heineken. Coors is shit. I highly recommend Guiness Blonde, even though it’s not an adjunct lager. Anywho….

            1. I actually hate beer snobbery. Miller Lite and Mich Ultra for me

              1. I’ll have to second High Life and Yuengling for cheap beer.
                For better stuff: Fat Tire amber ale

              2. WTF kind of lager elitism are you trying to push with that high falutin’ Miller shit? A REAL man drinks Schmidt, or Schmidt Lite. Animal beer, for the animal in the man!

    5. “Microbrews don’t use lots of kegs, they bottle only. Hence a reduction in the need for stainless steel kegs. And an increase in glass bottle making jobs.”

      Small brewers switched from glass bottles to aluminum cans years ago, grandpa. Other than that, great comment!

    6. So you’re saying this is FAKE | NEWS ?

    7. I was thinking the same. Beer drinking is in decline. Only beer in aluminum cans is impacted. 40,000 goes down as “fake news”

      Thanks for the data.

  2. We shouldn’t care if jobs are lost or gained due to a government policy. We should care about maximizing consumer choice and minimizing government meddling in our choices.

    1. Yes we should care very much, but we should also care about being lied to in a laughable inept manner

      1. Quoting from the report again:

        Beer retailing jobs are
        down slightly since 2016, which reflects a
        number of factors including reduced demand for
        malt beverages and general weakness in the
        retail economy. On-premise retail is up slightly
        over the prior study period, but this is offset by
        declines in off-premise retailing. This is
        reflective of more product being sold through
        local brewery taprooms and restaurants.
        There continues to be a shift away from less
        expensive products to more expensive local and
        “craft” beers in bars and restaurants, as well as
        to imports. Consumers purchase smaller
        volumes of these higher priced beers than they
        do of less expensive domestic light lagers and
        pilsners, suggesting that fewer employees are
        required to serve beer in a given bar or tavern.”

        fewer kegs of Bud sold to the local dive bar = less kegs. Fewer 18packs of Coors Light sold to college students = less aluminum can needed.

        People now drink 2-3 tasty high gravity beers instead of crushing a sixer of Coors Light Water , and spend about as much, and get as drunk. More glass bottles, less disposable metal consumed.

        1. That doesn’t mean the tariffs don’t have a negative effect on the beer industry. Obviously, it’s a complicated issue, but tariffs are always inefficient and they always create dead weight loss, whether it’s observable in the targeted industry or not.

          1. Tarriffs haven’t had any effect on the beer industry. None. Zero. The actual report lays that out.

            1. I don’t think either of us can say that for sure. One thing is for sure, however, which is that the tariffs have certainly had a negative effect on American industry and on American consumers.

              1. I can say for sure.

                Beer brewing jobs are up. Beer sales are slightly down. Growth in beer comes from microbrews and brewpubs. More jobs, lower paying than mass brewer factory jobs. Retail is down. Retail jobs are down. Retail jobs do not depend solely on beer. The report and especially the article treat ALL grocery store jobs as “beer industry” related.

                Amazon and Shipt and delivery services have infinitely more to do with that than aluminum tariffs, as do people going to gastropubs instead of buying fridge packs.

                1. This is specious reasoning. Just because jobs are up, it doesn’t mean that that the industry hasn’t been negatively effected. The industry could have already been in a period of growth, and the market trend could be moving away from aluminum reliance towards less centralized production. It’s far to complicated to make broad generalizations.

                  1. It is easy to understand

                    “Beer Industry Blames Tariffs for 40,000 Job Losses”
                    No, they don’t. They do nothing of the sort. Actual beer industry jobs are UP. Retail jobs are down. This has little to nothing to do with beer, and everything to do with people buying online and having groceries delivered. The report in question does not even mention tariffs at all.

                    “Who could have predicted this?” This is the reason for the article. make up lies to further a pre-conceived agenda.
                    I’m not a big tariff guy, but this is shocking to me. You are being lied to, and are apparently OK with that, as long as you like the lie and it fits the narrative you are comfortable with. There are a few proggy outlets that go this far to deliberately lie to their readers, but not many. Most are more careful than this.

                    1. I’m not necessarily defending the article. Like yourself, I checked the report and sure enough it did not blame or even discuss the aluminum tariffs. However, I don’t think this fact alone is enough to conclude that tariffs haven’t negatively impacted the industry. Economic sense informs us that tariffs negate some of the total market benefit one way or another. Like you mentioned, the beer industry is very complicated and, as such, neither the article, or the report, or yourself can possibly give enough evidence to make the claims that you are collectively trying to make.

                    2. It’s actually NOT complicated.

                      beer brewing (manufacturing jobs) = up a whopping 8% in 2 years

                      beer wholesaling (distribution jobs) = also up, it doesn’t say how much in 2 years, but says 20% in a decade. I know firsthand of the explosion in growth in sales, promotion, and delivery positions all these new local and regional brands have created, which again is but a fraction of what is happening in the liquor industry.

                      beer retailing = down. Nothing to do with tariffs, purely a function of higher margin expensive beer being purchased in restaurants in lower quantities than cheap domestic mass produced beer, and the decline of brick and mortar grocery sales overall.

                      Pretty simple, actually

                    3. You must have skipped your Milton Friedman readings

                    4. Each job in the brewing industry
                      generates 31 additional full-time
                      equivalent jobs
                      2.02 jobs in beer wholesaling
                      13.04 jobs in beer retailing
                      1.28 other manufacturing jobs
                      0.73 jobs in farming
                      About 40 percent of the price of every
                      beer goes toward taxes paid to the
                      federal government, state governments
                      and localities
                      “Suppliers:
                      Other firms are related to the three tiers of the
                      malt beverage industry as suppliers. These firms
                      produce and sell a broad range of items
                      including ingredients for the production process,
                      fuel, packaging materials, sales displays or
                      machinery. In addition, supplier firms provide a
                      broad range of services, including personnel
                      services, financial services, advertising services,
                      consulting services or even transportation
                      services. Finally, a number of people are
                      employed in government enterprises responsible
                      for the regulation of the malt beverage industry.
                      All told, it is estimated that suppliers to the malt
                      beverage industry are directly responsible for
                      nearly 436,650 jobs with supplier firms
                      generating nearly $101.91 billion in economic
                      activity.
                      Induced Activity:
                      An economic analysis of the malt beverage
                      industry will also take additional linkages into
                      account. While it is inappropriate to claim that
                      suppliers to the supplier firms are part of the
                      industry being analyzed, the spending by
                      employees of the industry, and those of supplier
                      firms whose jobs are directly dependent on malt
                      beverage sales and production, should surely be
                      included. This spending on everything from
                      housing, to food, to educational services makes
                      up what is traditionally called the “induced
                      impact” or multiplier effect of the malt beverage
                      industry. In other words, this spending, and the
                      jobs it creates, is induced by the production,
                      distribution and sale of malt beverages. We
                      estimate that the induced impact of the industry
                      is nearly $103.18 billion and generates nearly
                      629,220 jobs.
                      The multiplier effect of the beer industry in 2018
                      was therefore 1.66, in line with the multiplier of
                      about 1.65 the last time the study was
                      conducted.

                      Suppliers to supplier firms is where the tariffs hit. And, this report does little to address that, other than to note the overall effect of the beer industry remains about the same.

                      Stainless steel tariffs would only hurt an American keg manufacturer in competition with cheap overseas kegs. It would not effect “the beer industry” whatsoever. The same number of kegs will be bought regardless.

                      Aluminum tariffs will not hurt “the beer industry” either, it may raise the cost of a can a half cent. That will not impact consumption. Consumer tastes will.

                    5. And there aren’t 40,000 American keg manufacturing jobs, there are less than 400. And Reason already did that story. And it’s STAINLESS STEEL, NOT ALUMINUM

                    6. Are you forgetting beer cans or am I the idiot here?

                    7. NashTiger’s ignorance with respect to the beer industry seems comprehensive.

                      That doesn’t stop him from launching unqualified assertions, though.

                    8. 40,000 lost jobs at grocery stores, and higher minimum wage laws for restaurants have nothing to do with Beer, sonny. Beer Industry jobs are up. It has been shown

                    9. Standard English has been added to the subjects regarding which NashTiger is unqualified to comment.

                  2. “It’s far to complicated to make broad generalizations.”
                    “but tariffs are always inefficient and they always create dead weight loss,”

                    Oops

                2. You can say for sure that tariffs have had zero effect on the beer industry? You’re insane.

                  1. Using this report that says actual beer industry jobs are up, even while sales fall, due to the change in the way people buy beer – instead of pretending that EVERY grocery store job is a “beer job”? Why, yes, yes I can.

                    1. “While there are obviously other venues that may
                      sell beer to the public – street vendors, cruise
                      lines, non-profit groups, etc. – they are not
                      included in the analysis due to limited data
                      availability and the small amount of product that
                      they handle. It is estimated that outlets selling
                      malt beverages in the United States employ
                      about 912,092 people. Beer retailing jobs are
                      down slightly since 2016, which reflects a
                      number of factors including reduced demand for
                      malt beverages and general weakness in the
                      retail economy. On-premise retail is up slightly
                      over the prior study period, but this is offset by
                      declines in off-premise retailing. This is
                      reflective of more product being sold through
                      local brewery taprooms and restaurants.
                      There continues to be a shift away from less
                      expensive products to more expensive local and
                      “craft” beers in bars and restaurants, as well as
                      to imports. Consumers purchase smaller
                      volumes of these higher priced beers than they
                      do of less expensive domestic light lagers and
                      pilsners, suggesting that fewer employees are
                      required to serve beer in a given bar or tavern.”

                      Off-premise = Grocery stores. Sales are down. All grocery sales are down, fewer people go to grocery stores.
                      On-premise = bars and restaurants. Sales are up, but volume is down. More expensive, higher profit margin beer being purchased, requiring less labor to deliver.

                  2. Blaming a 10% increase on a small percent of cost of goods sold…. yes the reason article and claim is bullshit. You’re talking about adding cents for every can to overcome the onerous tariffs. The horror.

                    1. Melvin is asking me to believe that Jayden the Hipster exercises demand elasticity and is put off by the 20 cent increase of a case of Bud Lite, so instead opts to switch to Turtle Anarchy or Good People at 2-3x the price, or Three Floyd’s barrell aged Dark Lord at 15-20x the price, because of the onerous tariff.

        2. Very few. The big guys still own 90% of the market, with Busch and Coors owning a full 80% between just the 2. Then come 2 more still fairly large breweries (Constellation and Heineken) that account for about 10% of the overall beer market in the US.

          So these hundreds (if not thousands) of microbreweries all share 10% of the overall market (and that includes some of the bigger small breweries like Sam Adams). Which means that most people aren’t drinking the at all, much less in numbers that somehow upset the market dominance of the 2 biggest players.

          TL;DR No they’re not. The vast majority of people (9/10) are still drinking 1 of only 4 brands of beer.

  3. I don’t see the word “tariff” nor “aluminum” mentioned in the report, even once.

    1. exactly. And the only aluminum used by beer is for cans. And disposable 1-use ponykegs, which are a tiny iota of a fraction of a percent of beer sales.

  4. Do you want to know exactly how low Reason has fallen? How mendacious Mr Alex Muresianu really is? How far he is willing to stoop to serve his master’s agenda?

    SPOILER: the 12 page report that is the subject of this article does not contain the word “tariff”, not even once. Retail jobs are down, and unless you count every restaurant, and indeed every grocery store job as being created by beer, it has nothing to do with beer. And even less to do with tariffs.

    http://beerservesamerica.org/wp-content/uploads/2019/05/Study-of-the-US-Beer-Industry%E2%80%99s-Economic-Contribution-in-2018.pdf

    Reason picked the wrong guy to peddle this bullshit to. This isn’t Slate or Vox, we don’t swallow whatever we are being forcefed off the ideological menu.

    This is a shocking new low. I would love for some Reasonista to appear here and explain themselves in light if the actual facts I have brought forth

    1. Well… a few do. Like Jeff.

  5. If the beer industry really cared about job losses and costs to consumers they would be railing against sin taxes not aluminum tariffs.

    1. “About 40 percent of the price of every
      beer goes toward taxes paid to the
      federal government, state governments
      and localities”

  6. i *have* been drinking less sorry.

  7. If this had happened under Obama, back when free trade was still bad, the line would have been “Those greedy businessmen need to start using recycled cans.”

    1. That has fascinated me. Democrats generally hated free trade and immigration in large numbers. NAFTA was negotiated by the first Bush administration and many Democrats opposed it. Obama deported millions (as did Bush and Clinton). The Democratic Party pretty much betrayed labor unions and part of their former base. Probably why Uncle Joe is so popular right now.

  8. AND ANOTHER THING – these “on premise” retail jobs (waitresses) were hit with massive mandatory minimum increases last year in many beer loving locations….

  9. I really doubt that the tariff has anything to do with it. I also doubt the #’s. Every city, town, village or county has a local microbrewery. They use glass and capture local micro markets. Only the big boy$ of booze use aluminum for their cheap beer. And, the unions man the pumps. So the whining falls on deaf ears.

  10. Craft Beer can sales have been growing as a percentage by double digits every year and doubled as total percent of packaged product (vs bottles, kegs) in the past 5 years. In Colorado, about 45% of craft beer sales are in cans.

    Craft breweries do indeed use a lot of cans. There’s also been a trend of using mobile canners. Companies that drive from brewery to brewery with a mobile canning line to do can runs.

  11. […] Beer Industry Blames Tariffs for 40,000 Job Losses. […]

  12. Ya started out OK, with “Beer industry claims” prefacing the list of costs.

    Then it devolves into a load of totally incompatible propaganda written by various groups… finally ending with:

    But after a year of paying higher taxes on imported aluminum, it’s clear that American breweries—like many other industries—did not emerge as winners from Trump’s trade policies.

    Ok, no. It isn’t clear that American breweries did not emerge as winners.

    You should have been able to sniff this one out at the beginning by simply asking this: What percentage of the beer industry’s costs are tied to Aluminum? Surely the largest one, the one they are talking about is aluminum for beer cans.

    So let’s do a sanity check. A quick google search shows that aluminum cans for soda and beer cost as much as $0.10 in small lots – less than 100k. But larger orders can drop that unit cost to a penny. So right off the bat we know a couple of things. Small craft brewers are going to be more sensitive to the price of aluminum cans – because they can’t buy a million cans.

    Next, the cost of cans will be sensitive to aluminum costs, but not only aluminum. A can costs a lot more than the actual aluminum that goes into it, because there is the manufacturing and handling costs, plus profit. So doubling the cost of aluminum will not double the cost of a can. But it might be close, because volume is high and the margins are likely to be quite low.

    And we know one more thing…. Soda Pop is also delivered in cans. And they have a lot less margin in there – a 6 pack of soda can go for $2 on sale.

    Right this second Total Wine & Spirits has a 12 pack of 8 oz. Miller Lite cans for $8.50- pretty much exactly the same price as 2 years ago. A 6 pack of 12 oz. bottles is $8. But a 9 pack of 16 oz. aluminum bottles is $12, which throws a monkey wrench in that whole analysis – one of those bottles probably has more aluminum than 3 cans.

    Meanwhile, the most expensive beer at TW&S comes from Dogfish Head and it goes for about $37 for 4 bottles. In fact, all of the most expensive beers come in bottles only. It doesn’t appear that the cost of aluminum is a major factor.

    But as we said, Coke comes in aluminum cans too. And so does Check Cola and other store brands that go for $2 for a 6 pack. So you should have had an immediate smell test on this claim, just based on common knowledge. It doesn’t sound the least bit plausible. In fact, based on what we see at retail, you would expect the real number to be zero, since there does not seem to be an impact in the price of the lowest margin products – store brand cola.

    These “industry studies” and “economic studies” by industry friendly groups are usually very suspect. They are looking to support a position, not doing real academic research. You have to read them the same way you read one of these science articles that get published in the media – the ones that claim that some fruit cures cancer, or some food additive causes cancer… you should be very skeptical.

    And the first step in reading these articles is a simple sanity check. What is the prior plausibility of the claim? Like “cell phones cause brain cancer”… prior plausibility is very low – because radio EM is very low energy and billions of people use cell phones – so on two fronts you can guess that it is very unlikely.

    In this case, what is the prior plausibility? 40,000 people lost their job because the price of aluminum went up… for beer. 40,000. That’s a big number. And aluminum is not a major factor in the cost of beer. And beer is hardly the most sensitive product to aluminum prices. So the prior plausibility of this claim is very low.

    When the prior plausibility is low, you should apply extra scrutiny. Instead of additional scrutiny, this article casts about for additional implausible industry claims to shove under the same umbrella. This is how low quality journalism is done. And this is how “fake news” takes hold and becomes common knowledge.

    So do better, Reason. This press release should never have seen the light of day, unless it was in an article debunking the claims. They don’t even pass the giggle test.

    1. It’s not the Beer study’s fault. The beer study does not mention tariffs or metal costs AT ALL> Reason invented this out of whole cloth.
      In a study that says Beer Industry jobs are up, but retail jobs selling beer are down, Reason says Beer industry jobs are down due to tariffs. Inexcusable.

  13. Opposed to tariffs but I am skeptical about the 40k job loss claim. In one industry.

  14. […] Rea­son, a con­ser­v­a­tive Amer­i­can pub­li­ca­tion which sits in around the same space as the UK’s Spec­ta­tor, has an inter­est­ing piece by Alex Mure­sianu on how the impo­si­tion of steel tar­iffs has affect­ed the US brew­ing indus­try: […]

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