On Thursday, Feb. 26, the Pennsylvania House of Representatives voted 114-87 to pass a bill aiming to abolish the state-run Pennsylvania Liquor Control Board and privatize liquor sales.
Newly-elected Pennsylvania Gov. Tom Wolf, however, does not support liquor privatization and has stated that he will veto any bill wishing to abolish the PLCB.
This statement flies into the face of one of America’s most championed values: the trust in the free market to keep business efficient and prices lower for consumers. But Wolf is right. Keeping the liquor business under state control is the right move for Pennsylvanians.
Largely voted for by House Republicans – only four House Republicans voted against the bill – the abolishment of the PLCB has been a contentious issue in Pennsylvania politics for quite some time. The PLCB currently runs all of Pennsylvania’s wine and liquor stores and lends itself to the reasoning of Pennsylvania’s strict liquor laws, which doesn’t allow sale of beer or liquor in local corner and grocery stores. Pennsylvania State House Majority Leader Mike Turzai, a Republican, summarized the bill on his website:
“We have an opportunity to move Pennsylvania into the 21st century by allowing the private sector to sell wine and spirits. This approach will result in better selection, cheaper prices and more convenience for consumers.”
A lot of Temple students agree with these sentiments, especially when it comes to convenience.
“To throw a party in Pennsylvania you have to go to the grocery store for food, beer distributor to get enough beer, and then go to the liquor store,” senior management information systems major Charlie Cappelli said. “That’s a lot of driving around.”
Senior finance major Ellis Holmes agrees.
“Coming from New York, I find it the oddest thing that I cannot roll up into a 7-Eleven … and not buy liquor,” he said. “I go back home and sure enough, I can buy a six-pack right at the nearest Walgreens.”
But entrusting Pennsylvania’s liquor business to the free market would do more harm than good. Privatization of the liquor industry would do the opposite of what Turzai says, hurting both consumer pricing and selection, while eliminating jobs of those employed by liquor stores run by the PLCB and the business of popular local breweries across the city.
An article published by the Pittsburgh Post-Gazette in July 2014 compared prices for a range of different liquors in Pennsylvania state stores to those in neighboring states Ohio and West Virginia. According to the article, “the LCB was cheaper half the time and more expensive half the time.” Pennsylvania liquor prices are already competitive despite not being set by the free market.
And since the PLCB has the buying power to buy liquor wholesale for the retail stores it runs, relinquishing control from the PLCB could result in higher prices for consumers. Smaller liquor stores would not be able to purchase the volume that the PLCB does for its retail stores, or necessarily be able to carry the stock that PLCB stores can, leading to less selection, higher prices and less people employed due to lower profit margins.
According to the PLCB’s website, the PLCB currently employs over 3,000 people statewide – 2,220 of those being retail clerks. Should the liquor business be privatized and these retail stores be closed, jobs could suffer a major bout of uncertainty.
Wendell Young IV, president of the United Food and Commercial Workers Local 1776 union, which represents many PLCB employees said in a statement, “The PLCB is a profitable asset that continues to set records in total sales and profits. Last year alone, the agency returned more than $565 million in profits, transfers and taxes to this commonwealth. It makes no sense to sell it off to the big chain retailers and put 5,000 Pennsylvanians out of work in the bargain.”
These profits from state ownership of the PLCB retail liquor stores generates income for the state. According to the PLCB website, in 2013, 4 percent – or $80 Million dollars of the PLCB’s revenue – was transferred to the Pennsylvania Treasury’s General Fund. Privatizing the liquor industry in Pennsylvania could cause a budget shortfall, and politicians could sell this as a reason for a tax increase.
Pricing aside, Temple students seem to lean towards privatization because of convenience and availability.
The laws have led to a shortage of beer and liquor stores around Main Campus, causing an inconvenience for some students.
“The closest liquor store is way down Diamond [Street],” Cappelli said. “Most Temple students aren’t comfortable walking there. Everyone I talk to either goes to 20th and Fairmount … or one of the ones in Center City. If you consider the campus [as] the Temple police boundaries, they end right at the only beer distributor [at 18th and Montgomery], and there’s no liquor store.”
While the current Pennsylvania liquor laws may come as an inconvenience for some consumers due to the lack of retail stores and more limited hours, this is just a small price to pay for benefits and jobs created from liquor stores being stated owned.
Christian Matozzo can be reached christian.matozzo@temple.edu.
What Mr. Matozzo is missing from his story is that every place that has fully privatized has seen a tripling of employment in the industry. Washington State released a report in January which they admit is incomplete, that show retail jobs in the liquor industry went up 91%. Just two new wholesalers built warehouses that employ more than the old WSLCB did – and Washington only privatized liquor since beer and wine were already private. On a purely statistical look if the entire PLCB was fired the unemployment rate in the state wouldn’t change by a tenth of one percent. 3000 clerks are not more important than 12 million citizens.
Add to that – Washington has seen not only a decrease in DUI but the rate is dropping faster than PA. Alberta, Canada which privatized 20 years ago had a higher DUI rate than PA but now has one 40% lower. 4 of 6 of our border states have better rates – all private sale states. The two that don’t are so called Control States – Ohio and West Virginia.
Monetarily, increased convenience means more sales and less border bleed – more so if taxes aren’t raised. Washington which already had the highest liquor taxes in the country before they privatized saw a 13% increase in sales. Pennsylvania with the highest border bleed in the nation could easily see a 15% increase which happens to be about $80 million worth in collected taxes. Not to mention license fees, business taxes and income taxes for the owners plus all the churn created by the increase in employment. Then there is the decrease in long term pension debt because of less state workers. Saving money is the same as making more money.
It should be no surprise that a police enforced monopoly is profitable or that is has record sales. Population increases, prices increase and the citizens have nowhere else they can legally go. The real story would be if it didn’t. What should be a surprise is that operating income has gone down in 8 of the past 15 years on a year to year basis and every one of those years had record sales. Not a sign of the best management.
The state should not be in the business of selling a legal product. Some bureaucrat in Harrisburg should not decide what legal product I should be allowed to buy. The current system has never been wanted by the citizens as there has never been a scientific poll ever taken that shows the populace wants a state run system.
We aren’t safer, we aren’t better served and we aren’t satisfied.
“According to the PLCB’s website, the PLCB currently employs over 3,000 people statewide – 2,220 of those being retail clerks. Should the liquor business be privatized and these retail stores be closed, jobs could suffer a major bout of uncertainty.”
And how many jobs would be created by the opening and diversification of liquor stores?
Fair point, but debatable. On one hand you could create more jobs, but how much would these people get paid? The retail clerks of the PLCB are unionized. And how many people does it take to run a small liquor store or beer distributor? One would have to look at the average number of employees currently at each PLCB store and compare it to liquor stores in other states. I don’t currently have statistics like that though. There’s a possibility jobs are lost as well in the process.
There are so many flaws with this analysis I don’t know where to begin. This is further proof of college students living in a bubble that isolates them from reality.
Fact: If anything Wendell Young says is true, it’s by accident. He, like every union leader, is a propagandist that doesn’t let facts get in the way of his activism.
Fact: The survey by the Pittsbugh Post-Gazette cited compared Pa. prices with Ohio and West Va., two other “state control of liquor” states. The more apt comparison is with New Jersey, Delaware, and Maryland–all much closer to Temple–where lower prices, vastly superior selection, and convenience are estimated to siphon off as much as 50% of southeastern Pennsylvania’s alcohol trade, and 15-25% statewide lost to “border bleed.” A recapture of this lost commerce, along with more purchases from more and friendlier stores with more service and convenience, would easily replace the lost “profit” from State Stores with increased tax revenues.
If the purpose of state liquor stores is to provide benefits and jobs to the people that work there, then why doesn’t the Commonwealth take over all grocery stores? All drug stores? All car dealerships? Heck, think what the state could “save” by just having one store chain replacing WalMart, KMart, Target, etc., and a single supermarket chain replacing Wegman’s, Acme, Giant, Safeway, Weis, etc. Heck, have the state take over Wawa, Sheetz, 7-Eleven, etc. Think how much cheaper your hoagies will be assembled by union clerks with pensions and benefits, with breads, meats, and cheeses purchased through the vast centralized power of the state, to say nothing of your gasoline!
By the way–the last paragraph is satire. If you actually believe that bunch of blather I just spouted satirically, please seek a refund for your tuition immediately.
Still waiting for:
1) A liquor privatization success story. A success story is defined as when/where retail liquor prices dropped, areal coverage increased and state revenue grew – from liquor sales – not added fees and taxes.
2) A credible third-party asset valuation.
3) Numbers crunched by a credible third party. Remember it was Republicans who assured us the Corbett 2014 budget was “balanced and responsible” just 10 weeks before it ruptured $750 million.
Oh pulleeze – bring PA into the 21 century – and ditch this antiquated situation. You sound so concerned with workers? Well lets see you protesting at the Pittsburgh Post Gazette?? Or other situations. Workers will find other jobs and hopefully better paying jobs than the PA “wine and spirits” full of shit places. – P.S. And I am not even a drinker.