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March 01, 2017

Union says 100 layoffs from Philly soda tax, but city points to new pre-K jobs

The union representing employees of Philadelphia's soda industry said Wednesday that the recently-implemented tax on sugary beverages has caused about 100 layoffs already, and more are coming.

But city officials say that's the fault of the industry for passing the tax, a 1.5 cent-per-ounce tariff on sodas and other beverages with added sugar, along to consumers and holding workers "hostage."

In a statement Wednesday, Teamsters Local 830 Secretary-Treasurer Daniel Grace said that Pepsi has announced 80 to 100 layoffs "as a direct result of the city’s onerous and discriminatory Beverage Tax."

Canada Dry is planning 25 layoffs because of a decline in sales from the tax, and Coca-Cola is planning a similar move in the near future, the union said.

Pepsi sent out notices Wednesday saying layoffs will occur at plants in north and south Philadelphia and in Wilmington, Delaware, The Philadelphia Inquirer reported.

Dave DeCecco, spokesman for the Purchase, New York-based company that employs 423 people in the city, said the tax has cut sales here by 40 percent.

"Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles, in Philadelphia over the next few months, beginning today," DeCecco said.

Fran McGorry, president and general manager of Coca-Cola Refreshments, Tri-State Metro Unit released the following statement:

“We are sorry to hear that the hard working people who make, sell and deliver a wide range of beverages in Philadelphia are losing their jobs because of this beverage tax. There is no question this tax is hurting Philadelphia’s consumers, restaurants and store owners as well.

"Everything we’ve said would happen by enacting this tax is proving to be true. We are evaluating how we will address the impact of this tax on our business. People are leaving the city to shop, small businesses are getting hurt, consumers are unhappy and people are losing their jobs.”

A representative for Canada Dry did not reply to a request for comment.

Lauren Hitt, spokesperson for Mayor Jim Kenney, said Wednesday's announcement showed the industry had sunken to a "new low." She pointed to Pepsi's gross profit of more than $6 billion in 2016, and said soda companies are able to spend thousands on lobbying efforts and advertising.

"The idea that they can afford to do that but ‘must lay off workers’ should make every Philadelphian very skeptical of whether these layoffs are actually due to the tax," Hitt said.

Kenney's office also pointed to an announcement Wednesday that the city's new universal pre-K program has created 251 new jobs.

That includes 191 teaching jobs, 147 of which are full-time positions. The average wage for the new jobs is $14.72 an hour, the city said.

Funding for the pre-K program, along with other city projects, was the reason Kenney pushed for the tax, which was passed by City Council despite a reported $10 million effort from the soda industry to kill it.

"We predicted this dire outcome from the outset," Grace said, pointing the finger at City Council members and other union leaders who supported the tax when it passed last summer. "I hope they can live with themselves after knowing that their actions led to the devastation of an industry in the city and the loss of so many family-sustaining jobs.”

"What the mayor put out today is repugnant and disrespectful," said Anthony Campisi, spokesman for the Philadelphians Against the Grocery Tax coalition, of the Kenney administration placing blame for the layoffs on the soft drink companies.

"Unfortunately, everything that is occurring right now is what we have been predicting since Day One," he said.

Campisi said Wednesday that he has heard secondhand that a number of city grocery stores and bodegas are considering reduced store hours, layoffs and even closure due to the effect of the soda tax on sales. He could not offer details, he said, as he is still researching those claims.

But already, Campisi said, Shop Rite supermarkets in Philadelphia have reduced store hours.

"Unfortunately, the pain is probably going to expand," he said.

Albert Eisenberg, spokesperson for Philadelphia's Republican Party, said layoffs were the "obvious" outcome of the tax. 

"We will see more job loss and more pain for consumers – mostly the poorest Philadelphians — as long as this regressive, job-killing tax is on the docket," Eisenberg said in an email. 

The city said in February that revenue collected from the tax, enacted at the beginning of the new year, has doubled projections so far. Supermarkets and beverage distributors, however, have said the tax has sharply cut into beverage sales and would likely lead to layoffs.

The Associated Press contributed to this report.