Daylight Savings Time Likely to Become Permanent — What Are the Economic Benefits?

In news that will no doubt bring smiles to the faces of people who are sick of having to change their clocks twice a year, on March 15 the Senate passed legislation that would make daylight savings time (DST) permanent. This should have a positive economic impact as well, if for no other reason than it will end any tertiary harm done whenever clocks are changed.

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In a unanimous vote, the Senate passed the Sunshine Protection Act, which would permanently extend DST to 12 months from eight months, USA Today reported. The bill was first introduced in Jan. 2021 and then reintroduced last March by Sen. Marco Rubio (R-Florida) and seven other members of Congress.

If approved, the bill will make daylight savings time permanent across the United States beginning in 2023. It still needs House approval before President Joe Biden can sign it into law.

While backers of the bill tout the economic benefits of making DST permanent, some of those benefits are perhaps overstated. An analysis by PNC found that two of the perceived economic benefits — reduced energy use and more daylight hours for consumers to spend money — are not what they’re cracked up to be.

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PNC cited a study from Yale University showing that residential energy consumption in Indiana actually increased by as much as 4% after DST went into effect in 2006. Researchers discovered that the decreased need for electrical lighting was offset by higher demand for heating and cooling power.

Another analysis, from PNC economist Kurt Rankin, found that very few businesses get a sales boost from later shopping and spending hours during daylight savings time. Among the businesses that do benefit are those that specialize in outdoor recreation, such as golf courses; those that sell and repair barbecue equipment; and those that sell gasoline, due to the fact that more people drive when it is light outside.

For everyone else, the impact is minimal.

Which is not to say that making daylight savings time permanent won’t be good for the economy. The biggest benefit is that people will no longer need to change their clocks twice a year — something that has been proven to have a negative impact on mental and physical health, sleeping patterns, mental focus and productivity.

Turning clocks an hour ahead, which happens in the spring, has a particularly negative effect. Most Americans lose 40 minutes of sleep in the spring when the clocks change, Quartz reported. This leads to lost productivity at work in the days that follow. According to some estimates, the dollar value tied to this lost productivity is more than $400 million.

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Adding an hour back in the fall also has negative consequences. Research suggests that less daylight later in the day results in an 11% increase in depressive episodes, which contributes to lower productivity as well.

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