Wage Penalties for Obesity

Charles Baum and William Ford, economists at Tennessee State University, are amid a wave of labor economists who have recently published papers evaluating the possibility of discrimination against obese and overweight people in the workforce. In “The wage effects of obesity: a longitudinal study,” Baum and Ford find that obese men and women earn lifetime wages that are on average 3.4 percent and 6.3 percent lower than other workers with similar educational backgrounds, work experience and socio-economic characteristics.

Prior obesity-wage studies have also concluded that there is a negative correlation between Body Mass Index and wages when all other variables are the same. Studies have not sought to identify “the channels through which obesity affects wages,” claim Baum and Ford.

Their study is unique in that they use 15 separate statistical models and a very large sample size. They attempt to test if obese workers receive lower wages because they are 1) less motivated, 2) they are more costly for employers to insure, 3) they are discriminated against by customers, or 4) they are limited in their jobs due to their obesity.

Baum and Ford’s results did not square with their assumption. They show that either obese workers do indeed tend to be more economically myopic (workers who have higher marginal rates of time preference and are less likely to engage in training) or alternately that they receive fewer training opportunities due to discrimination.

Some of Baum and Ford’s most surprising results included that, despite higher healthcare costs, obese workers receiving health care received a lower (but still positive) wage penalty than obese workers who did not receive health benefits. Their results did not support the hypothesis that customer discrimination accounted for the obesity wage differential.

Workers in customer-oriented occupations earned less as a category, but obese workers in those occupations did not face higher wage penalties than their counterparts in non-customer-oriented-fields.

In “The Impact of Obesity on Wages,” a paper in the Journal of Human Resources, John Cawley finds an even larger wage penalty for obese white female workers, of 9 percent. Cawley shows that the wage penalty is “equivalent to the wage effect of roughly one and a half years of education or three years of work experience.”

Another way of showing this: given a median income in America in 2004 of $44,389, losing 9 percent of lifetime wages, over the course a 30 year career, obese women would make $119,850.30 less than their nonobese counterparts.

Given the litigious US society, it is seemingly a matter of time before class action discrimination suites are brought to the courts. In the meantime evidence is piling up that in a country of increasingly fat citizens, there is a premium for staying healthy.