Would You Quit Smoking for $750,000?
Research links sharply lower lifetime wages to tobacco intake
If you choose to smoke, you’ve likely considered the risks — that you’re about three times more likely to contract lung cancer. You’ve weighed the downside of stained teeth and fingertips, the cost of a pack a day, and the tickly cough at the back of your throat, and decided that, all things considered, it’s worth it.
But factor this into the equation: What if the cost of smoking set you back $750,000 in income over 35 years?
A study from the National Bureau of Economic Research shows smokers actually get paid less than their nonsmoking peers. By age 30, a male smoker who has smoked on roughly two days out of three from age 23 or earlier might earn 25% less than his nonsmoking counterpart. For a female, the gap was as much as 40%.
Those very large income penalties aren’t cause and effect. Smokers aren’t paid less because they are smokers, in most instances. Factors like education and choice of occupation weigh heavily. Poor earnings and smoking are correlated, the research finds.
But controlling for those factors, researchers still find the smoker suffers a substantial income penalty, that in equivalent occupations and with similar education, females who smoke make 14.8% less and males 9.3% less, at age 30.
Suppose you’re a 30-year-old heavy smoker, in a field where the typical salary is about $35,000. Working with the adjusted penalty, if you’re a male, you’re losing out on $3,255 a year; a female, you’re out $5,180. (That’s without factoring in the roughly $2,300 a year smokers spend on cigarettes.)
But it’s not just about the cash in hand. Suppose you don’t smoke and put the $3,255 or $5,180 a year toward your 401(k). Over the next 35 years of your working life, assuming an annual rate of return of 7% and no employer matching, you’d accumulate a total of about $470,000 if you’re a male and roughly $750,000 if you’re a female.
Saving the cash you actually spend on cigarettes, too, would put you in an even better position. Add $2,300 a year, and a female smoker could accumulate well over a million dollars in her 401(k). For the male smoker, an extremely respectable $800,000 — the difference between a lean and a comfortable retirement.
It’s hard to pinpoint exactly what lies behind the smoker’s wage penalty. For employers, prefering nonsmokers may be a mixture of simple discrimination and actual pragmatism. Depending on the state, employers are within their legal rights to pass you over for a job or promotion if you’re a smoker.
While the law prevents discriminating against people on the basis of their race, sex or national origin, for example, smokers don’t usually enjoy the same protections.
There’s a practical explanation: Smokers represent a potentially higher healthcare cost for firms that self-insure; for instance, one study estimated an excess cost per worker of $5,816. These costs are one reason why, for example, the city of Dayton, Ohio, will no longer hire smokers. They’re also more likely to get ill, requiring sick leave. And if they’re smoking every couple of hours, they need more breaks, more time away from the job at hand.
Good news: Females who stop smoking at the age of 24 see their wages increase significantly in the year that they stop. For males, wages also increase, somewhat more gradually.
This gender gap is in part explained because male smokers are overrepresented in physically strenuous occupations, where the wage penalty for smoking is less or, in some cases, nonexistent. Female smokers tend to be in offices and other workplaces that pay smokers less.