A Safety Net That Works: Enforcing Child Support Payments

March 17, 2017

What parent doesn’t want to help his or her child? Most people would wonder why the question even needs to be asked. But while child neglect and child poverty are issues that the social safety net and public assistance rightfully focus on addressing, legislative efforts to require delinquent or absent parents to take financial responsibility prove a handy tool for reducing the problem of childhood poverty.

Child Support Enforcement (CSE) was first passed into federal law in 1974. It was set up to make parents become financially responsible for their children. At the time, 75 percent of welfare caseloads involved an absent parent.

CSE became a part of the social services network in order to take pressure off government services and return the job of parenting to where it belonged — the parent.  Yet nonpayment of child support remains a huge problem today, even after the 1996 welfare reform law strongly enhanced enforcement mechanisms.

Child Support Enforcement is an issue that crosses partisan lines. Separation and divorce are an unfortunate circumstance of modern life, and child support delinquencies are not confined to one particular income level or political belief. At the same time, CSE was a major factor in reducing poverty among children after the 1996 welfare reform law was signed.

Believe it or not, one quarter of the welfare reform law of 1996 was dedicated to CSE. Its impact was notable. Child support agreements among poor parents increased by 8 percentage points from 1993-2003, meaning more children were assured that the parent not living with them helped pay for their upbringing. Enforcing child support payments resulted in a 74 percent increase in payment collections over 10 years.

So what happened? In the second decade since the law was passed, the percentage of custodial parents with a payment agreement dropped by nearly 14 points.

What accounts for the loss of momentum? Robert Doar, the former commissioner of New York City’s Health and Human Services, explains.

What accounts for this loss of momentum is a legitimate, although exaggerated, concern about being too tough on poor noncustodial parents, the parent who is not living with the child. A false wisdom has emerged in the policy community—from academics to the media—that the child support system forces noncustodial dads to, as the headline of a 2015 New York Times story put it, “Skip Child Support. Go to Jail. Lose Job. Repeat.” Some influential commentators even see the system as fundamentally unjust by imposing on poor men burdens that are viewed as the government’s responsibility. …

Certainly, some poor noncustodial parents are struggling and need help to live up to their obligations. But most noncustodial parents, poor and nonpoor alike, are capable of working and could contribute something—even a regular payment of $25 per month has value. Analysts who are critical of the program seem to forget that the parent raising the child full time is often poor too. In 2013, for poor custodial parents who received child support payments, the noncustodial parent’s payments represented 49 percent of their income. Allowing parents to completely walk away from their financial responsibility to their children should not be an option.

According to Doar, if the share of poor custodial parents with agreements had held steady at the percentage that it was in 2003 when the welfare reform law was still being closely enforced, then 500,000 more poor custodial parents would have had orders to receive support in 2013!

“Surely a substantial fraction of these parents would have received enough in payments for them and their children to be lifted above the poverty line,” he wrote in the introduction to a recent volume he edited on the topic.

What Reasons Are There For Parents to Refuse to Pay Child Support?

A lot of times, the parent responsible for child support payments is cut off from the child. Other times, resentment of one parent toward the other leads to a child being caught in the middle. Still other times, suspicion that the money is being misused by the custodial parent is made as an excuse by noncustodial parents to withhold payments.

But sometimes, the paying parent claims he just can’t afford it. And while that claim may have been doubted or disproven, it sadly is becoming a more frequent excuse due to an unfortunate shift in American culture and economy — notably the increasing struggle of men in the labor market. More from Doar:

Reliable data on noncustodial parents are hard to come by because the Census Bureau’s major surveys do not ask whether a man living alone is also a nonresident father. But a survey from 1997 conducted by the Urban Institute found that only 43 percent of noninstitutionalized, nonresident fathers who were poor worked at all—and this was during the late 1990s economic boom. Another study from the Urban Institute used administrative data from nine states in 2003 and 2004 and found that 25 percent of all obligors had no reported income. …

I suspect, given the evidence on young, low-skilled men generally, that these rates must look even worse today. In 2000, among African American men age 16–24 without a high school diploma and not in school, the employment rate was 40.8 percent, and for similarly positioned whites, it was 72.3 percent. By 2007 (like 2000, a year at the peak of the business cycle), the rates had fallen dramatically to 28.7 and 55.0 percent, respectively.

Seven million men age 25 to 54 are not working or even looking for work, according to recent data. Many of them have children despite having never married. These men are disproportionately less educated, and seen by woman as less “marriageable.” Yet marriage is a reliable indicator of higher paying jobs.

With the increasing struggle of men in the labor market, sympathy has shifted. But there is something of a chicken-and-egg argument to all this. Where once women claimed they didn’t need men to raise their children, they still demanded that fathers (a majority of noncustodial parents) help out. Did women tell men to get lost because they were dead weight? Or did men become deadbeats because their paternal role was rejected?

Data show that 70 percent of arrears are owed by noncustodial parents who have no documented income or very little earnings (less than $10,000 a year). And 25 percent of poor custodial parents with a support agreement aren’t receiving payments. So whatever the relationship between parents, the question is now whether it is even possible to get blood from a stone?

Much can be done to fix the mish-mash of regulations and changes that have occurred over the last 40 years. For instance, determining what is a proper measure of a noncustodial parent’s income would go a long way to changing the way male parents look at work. Why is this? Because evaluating a parent’s ability to pay support based on an over-the-table paycheck disincentivizes men from going to work.

The reforms to the program in 1996 focused on tracking down and holding accountable “deadbeat” dads, but it did little to acknowledge or address those who really are dead broke. This is a difficult balance to strike—I know from my experience working in New York that many fathers who appear to have few assets and no earnings are working off-the-books or involved in illicit activities, but they are reluctant to make that known because they either do not want to pay or do not want the government to know of their off-the-books activities.

Another issue is the requirement to declare the other parent’s ability to pay support before qualifying for assistance. The purpose of the requirement is to ensure custodial parents look to the other parent to contribute before going to the government for help. This is the case with Temporary Assistance for Needy Families (TANF), the cash welfare program.

But TANF is on the decline while Supplemental Nutrition Assistance Program (SNAP), Medicaid, child care, and housing assistance programs are on the rise. And guess what? Those programs don’t require opening a child support case as a condition of receiving aid.

But the issue, Doar explains once more, isn’t necessarily a matter of what you have to reveal, but whether the revelation leads to some kind of change.

Policy should not have to choose between helping single mothers or low-income men. CSE is a rare government program (outside the criminal justice system) that interacts often with disconnected, low-skilled men, but it does not do enough to help them. Order amounts should be responsive to the noncustodial parent’s ability to pay and his changing economic circumstances, and significant improvements have been made on this front. But a singular focus on reducing order amounts and forgiving arrears distracts from the main challenge these men face: not enough of them are working. Instead of reducing what we expect of these men, we should help them better meet their obligations to their families and society.

Lastly, Doar notes that if federal or state assistance is dependent on parents working, then expand the programs that incentivize work.

While momentum has been building in Washington for an expansion of the earned income tax credit (EITC) for all childless adults, this policy is not well-targeted. A better solution is to expand the EITC for noncustodial parents who work and pay current child support. As commissioner in New York State, I created and implemented such a program, and an Urban Institute analysis found that it increased the share of parents who paid their support in full.

Why Is the Child Support Enforcement Program Important?

Historically, CSE has worked. Even as late as 2015, CSE resulted in $5.26 in payments for ever dollar spent on enforcement. Doar explains that enforcement works for several reasons:

  1. The program sends a clear message to all potential parents: if you play a role in bringing a child into the world, you have a responsibility to help support him or her.
  2. Strong child support enforcement not only communicates that essential American value, it changes the incentives around fathering children outside of marriage by making it impossible to abandon the responsibilities of parenthood.
  3. When child support obligations force an absent parent to be reminded of his financial responsibilities, he is also more likely to take up his other parental duties and be more involved in the child’s life. Unsurprisingly then, receiving child support is also linked to better outcomes for the children involved.
  4. Studies have found that formal child support payments are associated with fewer behavioral problems, better academic performance, and increased self-esteem.
  5. While it may seem counterintuitive, the CSE program offers one of policy’s best opportunities to address the crisis of prime-age male nonwork in America.

CSE is a needed and effective program. It currently lifts more than one million families above the government’s official poverty line, reduces single parenthood, and improves child outcomes, all by enforcing and facilitating personal responsibility at very low cost to taxpayers.

Filed Under: Front-Page Feature, Life Tagged With: , , , , , , ,

How Trump Can Improve Antipoverty Programs

November 18, 2016

With the presidential election in the rear view mirror, Washington and the rest of the country are now turning attention to what President Trump will mean for public policy. What would Trump do for antipoverty programs? Given Trump’s early focus on relieving child care costs for working mothers, that could be an early achievement for his administration.

A Trump administration may also be willing to require more labor force participation among SNAP and disability program recipients and could expand work-based tax credits.

After an election that showed the country is unsatisfied with the status quo, if Congress and the next administration are willing to put in a little work of their own, reforms to antipoverty programs could help more Americans get back to work.

Poverty studies researcher Angela Rachidi sketches an outline of a potential Trump antipoverty agenda.

Included should be a top-to-bottom review of existing safety net and job training programs. Ripe for reform are food, disability, and housing assistance programs — all of which could do more to support work among recipients. Additionally, workforce development programs, many of which have limited evidence of success, expansions to work-support programs, such as the Earned Income Tax Credit and child care assistance, and efforts to improve the quality of education from birth to college, all deserve a serious look.

This is not a new concept for fans of TPOH. Indeed, apprentice training programs, gradual replacement of benefits as individuals climb the income ladder, and changes to disability programs have long been concepts discussed by TPOH to help the most vulnerable get on their own two feet.

For instance, the Earned Income Tax Credit (EITC) provides that if a household doesn’t bring in a lot of money, then the government can supplement its earnings to help people stay on their feet and in their homes. However, childless households receive only $500 for a credit, not much of an incentive to encourage people to aspire to greater levels of achievement. It may seem counter-intuitive, but if individuals don’t develop an aptitude toward work, they won’t work, and will become dependent on welfare, so it makes sense to encourage work until people can develop the skills and interest in participating in the job market. EITC has shown that it has a positive effect on workforce participation.

As for apprenticeship programs, the original job training, who better to encourage that then the host of the 14-yearlong show called, “The Apprentice”? If exempted from minimum wage requirements, apprenticeship programs could be an area where companies feel encouraged to pick up and train employees in the areas where they need help. While getting on-the-job training from real-life employers, the government could use existing job training and college aid budgets to subsidize salaries, making sure individuals in these programs have enough money to live on while they develop their skills.

Finally, as labor economist Michael Strain explains, Social Security Disability Insurance was originally designed to help people who could no longer work after spending years in physically demanding jobs. Automation has reduced the number of physically exhausting jobs, yet the number of working-age adults on SSDI doubled between 1989-2009. This program has effectively discouraged work when it need not do so.

In today’s services economy, disability is often more a continuum than a binary state — a person may be disabled in the sense that he can’t stock shelves, but not disabled in the sense that he can’t sit behind a desk for 25 hours per week. SSDI should be modified to reflect this, covering individuals who truly cannot work, as a just society should, while encouraging others to do what work they can.

In other words, the safety net is becoming a hammock, discouraging people from working when it would be better used and more economical to help those who truly need a lift. Individuals with limited mobility can work in jobs that require fewer physical demands. As Mike Zelley, founder and president of the Disability Network, states, a half-million people with disabilities, including the 43 percent of whom have a college degree, are disincentivized to work because of federal disability programs.

The reality is that, due to his lack of specific proposals or experience in government, it is unknown what President-elect Trump intends to do to fight poverty. Will he be a strong fiscal conservative who focuses on requiring work, reducing fraud, and holding the line on the size of government; a Rockefeller Republican content to increase spending; or something else entirely?

Hopefully, the “wait-and-see” mode will soon be over.

Filed Under: Front-Page Feature, Liberty Tagged With: , , , , , , ,

The Poverty Debate: Why We Don’t Agree on The Same Set of Facts

September 5, 2016

The political realm is a great place to toil if you aspire to be an armchair pugilist. Without much personally at stake in the outcome of  the poverty debate, it is easy to pick a side and argue statistics and facts. But in the midst of all the fighting are real people being impacted by decisions outside of their control.

Such is the case when it comes to arguments between the political scientists of the left and right over welfare reform, and whether those at the bottom rungs are any better off despite numbers showing that millions of people were clearly lifted out of poverty as a result of the 1996 welfare reform law.

To this day, commentators on the left employ bogeyman language for the anti-poverty law — demonizing Newt Gingrich and House Republicans for coming up with legislation that Bill Clinton signed — while at the same time acknowledging that the percentage of people in poverty is demonstrably less than reflected in the antiquated methodology used to determine current poverty levels.

Take the words of Will Marshall, president of the Progressive Policy Institute:

The official poverty rate is just above 15 percent, about a point larger than it was in 1996. But that measure is misleading, because it doesn’t take into account non-cash benefits and tax subsidies. According to Harvard University’s Christopher Jencks, the absolute poverty rate falls to under 5 percent when adjusted for food and housing, the earned income and children’s tax credit, and a more accurate measure of inflation.

Nonetheless, Jencks and other social policy researchers are concerned about the rise of “deep poverty” — an increase in the percentage of families whose income is less than 50 percent of the official poverty line.

Some liberal analysts blame welfare reform for gouging a huge hole in the social safety net. Even as unemployment soared during the Great Recession, they note, TANF caseloads stayed down. That meant fewer needy families were getting cash assistance when they needed it most.

That’s true, but it’s not the whole story. As cash assistance has shrunk, other forms of social support have grown and become more generous. These include unemployment insurance, food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) and disability programs. In fact, some conservatives complain that welfare reform hasn’t made poor single-parent families less dependent on government; it just transferred their dependence to other programs that lack TANF’s strong work requirements.

Marshall notes that welfare reform, courtesy of President Clinton or otherwise, helped reduce the number of people in poverty. The big problem now is the number of women with children who live in “deep poverty,” which is defined as people living on less than half the official poverty rate. Professors Kathryn J. Edin and H. Luke Shaefer recently wrote a book in which they demonstrate that “deep poverty” rose by 2.6 percentage points between 1996 and 2011, from 1.7 to 4.3 percent.

At the same time, however, the Manhattan Institute has released a study contradicting the numbers, while saying something similar to Marshall from a completely opposite perspective.

Practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics), once the receipt of all government benefits are factored in. In 2012, fewer than one in 1,500 children of single mothers were living in what is called “extreme poverty.” This finding is consistent with other research.

Herein lies the challenge. If both sides agree that “official poverty statistics can create a misleading impression that hardship has increased,” then both sides must get out from beyond their political lens to evaluate not whether welfare reform has been a net positive — it has — but what’s the next step.

Progress is being made. More needs to be done. But the debate must start from the perspective of not what should be done, but whether we can eradicate poverty or whether it will always exist to some extent.

Then it’s a matter of determining how much help is enough to ensure that the least among of us has the means to live in safety and with dignity. This is where agreement is elusive and where next measures stall. Determining what those in deep poverty need, want, and are capable of contributing could go a long way to getting past arguments over whether six in one is equal to a half dozen in the other.

Filed Under: Front-Page Feature, Life Tagged With: , , ,

The Persistent Marriage Penalty and Its Impact on Family Formation

July 29, 2016

You thought this was resolved in the ’90s, didn’t you? It wasn’t.

“Almost one-third of Americans aged 18 to 60 report that they personally know someone who has not married for fear of losing means-tested benefits.”

That’s right, the marriage penalty still exists on families who receive government subsidies, and it is impacting more families as the safety net expands.

Now, the bias up the social ladder has traditionally been to assume that people who have kids without getting married are of questionable moral character because who would go have a baby without having a stable household, right? After all, studies show that children raised by their biological parents in married households have a likelier chance of success in school, a stable job, and upward mobility.

That notion of planning your marriage, then your family is outdated in a lot of communities, not least because when is it ever a good time to have a kid? So maybe the decision to not marry is not a question of moral repute, but in fact a question of public policy working against a loving family whose only commitment phobia is filling out the paperwork.

At least 43 percent of families with children 18 and under receive some kind of means-tested aid from the federal government, from Medicaid to Supplemental Nutrition Assistance Program funds. That number goes up to 47 percent for families with children five and under. And this is what they are likely to face if they marry.

… 82 percent of those in the second and third quintiles of family income ($24,000 to $79,000) face this kind of marriage penalty when it comes to Medicaid, cash welfare, or food stamps. By contrast, only 66 percent of their counterparts in the bottom quintile (less than $24,000) face such a penalty. …

Couples where each partner’s individual income is near the cut-off for means-tested benefits—are about two to four percentage points less likely to be married if they face a marriage penalty in Medicaid eligibility or food stamps. Most of these couples are in the second and third quintiles of family income for families with children two and under ($24,000 to $79,000).

Indeed, this recent report on the marriage penalty notes that couples’ combined income in that second and third quintile of earners ($24,000 to $79,000) could face penalties of lost benefits up to one-third of their income if they were to marry.

A valid question is why has the social safety net grown so large that families making nearly $80,000 are still receiving benefits? That may make sense if you’re talking about a family in Brooklyn or around the Beltway outside Washington, D.C., or  Honolulu, or San Francisco, for example, but that’s certainly not the situation in Indianapolis, Louisville, Omaha, Memphis, Tulsa, and so on.

The answer lies in the decision not to marry. If one unmarried person is reporting income to an agency, then the household earnings don’t get counted as $80,000, it only gets counted as the one family member’s income. A combined income would phase out benefits whereas a reported single income would qualify.

Certainly, no one wants to see anyone in need unable to receive the staples of shelter and food, but as the below infographic demonstrates, 59.7 percent of cities surveyed by Experian (click on it to enlarge) have a lower median income and a lower cost of living than the national average so many recipients can in fact afford to live without federal benefits.

Cost of living in America infogrpahic

The report does not challenge the expansion of the safety net to the lower-middle class, but it does raise the question of whether public policy discourages couples from marrying. And as the evidence shows, a significant minority of Americans say they have seen marriage ruled out because of the policies.

So how does government policy correct itself to not penalize lower-middle-class couples for being married when they start their family? The report makes four suggestions:

– In determining eligibility for Medicaid and food stamps, increase the income threshold for married couples with children under five to twice what it is for a single parent with children under five. Such a move would ensure that couples just starting a family do not feel pressured to forgo marriage just to access medical care and food for their families. The cost of this policy change would be limited, since it would only affect families with young children.

– Offer an annual, refundable tax credit to married couples with children under five that would compensate them for any loss in means-tested benefits associated with marrying, up to $1,000. This would send a clear signal that the government does not wish to devalue marriage and, for couples, it would help to offset any penalties associated with tying the knot.

– Work with states to run local experiments designed to eliminate the marriage penalty associated with means-tested policies. States could receive waivers to test a range of strategies to eliminate penalties in certain communities, and to communicate to the public that the penalties are no longer in force there. Successful experiments could then be scaled up to the national level in future efforts to reform means-tested policies.

– Encourage states and caseworkers working with lower-income families to treat two-parent families in much the same way as they do single-parent families. For instance, states could ease the distinctive work requirements that many have in place for two-parent families receiving cash welfare. Reforms such as this one would put two-parent and single-parent families on a more equal footing when it comes to public assistance. More generally, policymakers and caseworkers should try to eliminate policies and practices that effectively discriminate in favor of single-parent families.

Read the report on the marriage penalty’s impact on lower-middle income families.

Filed Under: Front-Page Feature, Life Tagged With: , , , , , , ,