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Long-run economic consequences of child support enforcement for the middle class
Journal of Socio-Economics 31 (2002) 273–286
Long-run economic consequences of child support enforcement for the middle class Kimberly Folse a,∗ , Hugo Varela-Alvarez b a
b
Department of Psychology, Sociology and Social Work, Texas A&M International University, 5201 University Blvd., Laredo, TX 78041, USA Associated Consultants International, Saltillo 1521 Col Mitras Centro, Monterey, NL Mexico
Abstract The purpose of this research is to examine the economic impact of child support transfers for middle-income custodial and noncustodial parent over a 15-year period. We have a substantial amount of research on low-income families, but little research about middle-income families. This research is based on computer simulations using income and expenditure data from the Consumer Expenditure Survey (CES) tables prepared by the Bureau of Labor Statistics. The results of the simulations challenge the majority of research that proposes that women suffer far more than men after family dissolution. Instead, we conclude that it is the noncustodial parent, usually the father, who suffers the most. In every case and for every income, according to our analyses, the payer of child support is never able to cover household expenditures if paying child support at guideline levels. By reducing the standard of living to the next lowest income category, in some cases to a level below the custodial parent’s, the parent owing child support is able to make child support payments and cover consumer expenditures. We use exchange and choice theories to analyze the economic alternatives in making a decision to divorce and consequently propose that public support for strict child support enforcement may encourage middle-income women to seek divorce. Micro-level decisions, we argue, have macro-level economic and social consequences for the middle-income parents. © 2002 Elsevier Science Inc. All rights reserved. Keywords: Economic impact; Child support; Middle-income families
The economic consequences of family dissolution because of divorce are intuitively understandable; one household is split into two, each with its respective costs. Child support transfers are supposed to make the two households comparable in terms of standard of living, but do they? According to Lester (1991), in 1989, child support typically made up no more than ∗
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15–20% of household income. Much of the accumulated research focuses on the economic experience of low-income parents. Policy research, for example, is concerned with issues of parents’ ability to pay support and costs to States, when parents have to seek welfare because of nonpayment. We have very little information on the circumstances of middle-income parents. These parents are more likely to pay their child support and because they pay, we argue, researchers have paid far less attention to their experience. Presented here are the results of a computer simulation, spanning 15 years, of the effects of child support transfers on the economic well being of middle-income parents. A theoretical discussion of how child support enforcement may be an unintended economic incentive for middle-class women to seek divorce, follows. The economic consequences and the effects of child support policy on fathers and the middle class, in general, are also discussed.
1. Background Weitzman’s (1985) research on the after effects of divorce is one of the most cited and used statistics of the 1980s (Braver and O’Connell, 1985). Based on her 10-year study in California, she concluded that after divorce women experience a 73% decline and men experience a 43% increase in standard of living. Others conducting research in the 1980s was more conservative in their conclusions; most concluding standard of living declines ranging for 50–25%, with around 30% cited most often. Duncan and Hoffman (1985), e.g., reporting on their national results from the early 1980s, found that family income for divorced women fell by 34%. When they adjusted for smaller family size, the average decline was 25%. Family income for the father also fell, by 15%. When his income was adjusted for smaller family size, his standard of living increased by about 3%. According to Duncan and Hoffman, 5 years after the divorce, women and their children have exceeded their predivorce standard of living, usually due to remarriage. Burkhauser et al. (1991), using data from 1986 and adjusting for taxes and public transfers such as welfare and food stamps, found that in the year after divorce, the median standard of living for women fell by 24% with 22% of the women experiencing drops of 50% or more. The divorced man’s living standard also dropped, by 6%. Seltzer (1994) found that divorce has an immediate economic impact for women. Consistent with other studies, she found that they lost about 30% of their income after divorce. In contrast to Weitzman’s and others’ findings based on 1980s data, is the research of Braver (Braver and O’Connell, 1998) and his colleagues at Arizona State University. They too conducted a 10-year study of divorced parents. Instead of the steep declines in the standard of living after divorce for the woman, Braver and his colleagues find an increase in the standard of living of 1–5%. They find similar increases for the father. Their analysis includes child support transfers, taxes, and expense allocations, including visitation. 1.1. Guidelines and order reviews Since 1998, all states are required by federal law (Public Law 98-378) to devise a way to quantitatively set support orders. In response to the law, state guidelines are generally one of three types: cost sharing, income sharing (e.g., Connecticut, Ohio), and taxation approaches
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(e.g., Minnesota, Wisconsin, and Texas). The taxation approach—used in 13 states—focuses just on the noncustodial parent’s income; the support order is based on a percentage of the parent’s gross (Texas and Wisconsin) or net income (Minnesota). In Texas, e.g., child support represents about 17% of the noncustodial parent’s gross income for one child and 25% for two children (Vernon’s Texas Codes, 1996) and does not take into consideration the income of the custodial parent. According to Braver and O’Connell (1998), child support award guidelines are ill conceived. There are three problems with the current approach, they conclude. First is how custodial parent’s standard of living needs is calculated. They argue that these are based on federal government published figures regarding what is needed to maintain identical living standards. Using these government tables—which Weitzman did—to create a needs ratio, is “highly misleading and seriously inaccurate they claims” (p. 65). The second problem has to do with taxes. Child support income is tax free and child support payments are not tax deductible. The custodial parent claims head of household and also receives extra exemptions for the child(ren). The custodial parent may also claim a tax credit. Thirdly, father’s expenditures on their children for clothing, visitation, transportation, food, recreation, and child care, while in their care, are never counted. In light of Braver and his colleagues’ research and the research of economist, James Shockley and Phoenix attorney Bruce R. Cohen, the state of Arizona has revised its child support guidelines to better reflect the circumstances of the respective parents. Often, children spend 30% of their time with the noncustodial parent. To adjust for this time and associated expenses such as food and childcare, child support guidelines are being adjusted downward by about 18.7% (Braver and O’Connel, pp. 71/72). Once an order is established, it stands for 36 months, after which the order can be reviewed for a modification at the behest of either party. Modifications are usually for cases where child support is based on a set level rather than a percentage level. Significant decreases in income due to loss of job or disability—at least a 15% decline in income—are cause for modification. If the noncustodial parent, as determined by the court, is underemployed or unemployed with intent, no order modification will be made.
2. Research objectives This study examines the economic situation of the respective parents in the long run—we chose 15 years—assuming neither parent remarries. Our goal is to develop a better understanding of how middle-income or middle-class parents are coping with child support payments and living expenses. We wanted to see the effects of child support transfers as class phenomenon. This research has the following objectives: 1. To compare parental income combinations (i.e., effects of receiving child support as part of income) and how these play out over the long run in terms of expenditures/standard of living. 2. To compare the long run effects of child support guidelines on the income and standard of living of both parents with respect to award adjustments when the obligation is always adjusted or never adjusted.
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3. To evaluate child support guidelines in terms of income adequacy for either parent. 4. To determine what percent of the custodial parents’ income can be attributed to child support for different levels of custodial parent income in the long run. 3. Methods We chose a computer simulation for our research. Computer simulations are excellent tools for policy analysis (Whicker and Sigelman, 1991); they allow us to better predict the outcome of policy decisions, especially over time. Much research is plagued by old data or data that are limited in time frame. Another problem of using data on actual families is the difficulty of finding matching cases where both parents’ economic circumstances can be documented. An alternative to using actual cases is to simulate cases that model the real world. One way to simulate matching couples is to assume that they have a certain level of income, use official data to document expenditures, and assume that the noncustodial parent always pays the child support that is owed. We can then observe the effects that payment has on the economic circumstances of both parents. We assume that neither of them remarries for the duration of the simulation. For ease of description, we label the custodial parent as the mother or “she” and the noncustodial parent as the father or “he.” This is generally true, but the number of custodial fathers is increasing over time. 3.1. Data We use the most recent Consumer Expenditure Survey (CES) tables as our data source for simulating the economic dynamics of income and spending. The CES, compiled by the Bureau of Labor Statistics, is a profile of the Nation’s households and families and their buying habits and income. According to the Bureau of Labor Statistics (1999), the survey is best used when researchers want to relate the expenditures of consumers to their income, which is exactly what we want to do here. The CES has nine income categories ranging from less than $5,000–$70,000 and over. Expenditures are broken down into seven categories, the largest of which are food, housing, and transportation. To simulate the effects of child support transfers, the income taxation method is employed, partly because it is easiest to use in calculating the child support over time. This simulation does not take into account the extra expenditures of noncustodial parents, as did Braver and his colleagues. If anything, the model underestimates these costs. The simulation illustrates the long-term differences between orders that are adjusted upward or downward based on a review every 36 months or never adjusting the award from the original start date. 3.2. Variables 3.2.1. Income We selected the income categories of $20,000–$29,000 and $30,000–$39,000 for the payer of child support (for ease of discussion, we assume the payer is the father and the receiver
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is the mother). We used the income categories of $10,000–$14,999, $15,000–19,999, and $20,000–$29,000 for her. We started the simulation at the middle of the income category; the starting incomes were $12,500, $17,000, $25,000, and $35,000. 3.2.2. Income change We assume that income will generally increase over time, but not steadily and assigned a different probability for the woman and the man for either an increase, a decrease, or stay the same, for income, on a yearly basis. We based these on the cost of living index used by the Social Security Administration (2000). For him, we assign a 60% probability of an increase in salary for a given year, a 7% probability of a decrease, and a 33% probability that the salary will stay the same. For her, we assign a 50% probability of an increase, a 7% probability of a decrease, and a 43% probability that her salary will stay the same. Our rationale for the difference in probabilities is that women generally have fewer skills and work experience than men and are likely to increase their incomes over time, but not by as much as men. For both, if there is an increase, the increase will be 2.5% to simulate cost of living increases. If there is a decrease, it will be 8%. The 8% decrease, we argue, is reasonable because there is only a 7% probability for a decrease and would simulate the loss of a job, and/or reemployment at either the same salary a month later or reemployment at a lower wage. 3.2.3. Expenditures For his expenditures, we used CES Table 35 representing a typical consumer unit of one person. For her, we used CES Table 37 representing a typical consumer unit of two persons. We use all the expenditure categories. Expenditures are calculated as an average by type of expenditure for each income category in the CES. We initially tried to divide each category into low, medium, and high but quickly ran into trouble; the lower income categories actually spend more, on average, for some main items than does the next higher income category. For this reason, we decided to use the average for the category. 3.2.4. Child support awards The CES does not include receipt of child support as a major source of income, but it is included as an expense. The Miscellaneous Expenses category, according to the CES, includes child support, but child support is not itemized. We left the category as it was and created child support as another expense. We may be guilty of double counting; however, the expenditure level of the Miscellaneous category does not come close to what a middle-income parent would typically pay in child support. We consider child support as a source of income for her and add it as an extra category to the CES table figures. This does not represent a problem for tax calculations for her, as child support income is nontaxed; we use the tax calculations straight from the tables and these do not include child support. We calculate what percentage of her total income (includes child support and her income) is child support. The child support award represents 17% of his gross income as proposed by state guidelines that use the taxation method of calculating child support.
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4. Results 4.1. Simulations of equal starting incomes The first simulations assumed that both parents had equal starting incomes of $25,000 (see Table 1). These runs of 15 years compare child support that is adjusted to the noncustodial parent’s income every 36 months or never adjusted once the order is set. Despite the noncustodial parent loosing income in some years in the simulation, he never lost 15% of his income, which could result in a downward award. At first year, they both start with $25,000 in income. Child support represents 17% of his income (in compliance with the guidelines for
Table 1 Simulation results (15 years) comparing child support transfers always adjusted as percentage of income and never adjusted Always adjusted
Never adjusted
Custodial parent
CS as percent of her income
Noncustodial parent
Custodial parent
CS as percent of her income
Noncustodial parent
Starting salary Child support Total income
$25,000 $4,250 $29,250
14.53
$25,000 $4,250 $20,750
$25,000 $4,250 $29,250
14.53
$25,000 $4,250 $20,750
Expenditures year 1 Difference
$29,553 $ (303)
$25,744 $ (4,994)
$29,553 $ (303)
Salary at 15 years Child support Total income
$27,339 $5,308 $32,647
$31,221 $5,308 $25,914
$27,339 $4,250 $31,589
Expenditures year 1 Difference
$29,553 $3,094
$33,132 −$7,218
$29,553 $2,036
$33,132 −$6,922
$ (4,994) $ (4,475) $ (3,944) $ (3,399) $ (3,399) $ (2,840) $ (2,267) $ (1,680) $ (1,680) $ (1,079) $ (7,850) $ (7,850) $ (7,218) $ (7,218) $ (7,218)
$ (303) $ (303) $322 $963 $963 $1,619 $1,619 $2,292 $2,982 $2,982 $719 $719 $1,370 $2,037 $2,036
$ (4,994) $ (4,369) $ (3,728) $ (3,072) $ (3,072) $ (2,399) $ (1,709) $ (1,002) $ (1,002) $ (277) $ (6,922) $ (6,922) $ (6,160) $ (6,160) $ (6,160)
17.72
Yearly details of income minus expenditures $ left after year 1 $ (303) $ left after year 2 $ (197) $ left after year 3 $537 $ left after year 4 $1,289 $ left after year 5 $1,289 $ left after year 6 $2,060 $ left after year 7 $2,178 $ left after year 8 $2,971 $ left after year 9 $3,661 $ left after year 10 $3,784 $ left after year 11 $1,648 $ left after year 12 $1,648 $ left after year 13 $2,428 $ left after year 14 $3,094 $ left after year 15 $3,094 Starting salary for both parents is $25,000.
$25,744 $ (4,994) 13.45
$30,460 $4,250 $26,210
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child support for one child). For her, child support represents 14.53% because child support is added to her income before the percent is calculated. At 15 years, her salary is $27,339 and child support now represents 17.72% of her income. His income, on the other hand, while starting at $25,000, is $31,221 at 15th year. Child support is always 17% of his income. We can see from Table 1 that for the first 2 years (always adjusted) the custodial parent is in the red—$303 and $197—when subtracting expenditures from income. By the third year, she is in the plus category, as she is every year thereafter. We conclude that by the third year, with the help of child support she makes enough money to cover her expenditures given that both of their incomes are $25,000. When we look at the economic circumstances of the noncustodial parent, we see that he is always in the red, ranging from a deficit of $1,680 to $7,850. The smallest deficit is due to the fact that he is at the top of the income category of $20,000–$29,999, but the expenditure category does not have a range, instead has a fixed amount. Once his income jumps to the next income category of $30,000–$39,000, he is at the bottom of the category but his expenditures represent a higher cost and consequently his deficit is larger; it is $7,850. Of interest here, is that the noncustodial parent’s income is never able to cover his expenditures. When we compare the outcomes of having child support always adjusted with never adjusted, we see another interesting pattern. For the custodial parent, we see that child support decreases from 14.53% of her income to 13.45% at the end of 15 years. For the noncustodial parent, although he’s earning more but paying less, percentage-wise of his income for child support, he’s still not able to cover typical expenditures for his income category. Based on this simulation, the difference between what he should be paying—if child support were adjusted—and what he is paying is $1,058. We see that his yearly deficit increases substantially after tenth year. We attribute this large deficit to his entering the next income and expenditure category, where his income is on the low end of the category, but his expenses are based on the stated expenditures for the income category. 4.2. Simulations of different starting incomes The results of the simulations, where the parents have different starting incomes, are presented in Tables 2 and 3. These tables compare the economic circumstances of the custodial and noncustodial parents over time when child support is always adjusted to 17% of the noncustodial parent’s income. We can compare what happens when her starting income is $12,500 versus $17,000 and his starting income is $25,000. In Table 2, we see that child support is unable to cover the custodial parent’s expenses for either of the custodial parent incomes; she is always in the red. Initially child support comprises 25.37% of her total income where she has an income $12,500 and 20% of her total income when she has an income of $17,000. At the end of 15 years, it comprises 26.02 and 19.46%, respectively. Her income increases only $3,307 over the duration of the simulation. The noncustodial parent is always in the red. His income, because he has a higher probability of a raise increases to $28,724 or an increase of $3,724. Because he never jumps income brackets, his expenditures represent a greater proportion of his income. He reduces his deficit by the 13th year, but he is still in the red. In Table 3, we see what happens when her income is $25,000 and his is increased to $35,000. We find that she is in the black except for the 14th year. The 13th year she only has $311.
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Table 3 Simulation results (15 years) comparing child support transfers, always adjusted as percentage of income, when the custodial parent’s income is $25,000 and the noncustodial parent’s income is $35,000 Custodial parent
CS as percent of income
Noncustodial parent
CS as percent of income
Starting salary Salary at 15 years
$25,000 $27,339
19.22 16.09
$35,000 $31,606
17.00 17.00
Expenditures year 1 Expenditures year 15
$29,553 $29,553
$25,744 $33,132
$ left after year 1 $ left after year 2 $ left after year 3 $ left after year 4 $ left after year 5 $ left after year 6 $ left after year 7 $ left after year 8 $ left after year 9 $ left after year 10 $ left after year 11 $ left after year 12 $ left after year 13 $ left after year 14 $ left after year 15
$1,397 $2,171 $2,811 $3,468 $4,141 $4,141 $4,831 $5,691 $5,847 $6,007 $5,482 $5,723 $311 $ (145) $3,094
$ (4,082) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (2,611) $ (1,848) $ (1,066) $ (3,631) $ (5,992) $ (5,313) $ (7,539) $ (6,898)
For these years, she jumped income categories and then lost income the last year. This forced her expenditures to drop because she was bumped to the next lowest income category. The noncustodial parent, despite increased income is still in the red every year. His deficit is an average of $6,435.50 for the last 4 years. Rather than decreasing over time, it increases. Given his income of $35,000, he cannot meet his expenditures.
5. Discussion The majority of child support enforcement research focuses on the economic circumstances of low-income parents. Our simulations, on the other hand, focus on middle-income parents. The first of our objectives was to compare different combinations of incomes and expenditures after 15 years of paying or receiving child support. We note three key findings. First, we find that lower the income of the custodial parent the greater the economic difficulty. It appears from the simulations that if the custodial parent has a low income—$12,500 or $17,000 and the noncustodial parent has an income of $25,000, neither can cover their expenditures, and thus, children will suffer. It is only when the custodial parent has an income of $25,000 and receives child support from her ex who has an income of at least $25,000, that she is able to cover her expenses of a consumer unit of two persons. Second, we find that the noncustodial parent who is paying child support on a regular basis is never able to cover his expenditures; paying child support always puts him in the
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red. Even if he is able to increase his income to $35,000, he is still in the red, he still cannot cover his expenditures. We suggest that the prudent way for the noncustodial parent to survive economically would be to spend at a level comparable to the next lowest income category. In doing so, their standards of living would be more comparable, which may, in fact, be the intent of enforcement. When the noncustodial parent’s income is $25,000, however, it would mean that he would have to spend at the next lowest income level of $17,000. In other words, he would have to maintain a living standard lower than the custodial parent’s. Third, based on our second objective of the research, namely to compare the circumstances where orders were always adjusted or never adjusted, we find that the nonadjusted order is about $1,000 ($84 a month) less at the 11th year than if it had been adjusted. We see that child support as percent of her income decreases from 14.53 to 13.45% when child support is never adjusted. When the order is adjusted, child support increases as percent of her income from 14.53 to 17.72%. We would expect that over 15 years, it would decrease. It appears that even at the end of the cycle, child support is very important to the custodial parent. It certainly provides for greater flexibility, giving her a cushion of $2,000–$3,000 at the end of the year. What is also important, however, is that despite not adjusting child support, she is able to cover her expenses given her income and child support, but he is not. Again, we attribute his deficit to his being in the next income and expenditure category.
6. Theoretical insight If marital dissolution creates such dire economic circumstances for the woman, it does not seem rational that she would choose to end a marriage. In weighing the economic costs and benefits, divorce would not be a good choice. What then would be the incentive to seek a divorce for a woman? Could it be that middle-income women might seek a divorce because they can expect regular child support? In other words, does child support serve as an incentive for divorce? According to Braver and O’Connell’s (1998, p. 133) study and consistent with the literature, it is the woman, 63–67% of the time, who seeks to end the marriage. Based on the simulations presented here for middle-income women, that is, women who earn at least $25,000 of their own and, where the father of their child earns at least $25,000, child support transfers appear to be a viable economic consideration. We know, for example, that women respond to other economic incentives. Hoffman and Duncan (1995) found that welfare (AFDC) was positively associated with marital dissolution; as welfare payment increased, so did divorce. They also found that higher wages for both husbands and wives serve as a disincentive to divorce. Klawitter (1994) found that women who receive child support reduce their work effort by working fewer hours per week. Exactly why is unclear, they state. They suggest that the State’s standards that consider the custodial parent’s contribution may affect her decision to work less because by working, she decreases what she will receive in child support. This relationship did not hold for fathers, however. They found that the amount of child support they owed did not affect their work effort one way or another.
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6.1. Exchange and choice For an explanation, we draw on the propositions of exchange theory of George Casper Homans. According to Homans (1974), in making a decision, one weighs the costs and benefits of a given action based on an assessment of the probability of actually reaping the benefits or rewards or facing the costs for that action. Rewards, according to Nye (1979), represent a positive outcome and are derived from particular status, experiences, or relationships. In this case, the status is being divorced; the reward is monetary and comes from the dissolution of a relationship. Of course, a person can never know for certain that a choice will result in a desired outcome. A choice is only as good as the information available to the decider and the decision-maker’s ability to make sense of that information (Sabatelli and Shehan, 1993). Since the early 1990s, we have seen intensified child support enforcement efforts and complementary media attention. Middle-income women may perceive that if they decide to divorce, they are more assured of child support because of the perception that it will be enforced. In other words, they may have an incentive to divorce if they perceive the law is on their side in securing support. When deciding if divorce is a viable option, she must decide if child support is sufficient and that it will be paid. As long as the middle-income father works at a level comparable to that before the marriage (Klawitter, 1994 indicates that child support demands do not change his work behavior), divorce can be attractive, or at least economically rewarding for her. Our contention is: The greater the perceived certainty of receiving child support (given the father’s income is at least $25,000), the more likely is the choice of marital dissolution (when divorce becomes a consideration).
Robin Hogarth (1987, p. 177), in his theory of judgment and choice, presents a framework for decision analysis that can be used to characterize the situation of a woman contemplating the economic consequences of divorce. He proposes that a decision analysis depends on the answer to two questions: (1) What are the consequences of alternative actions? That is, what is ‘at stake?’ (2) What are the uncertainties in the environment relevant to the decision? He proposes that the answers to these two questions reflect the evaluative and predictive dimensions of judgment. In decision analysis one proceeds through six steps, finally arriving at a decision. First is structuring the problem, which includes assessing the available alternatives, which are multifaceted. In this case, a woman must consider the economic consequences of staying married or getting a divorce. Second is assessing the various consequences of the different alternatives, including the weight assigned to each. Here, she must consider the likelihood of actually getting child support if the couple divorces. She must also consider the amount of child support. Third is assessing uncertainties. The assessment has to do with the likelihood of actually getting the child support she is due. If her husband were to fail to pay his child support, what legal mechanisms can she use to get him to pay? For the middle-income woman, this assessment is likely to result in a positive assessment, especially if her spouse worked steadily in the past; the uncertainties are minimized. Fourth is evaluating the alternatives, including
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which criteria to use in deciding. In this case, the criterion is economic. If she can afford to divorce, that is, child support will be enforced, then she will base her decision to divorce on that. Fifth is engaging in quantitative sensitivity analysis of balancing expected benefits of different courses of actions included in this analysis, he proposes, is an underlying assumption that one’s estimated consequences and uncertainties are likely wrong (due to subjectivity), and if so, how wrong are they? Step 5 leads to Step 6. Sixth is information gathering based on one’s tentative conclusions. In order to garner more information, the woman can consult an attorney or contact the office of child support enforcement for more information regarding enforcement. Likely, they will be presented with an optimistic picture of collection. Enforcement agencies have a need to present their efforts in the best light. Attorneys have a vested interest in closing their client’s cases. Thus, any subjective doubts about actually getting child support can be diminished by information from two reliable sources. This new information is used to shore up areas of concern in order to reassess the circumstances. Seventh is the decision or choice. A choice is made, provided that the person can conclude they have assessed the relative costs and benefits and constraints of the situation as sufficiently as possible. The decision rule, according to Hogarth, is: “Choose the alternative with the greatest expected utility” (p. 183). In our case, her choice to divorce is likely because the expected utility of divorce is greater than staying together. She becomes independent yet assures economic support. 6.2. Implications A micro-level decision to get a divorce, we argue, may be a consequence of macro-level social policy that increases the probability that a parent who owes child support will pay it. This is especially true of middle-income parents. Enforcement, at least perceptions of strong enforcement, we argue, is the critical variable in the choice dilemma because it represents a greater surety in the assessment of the probability of attaining rewards. In this case, child support is the reward. We propose that strong enforcement, while it is an agreed upon societal goal to protect children, may, in fact, lead to class-based micro-level decisions that lead to the unintended consequence of increasing the likelihood of divorce. Family dissolution also has a significant impact on the ability of the middle-income parents to maintain their economic position. Intact families protect their assets by keeping them together. Middle-income parents, as compared with those in or close to poverty, are characterized by their ability to accumulate assets. Assets are a form of economic capital that appreciate over time. The greater one’s ability to use one’s economic capital for the purposes of appreciation, the greater are one’s chances for establishing one’s place in the middle class. In the case of family dissolution, assets are divided. Based on these simulations, only the custodial parent is able to accumulate economic assets. If we assume that the main asset of the middle class is a home, then owning one’s own home is very desirable. Owning one’s home is a hedge against inflation and a mean to reduce one’s income taxes because the interest paid on a mortgage is tax deductible. Based on this analysis, the noncustodial parent would never be able to accumulate enough money to use as a down payment on a home and cannot, consequently, use interest as a tax deduction. The custodial parent, on the other hand, may have been granted the residence at the time of divorce if she maintained sole custody of the children. If the couple did not have a home, then she can, if both she and her ex have incomes of at least $25,000, accumulate
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enough to buy one. She, rather than he, is better able to secure a place in the middle class, at least with respect to home ownership and residence in a middle-class neighborhood. In effect, marital dissolution, specifically income transfers of child support, oppresses middle-income noncustodial parents by precluding them from capital accumulation. We are not arguing that noncustodial parents should not have to pay child support. Instead, we argue that family dissolution and current child support guidelines for income transfers are a major threat to the middle class. Probably, the best way a middle-class custodial parent can protect his assets and economic position is to immediately remarry or cohabitate with someone who has at least one child and who is receiving child support for that child, which they do. About 80% remarry, most within 7 years (Cherlin, 1981). However, based on research by Day et al. (1986), remarriage for the father does not bring the economic returns it does to the mother. 7. Conclusions Perhaps the public image of custodial parents in dire economic circumstances is due to the economic situation of low-income parents and media and social policy attention to this group. We wanted to offer a picture of the situation of middle-income parents. Because of the lack of matching data for custodial and noncustodial parents and longitudinal data, a computer simulation is an alternative research method that can be used to examine the circumstances of middle-income parents. These simulations are based on the best available evidence documenting consumer incomes and expenditures. The results challenge the conclusions of many other researchers who claim that family dissolution has a far greater negative impact on the economic well being of the custodial parent. We find that the noncustodial parent, usually the father, paying the child support at the guideline level of 17% of gross income, is the one that is most economically impacted. These simulations may actually under represent the circumstances of noncustodial parents because they do not include expenditures for their children beyond child support. We acknowledge several limitations of this study. This is a simulation. We approximate income changes over time with probabilities that seemed reasonable to us, with some guide from the social security administration and our knowledge that women make less than men, generally, and that women hold jobs with less potential for income adjustment upward. Expenditures, while based on the best-documented evidence, are averages for an income category. They do not take into account individual differences. We assume that the noncustodial parent always pays the child support that is due. We do believe, however, that although we use average expenditures based on Bureau of Labor’s Consumer Expenditure Survey, that by increasing income while maintaining average expenditures, we have overcome some of the weakness of the data. Lastly, we acknowledge that we are not able to document the true costs of raising children, a daunting and controversial task all by itself. References Braver, S., O’Connell, D., 1998. Divorced Dads: Shattering The Myths. Putnam, New York, NY. Bureau of Labor Statistics, 1999. Consumer Expenditure Survey. Available: http://stats.bls.gov/
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Burkhauser, R.V., Duncan, G., Hauser, R., Berntsen, R., 1991. Wife or frau, women do worse: a comparison of men and women in the United States and Germany following marital dissolution. Demography 28, 353–360. Cherlin, A., 1981. Marriage, Divorce, Remarriage. Harvard University Press, Cambridge, MA. Day, R., Day, S., Bahr, S., 1986. Income changes following divorce and remarriage. Journal of Divorce 9, 75–88. Duncan, G., Hoffman, S., 1985. Economic consequences of marital instability. In: David, M., Smeeding, T. (Eds.), Horizontal Equity, Uncertainty and Well-Being, Vol. 50. University of Chicago Press, Chicago, pp. 427–467. Hoffman, S., Duncan, G., 1995. The effects of incomes, wages, and AFDC benefits on marital disruption. Journal of Human Resources 30, 19–41. Hogarth, R., 1987. Judgment and Choice, 2nd Edition. Wiley, New York, NY. Homans, G.C., 1974. Social Behavior. Free Press, New York, NY. Klawitter, M., 1994. Who gains, who loses from changing U.S. child support policies? Policy Sciences 27, 197–219. Lester, G.H., 1991. Child support and alimony: 1989. Current Population Reports, Consumer Income. Series P-60, no. 173. U.S. Department of Commerce, Bureau of the Census, Washington, DC. Nye, F.I., 1979. Choice, exchange, and the family. In: Burr, W.R., Hill, R., Ney, F.I., Reiss, I.R. (Eds.), Contemporary Theories About the Family, Vol. 2. Free Press, New York, pp. 1–41. Sabatelli R., Shehan, C., 1993. Exchange and resource theories. In: Boss, P., Doherty, W., LaRossa, R., Schumm, W., Steinmetz, S. (Eds.), Sourcebook of Family Theories and Methods. Plenum, New York, pp. 385–411. Seltzer, J., 1994. Consequences of marital dissolution for children. Annual Review of Sociology 20, 235–266. Social Security Administration, 2000. Cost of living adjustment. Available: http://www.ssa.gov/OACT/ COLA.misc.html Vernon’s Texas Codes Annotated, 1996. West Publishing Co., St. Paul, MN. Weitzman, L., 1985. The Divorce Revolution: The Unexpected Social and Economic Consequences for Women and Children in America. Free Press, New York. Whicker, M.L., Sigelman, L., 1991. Computer Simulation Applications: An Introduction. Sage, Newbury Park, CA.
Long-run economic consequences of child support enforcement for the middle class Kimberly Folse a,∗ , Hugo Varela-Alvarez b a
b
Department of Psychology, Sociology and Social Work, Texas A&M International University, 5201 University Blvd., Laredo, TX 78041, USA Associated Consultants International, Saltillo 1521 Col Mitras Centro, Monterey, NL Mexico
Abstract The purpose of this research is to examine the economic impact of child support transfers for middle-income custodial and noncustodial parent over a 15-year period. We have a substantial amount of research on low-income families, but little research about middle-income families. This research is based on computer simulations using income and expenditure data from the Consumer Expenditure Survey (CES) tables prepared by the Bureau of Labor Statistics. The results of the simulations challenge the majority of research that proposes that women suffer far more than men after family dissolution. Instead, we conclude that it is the noncustodial parent, usually the father, who suffers the most. In every case and for every income, according to our analyses, the payer of child support is never able to cover household expenditures if paying child support at guideline levels. By reducing the standard of living to the next lowest income category, in some cases to a level below the custodial parent’s, the parent owing child support is able to make child support payments and cover consumer expenditures. We use exchange and choice theories to analyze the economic alternatives in making a decision to divorce and consequently propose that public support for strict child support enforcement may encourage middle-income women to seek divorce. Micro-level decisions, we argue, have macro-level economic and social consequences for the middle-income parents. © 2002 Elsevier Science Inc. All rights reserved. Keywords: Economic impact; Child support; Middle-income families
The economic consequences of family dissolution because of divorce are intuitively understandable; one household is split into two, each with its respective costs. Child support transfers are supposed to make the two households comparable in terms of standard of living, but do they? According to Lester (1991), in 1989, child support typically made up no more than ∗
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1053-5357/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 5 3 - 5 3 5 7 ( 0 2 ) 0 0 1 2 8 - 2
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15–20% of household income. Much of the accumulated research focuses on the economic experience of low-income parents. Policy research, for example, is concerned with issues of parents’ ability to pay support and costs to States, when parents have to seek welfare because of nonpayment. We have very little information on the circumstances of middle-income parents. These parents are more likely to pay their child support and because they pay, we argue, researchers have paid far less attention to their experience. Presented here are the results of a computer simulation, spanning 15 years, of the effects of child support transfers on the economic well being of middle-income parents. A theoretical discussion of how child support enforcement may be an unintended economic incentive for middle-class women to seek divorce, follows. The economic consequences and the effects of child support policy on fathers and the middle class, in general, are also discussed.
1. Background Weitzman’s (1985) research on the after effects of divorce is one of the most cited and used statistics of the 1980s (Braver and O’Connell, 1985). Based on her 10-year study in California, she concluded that after divorce women experience a 73% decline and men experience a 43% increase in standard of living. Others conducting research in the 1980s was more conservative in their conclusions; most concluding standard of living declines ranging for 50–25%, with around 30% cited most often. Duncan and Hoffman (1985), e.g., reporting on their national results from the early 1980s, found that family income for divorced women fell by 34%. When they adjusted for smaller family size, the average decline was 25%. Family income for the father also fell, by 15%. When his income was adjusted for smaller family size, his standard of living increased by about 3%. According to Duncan and Hoffman, 5 years after the divorce, women and their children have exceeded their predivorce standard of living, usually due to remarriage. Burkhauser et al. (1991), using data from 1986 and adjusting for taxes and public transfers such as welfare and food stamps, found that in the year after divorce, the median standard of living for women fell by 24% with 22% of the women experiencing drops of 50% or more. The divorced man’s living standard also dropped, by 6%. Seltzer (1994) found that divorce has an immediate economic impact for women. Consistent with other studies, she found that they lost about 30% of their income after divorce. In contrast to Weitzman’s and others’ findings based on 1980s data, is the research of Braver (Braver and O’Connell, 1998) and his colleagues at Arizona State University. They too conducted a 10-year study of divorced parents. Instead of the steep declines in the standard of living after divorce for the woman, Braver and his colleagues find an increase in the standard of living of 1–5%. They find similar increases for the father. Their analysis includes child support transfers, taxes, and expense allocations, including visitation. 1.1. Guidelines and order reviews Since 1998, all states are required by federal law (Public Law 98-378) to devise a way to quantitatively set support orders. In response to the law, state guidelines are generally one of three types: cost sharing, income sharing (e.g., Connecticut, Ohio), and taxation approaches
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(e.g., Minnesota, Wisconsin, and Texas). The taxation approach—used in 13 states—focuses just on the noncustodial parent’s income; the support order is based on a percentage of the parent’s gross (Texas and Wisconsin) or net income (Minnesota). In Texas, e.g., child support represents about 17% of the noncustodial parent’s gross income for one child and 25% for two children (Vernon’s Texas Codes, 1996) and does not take into consideration the income of the custodial parent. According to Braver and O’Connell (1998), child support award guidelines are ill conceived. There are three problems with the current approach, they conclude. First is how custodial parent’s standard of living needs is calculated. They argue that these are based on federal government published figures regarding what is needed to maintain identical living standards. Using these government tables—which Weitzman did—to create a needs ratio, is “highly misleading and seriously inaccurate they claims” (p. 65). The second problem has to do with taxes. Child support income is tax free and child support payments are not tax deductible. The custodial parent claims head of household and also receives extra exemptions for the child(ren). The custodial parent may also claim a tax credit. Thirdly, father’s expenditures on their children for clothing, visitation, transportation, food, recreation, and child care, while in their care, are never counted. In light of Braver and his colleagues’ research and the research of economist, James Shockley and Phoenix attorney Bruce R. Cohen, the state of Arizona has revised its child support guidelines to better reflect the circumstances of the respective parents. Often, children spend 30% of their time with the noncustodial parent. To adjust for this time and associated expenses such as food and childcare, child support guidelines are being adjusted downward by about 18.7% (Braver and O’Connel, pp. 71/72). Once an order is established, it stands for 36 months, after which the order can be reviewed for a modification at the behest of either party. Modifications are usually for cases where child support is based on a set level rather than a percentage level. Significant decreases in income due to loss of job or disability—at least a 15% decline in income—are cause for modification. If the noncustodial parent, as determined by the court, is underemployed or unemployed with intent, no order modification will be made.
2. Research objectives This study examines the economic situation of the respective parents in the long run—we chose 15 years—assuming neither parent remarries. Our goal is to develop a better understanding of how middle-income or middle-class parents are coping with child support payments and living expenses. We wanted to see the effects of child support transfers as class phenomenon. This research has the following objectives: 1. To compare parental income combinations (i.e., effects of receiving child support as part of income) and how these play out over the long run in terms of expenditures/standard of living. 2. To compare the long run effects of child support guidelines on the income and standard of living of both parents with respect to award adjustments when the obligation is always adjusted or never adjusted.
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3. To evaluate child support guidelines in terms of income adequacy for either parent. 4. To determine what percent of the custodial parents’ income can be attributed to child support for different levels of custodial parent income in the long run. 3. Methods We chose a computer simulation for our research. Computer simulations are excellent tools for policy analysis (Whicker and Sigelman, 1991); they allow us to better predict the outcome of policy decisions, especially over time. Much research is plagued by old data or data that are limited in time frame. Another problem of using data on actual families is the difficulty of finding matching cases where both parents’ economic circumstances can be documented. An alternative to using actual cases is to simulate cases that model the real world. One way to simulate matching couples is to assume that they have a certain level of income, use official data to document expenditures, and assume that the noncustodial parent always pays the child support that is owed. We can then observe the effects that payment has on the economic circumstances of both parents. We assume that neither of them remarries for the duration of the simulation. For ease of description, we label the custodial parent as the mother or “she” and the noncustodial parent as the father or “he.” This is generally true, but the number of custodial fathers is increasing over time. 3.1. Data We use the most recent Consumer Expenditure Survey (CES) tables as our data source for simulating the economic dynamics of income and spending. The CES, compiled by the Bureau of Labor Statistics, is a profile of the Nation’s households and families and their buying habits and income. According to the Bureau of Labor Statistics (1999), the survey is best used when researchers want to relate the expenditures of consumers to their income, which is exactly what we want to do here. The CES has nine income categories ranging from less than $5,000–$70,000 and over. Expenditures are broken down into seven categories, the largest of which are food, housing, and transportation. To simulate the effects of child support transfers, the income taxation method is employed, partly because it is easiest to use in calculating the child support over time. This simulation does not take into account the extra expenditures of noncustodial parents, as did Braver and his colleagues. If anything, the model underestimates these costs. The simulation illustrates the long-term differences between orders that are adjusted upward or downward based on a review every 36 months or never adjusting the award from the original start date. 3.2. Variables 3.2.1. Income We selected the income categories of $20,000–$29,000 and $30,000–$39,000 for the payer of child support (for ease of discussion, we assume the payer is the father and the receiver
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is the mother). We used the income categories of $10,000–$14,999, $15,000–19,999, and $20,000–$29,000 for her. We started the simulation at the middle of the income category; the starting incomes were $12,500, $17,000, $25,000, and $35,000. 3.2.2. Income change We assume that income will generally increase over time, but not steadily and assigned a different probability for the woman and the man for either an increase, a decrease, or stay the same, for income, on a yearly basis. We based these on the cost of living index used by the Social Security Administration (2000). For him, we assign a 60% probability of an increase in salary for a given year, a 7% probability of a decrease, and a 33% probability that the salary will stay the same. For her, we assign a 50% probability of an increase, a 7% probability of a decrease, and a 43% probability that her salary will stay the same. Our rationale for the difference in probabilities is that women generally have fewer skills and work experience than men and are likely to increase their incomes over time, but not by as much as men. For both, if there is an increase, the increase will be 2.5% to simulate cost of living increases. If there is a decrease, it will be 8%. The 8% decrease, we argue, is reasonable because there is only a 7% probability for a decrease and would simulate the loss of a job, and/or reemployment at either the same salary a month later or reemployment at a lower wage. 3.2.3. Expenditures For his expenditures, we used CES Table 35 representing a typical consumer unit of one person. For her, we used CES Table 37 representing a typical consumer unit of two persons. We use all the expenditure categories. Expenditures are calculated as an average by type of expenditure for each income category in the CES. We initially tried to divide each category into low, medium, and high but quickly ran into trouble; the lower income categories actually spend more, on average, for some main items than does the next higher income category. For this reason, we decided to use the average for the category. 3.2.4. Child support awards The CES does not include receipt of child support as a major source of income, but it is included as an expense. The Miscellaneous Expenses category, according to the CES, includes child support, but child support is not itemized. We left the category as it was and created child support as another expense. We may be guilty of double counting; however, the expenditure level of the Miscellaneous category does not come close to what a middle-income parent would typically pay in child support. We consider child support as a source of income for her and add it as an extra category to the CES table figures. This does not represent a problem for tax calculations for her, as child support income is nontaxed; we use the tax calculations straight from the tables and these do not include child support. We calculate what percentage of her total income (includes child support and her income) is child support. The child support award represents 17% of his gross income as proposed by state guidelines that use the taxation method of calculating child support.
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4. Results 4.1. Simulations of equal starting incomes The first simulations assumed that both parents had equal starting incomes of $25,000 (see Table 1). These runs of 15 years compare child support that is adjusted to the noncustodial parent’s income every 36 months or never adjusted once the order is set. Despite the noncustodial parent loosing income in some years in the simulation, he never lost 15% of his income, which could result in a downward award. At first year, they both start with $25,000 in income. Child support represents 17% of his income (in compliance with the guidelines for
Table 1 Simulation results (15 years) comparing child support transfers always adjusted as percentage of income and never adjusted Always adjusted
Never adjusted
Custodial parent
CS as percent of her income
Noncustodial parent
Custodial parent
CS as percent of her income
Noncustodial parent
Starting salary Child support Total income
$25,000 $4,250 $29,250
14.53
$25,000 $4,250 $20,750
$25,000 $4,250 $29,250
14.53
$25,000 $4,250 $20,750
Expenditures year 1 Difference
$29,553 $ (303)
$25,744 $ (4,994)
$29,553 $ (303)
Salary at 15 years Child support Total income
$27,339 $5,308 $32,647
$31,221 $5,308 $25,914
$27,339 $4,250 $31,589
Expenditures year 1 Difference
$29,553 $3,094
$33,132 −$7,218
$29,553 $2,036
$33,132 −$6,922
$ (4,994) $ (4,475) $ (3,944) $ (3,399) $ (3,399) $ (2,840) $ (2,267) $ (1,680) $ (1,680) $ (1,079) $ (7,850) $ (7,850) $ (7,218) $ (7,218) $ (7,218)
$ (303) $ (303) $322 $963 $963 $1,619 $1,619 $2,292 $2,982 $2,982 $719 $719 $1,370 $2,037 $2,036
$ (4,994) $ (4,369) $ (3,728) $ (3,072) $ (3,072) $ (2,399) $ (1,709) $ (1,002) $ (1,002) $ (277) $ (6,922) $ (6,922) $ (6,160) $ (6,160) $ (6,160)
17.72
Yearly details of income minus expenditures $ left after year 1 $ (303) $ left after year 2 $ (197) $ left after year 3 $537 $ left after year 4 $1,289 $ left after year 5 $1,289 $ left after year 6 $2,060 $ left after year 7 $2,178 $ left after year 8 $2,971 $ left after year 9 $3,661 $ left after year 10 $3,784 $ left after year 11 $1,648 $ left after year 12 $1,648 $ left after year 13 $2,428 $ left after year 14 $3,094 $ left after year 15 $3,094 Starting salary for both parents is $25,000.
$25,744 $ (4,994) 13.45
$30,460 $4,250 $26,210
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child support for one child). For her, child support represents 14.53% because child support is added to her income before the percent is calculated. At 15 years, her salary is $27,339 and child support now represents 17.72% of her income. His income, on the other hand, while starting at $25,000, is $31,221 at 15th year. Child support is always 17% of his income. We can see from Table 1 that for the first 2 years (always adjusted) the custodial parent is in the red—$303 and $197—when subtracting expenditures from income. By the third year, she is in the plus category, as she is every year thereafter. We conclude that by the third year, with the help of child support she makes enough money to cover her expenditures given that both of their incomes are $25,000. When we look at the economic circumstances of the noncustodial parent, we see that he is always in the red, ranging from a deficit of $1,680 to $7,850. The smallest deficit is due to the fact that he is at the top of the income category of $20,000–$29,999, but the expenditure category does not have a range, instead has a fixed amount. Once his income jumps to the next income category of $30,000–$39,000, he is at the bottom of the category but his expenditures represent a higher cost and consequently his deficit is larger; it is $7,850. Of interest here, is that the noncustodial parent’s income is never able to cover his expenditures. When we compare the outcomes of having child support always adjusted with never adjusted, we see another interesting pattern. For the custodial parent, we see that child support decreases from 14.53% of her income to 13.45% at the end of 15 years. For the noncustodial parent, although he’s earning more but paying less, percentage-wise of his income for child support, he’s still not able to cover typical expenditures for his income category. Based on this simulation, the difference between what he should be paying—if child support were adjusted—and what he is paying is $1,058. We see that his yearly deficit increases substantially after tenth year. We attribute this large deficit to his entering the next income and expenditure category, where his income is on the low end of the category, but his expenses are based on the stated expenditures for the income category. 4.2. Simulations of different starting incomes The results of the simulations, where the parents have different starting incomes, are presented in Tables 2 and 3. These tables compare the economic circumstances of the custodial and noncustodial parents over time when child support is always adjusted to 17% of the noncustodial parent’s income. We can compare what happens when her starting income is $12,500 versus $17,000 and his starting income is $25,000. In Table 2, we see that child support is unable to cover the custodial parent’s expenses for either of the custodial parent incomes; she is always in the red. Initially child support comprises 25.37% of her total income where she has an income $12,500 and 20% of her total income when she has an income of $17,000. At the end of 15 years, it comprises 26.02 and 19.46%, respectively. Her income increases only $3,307 over the duration of the simulation. The noncustodial parent is always in the red. His income, because he has a higher probability of a raise increases to $28,724 or an increase of $3,724. Because he never jumps income brackets, his expenditures represent a greater proportion of his income. He reduces his deficit by the 13th year, but he is still in the red. In Table 3, we see what happens when her income is $25,000 and his is increased to $35,000. We find that she is in the black except for the 14th year. The 13th year she only has $311.
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Table 3 Simulation results (15 years) comparing child support transfers, always adjusted as percentage of income, when the custodial parent’s income is $25,000 and the noncustodial parent’s income is $35,000 Custodial parent
CS as percent of income
Noncustodial parent
CS as percent of income
Starting salary Salary at 15 years
$25,000 $27,339
19.22 16.09
$35,000 $31,606
17.00 17.00
Expenditures year 1 Expenditures year 15
$29,553 $29,553
$25,744 $33,132
$ left after year 1 $ left after year 2 $ left after year 3 $ left after year 4 $ left after year 5 $ left after year 6 $ left after year 7 $ left after year 8 $ left after year 9 $ left after year 10 $ left after year 11 $ left after year 12 $ left after year 13 $ left after year 14 $ left after year 15
$1,397 $2,171 $2,811 $3,468 $4,141 $4,141 $4,831 $5,691 $5,847 $6,007 $5,482 $5,723 $311 $ (145) $3,094
$ (4,082) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (3,356) $ (2,611) $ (1,848) $ (1,066) $ (3,631) $ (5,992) $ (5,313) $ (7,539) $ (6,898)
For these years, she jumped income categories and then lost income the last year. This forced her expenditures to drop because she was bumped to the next lowest income category. The noncustodial parent, despite increased income is still in the red every year. His deficit is an average of $6,435.50 for the last 4 years. Rather than decreasing over time, it increases. Given his income of $35,000, he cannot meet his expenditures.
5. Discussion The majority of child support enforcement research focuses on the economic circumstances of low-income parents. Our simulations, on the other hand, focus on middle-income parents. The first of our objectives was to compare different combinations of incomes and expenditures after 15 years of paying or receiving child support. We note three key findings. First, we find that lower the income of the custodial parent the greater the economic difficulty. It appears from the simulations that if the custodial parent has a low income—$12,500 or $17,000 and the noncustodial parent has an income of $25,000, neither can cover their expenditures, and thus, children will suffer. It is only when the custodial parent has an income of $25,000 and receives child support from her ex who has an income of at least $25,000, that she is able to cover her expenses of a consumer unit of two persons. Second, we find that the noncustodial parent who is paying child support on a regular basis is never able to cover his expenditures; paying child support always puts him in the
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red. Even if he is able to increase his income to $35,000, he is still in the red, he still cannot cover his expenditures. We suggest that the prudent way for the noncustodial parent to survive economically would be to spend at a level comparable to the next lowest income category. In doing so, their standards of living would be more comparable, which may, in fact, be the intent of enforcement. When the noncustodial parent’s income is $25,000, however, it would mean that he would have to spend at the next lowest income level of $17,000. In other words, he would have to maintain a living standard lower than the custodial parent’s. Third, based on our second objective of the research, namely to compare the circumstances where orders were always adjusted or never adjusted, we find that the nonadjusted order is about $1,000 ($84 a month) less at the 11th year than if it had been adjusted. We see that child support as percent of her income decreases from 14.53 to 13.45% when child support is never adjusted. When the order is adjusted, child support increases as percent of her income from 14.53 to 17.72%. We would expect that over 15 years, it would decrease. It appears that even at the end of the cycle, child support is very important to the custodial parent. It certainly provides for greater flexibility, giving her a cushion of $2,000–$3,000 at the end of the year. What is also important, however, is that despite not adjusting child support, she is able to cover her expenses given her income and child support, but he is not. Again, we attribute his deficit to his being in the next income and expenditure category.
6. Theoretical insight If marital dissolution creates such dire economic circumstances for the woman, it does not seem rational that she would choose to end a marriage. In weighing the economic costs and benefits, divorce would not be a good choice. What then would be the incentive to seek a divorce for a woman? Could it be that middle-income women might seek a divorce because they can expect regular child support? In other words, does child support serve as an incentive for divorce? According to Braver and O’Connell’s (1998, p. 133) study and consistent with the literature, it is the woman, 63–67% of the time, who seeks to end the marriage. Based on the simulations presented here for middle-income women, that is, women who earn at least $25,000 of their own and, where the father of their child earns at least $25,000, child support transfers appear to be a viable economic consideration. We know, for example, that women respond to other economic incentives. Hoffman and Duncan (1995) found that welfare (AFDC) was positively associated with marital dissolution; as welfare payment increased, so did divorce. They also found that higher wages for both husbands and wives serve as a disincentive to divorce. Klawitter (1994) found that women who receive child support reduce their work effort by working fewer hours per week. Exactly why is unclear, they state. They suggest that the State’s standards that consider the custodial parent’s contribution may affect her decision to work less because by working, she decreases what she will receive in child support. This relationship did not hold for fathers, however. They found that the amount of child support they owed did not affect their work effort one way or another.
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6.1. Exchange and choice For an explanation, we draw on the propositions of exchange theory of George Casper Homans. According to Homans (1974), in making a decision, one weighs the costs and benefits of a given action based on an assessment of the probability of actually reaping the benefits or rewards or facing the costs for that action. Rewards, according to Nye (1979), represent a positive outcome and are derived from particular status, experiences, or relationships. In this case, the status is being divorced; the reward is monetary and comes from the dissolution of a relationship. Of course, a person can never know for certain that a choice will result in a desired outcome. A choice is only as good as the information available to the decider and the decision-maker’s ability to make sense of that information (Sabatelli and Shehan, 1993). Since the early 1990s, we have seen intensified child support enforcement efforts and complementary media attention. Middle-income women may perceive that if they decide to divorce, they are more assured of child support because of the perception that it will be enforced. In other words, they may have an incentive to divorce if they perceive the law is on their side in securing support. When deciding if divorce is a viable option, she must decide if child support is sufficient and that it will be paid. As long as the middle-income father works at a level comparable to that before the marriage (Klawitter, 1994 indicates that child support demands do not change his work behavior), divorce can be attractive, or at least economically rewarding for her. Our contention is: The greater the perceived certainty of receiving child support (given the father’s income is at least $25,000), the more likely is the choice of marital dissolution (when divorce becomes a consideration).
Robin Hogarth (1987, p. 177), in his theory of judgment and choice, presents a framework for decision analysis that can be used to characterize the situation of a woman contemplating the economic consequences of divorce. He proposes that a decision analysis depends on the answer to two questions: (1) What are the consequences of alternative actions? That is, what is ‘at stake?’ (2) What are the uncertainties in the environment relevant to the decision? He proposes that the answers to these two questions reflect the evaluative and predictive dimensions of judgment. In decision analysis one proceeds through six steps, finally arriving at a decision. First is structuring the problem, which includes assessing the available alternatives, which are multifaceted. In this case, a woman must consider the economic consequences of staying married or getting a divorce. Second is assessing the various consequences of the different alternatives, including the weight assigned to each. Here, she must consider the likelihood of actually getting child support if the couple divorces. She must also consider the amount of child support. Third is assessing uncertainties. The assessment has to do with the likelihood of actually getting the child support she is due. If her husband were to fail to pay his child support, what legal mechanisms can she use to get him to pay? For the middle-income woman, this assessment is likely to result in a positive assessment, especially if her spouse worked steadily in the past; the uncertainties are minimized. Fourth is evaluating the alternatives, including
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which criteria to use in deciding. In this case, the criterion is economic. If she can afford to divorce, that is, child support will be enforced, then she will base her decision to divorce on that. Fifth is engaging in quantitative sensitivity analysis of balancing expected benefits of different courses of actions included in this analysis, he proposes, is an underlying assumption that one’s estimated consequences and uncertainties are likely wrong (due to subjectivity), and if so, how wrong are they? Step 5 leads to Step 6. Sixth is information gathering based on one’s tentative conclusions. In order to garner more information, the woman can consult an attorney or contact the office of child support enforcement for more information regarding enforcement. Likely, they will be presented with an optimistic picture of collection. Enforcement agencies have a need to present their efforts in the best light. Attorneys have a vested interest in closing their client’s cases. Thus, any subjective doubts about actually getting child support can be diminished by information from two reliable sources. This new information is used to shore up areas of concern in order to reassess the circumstances. Seventh is the decision or choice. A choice is made, provided that the person can conclude they have assessed the relative costs and benefits and constraints of the situation as sufficiently as possible. The decision rule, according to Hogarth, is: “Choose the alternative with the greatest expected utility” (p. 183). In our case, her choice to divorce is likely because the expected utility of divorce is greater than staying together. She becomes independent yet assures economic support. 6.2. Implications A micro-level decision to get a divorce, we argue, may be a consequence of macro-level social policy that increases the probability that a parent who owes child support will pay it. This is especially true of middle-income parents. Enforcement, at least perceptions of strong enforcement, we argue, is the critical variable in the choice dilemma because it represents a greater surety in the assessment of the probability of attaining rewards. In this case, child support is the reward. We propose that strong enforcement, while it is an agreed upon societal goal to protect children, may, in fact, lead to class-based micro-level decisions that lead to the unintended consequence of increasing the likelihood of divorce. Family dissolution also has a significant impact on the ability of the middle-income parents to maintain their economic position. Intact families protect their assets by keeping them together. Middle-income parents, as compared with those in or close to poverty, are characterized by their ability to accumulate assets. Assets are a form of economic capital that appreciate over time. The greater one’s ability to use one’s economic capital for the purposes of appreciation, the greater are one’s chances for establishing one’s place in the middle class. In the case of family dissolution, assets are divided. Based on these simulations, only the custodial parent is able to accumulate economic assets. If we assume that the main asset of the middle class is a home, then owning one’s own home is very desirable. Owning one’s home is a hedge against inflation and a mean to reduce one’s income taxes because the interest paid on a mortgage is tax deductible. Based on this analysis, the noncustodial parent would never be able to accumulate enough money to use as a down payment on a home and cannot, consequently, use interest as a tax deduction. The custodial parent, on the other hand, may have been granted the residence at the time of divorce if she maintained sole custody of the children. If the couple did not have a home, then she can, if both she and her ex have incomes of at least $25,000, accumulate
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enough to buy one. She, rather than he, is better able to secure a place in the middle class, at least with respect to home ownership and residence in a middle-class neighborhood. In effect, marital dissolution, specifically income transfers of child support, oppresses middle-income noncustodial parents by precluding them from capital accumulation. We are not arguing that noncustodial parents should not have to pay child support. Instead, we argue that family dissolution and current child support guidelines for income transfers are a major threat to the middle class. Probably, the best way a middle-class custodial parent can protect his assets and economic position is to immediately remarry or cohabitate with someone who has at least one child and who is receiving child support for that child, which they do. About 80% remarry, most within 7 years (Cherlin, 1981). However, based on research by Day et al. (1986), remarriage for the father does not bring the economic returns it does to the mother. 7. Conclusions Perhaps the public image of custodial parents in dire economic circumstances is due to the economic situation of low-income parents and media and social policy attention to this group. We wanted to offer a picture of the situation of middle-income parents. Because of the lack of matching data for custodial and noncustodial parents and longitudinal data, a computer simulation is an alternative research method that can be used to examine the circumstances of middle-income parents. These simulations are based on the best available evidence documenting consumer incomes and expenditures. The results challenge the conclusions of many other researchers who claim that family dissolution has a far greater negative impact on the economic well being of the custodial parent. We find that the noncustodial parent, usually the father, paying the child support at the guideline level of 17% of gross income, is the one that is most economically impacted. These simulations may actually under represent the circumstances of noncustodial parents because they do not include expenditures for their children beyond child support. We acknowledge several limitations of this study. This is a simulation. We approximate income changes over time with probabilities that seemed reasonable to us, with some guide from the social security administration and our knowledge that women make less than men, generally, and that women hold jobs with less potential for income adjustment upward. Expenditures, while based on the best-documented evidence, are averages for an income category. They do not take into account individual differences. We assume that the noncustodial parent always pays the child support that is due. We do believe, however, that although we use average expenditures based on Bureau of Labor’s Consumer Expenditure Survey, that by increasing income while maintaining average expenditures, we have overcome some of the weakness of the data. Lastly, we acknowledge that we are not able to document the true costs of raising children, a daunting and controversial task all by itself. References Braver, S., O’Connell, D., 1998. Divorced Dads: Shattering The Myths. Putnam, New York, NY. Bureau of Labor Statistics, 1999. Consumer Expenditure Survey. Available: http://stats.bls.gov/
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