Journal Issue: Children and Divorce Volume 4 Number 1 Spring/Summer 1994
The Financial Consequences of Divorce and the Support of Children
The primary social and financial responsibility for children in the United States rests with parents. In marriage or cohabitation, it is assumed that total family income, at whatever level, will be shared in a manner that at least provides for the basic needs of children. This is fundamentally a private matter except when there is child neglect or resources are transferred to the family through public programs. After divorce, initially the same income must be used to pay for the greater fixed costs of maintaining two households as well as legal, relocation, and other expenses related to family dissolution. Further, the basic dynamic of meeting the changing financial needs of children from the income of custodial and noncustodial parents is different than in marriage, and the state becomes significantly involved in the relationship between these parents and children in a variety of ways. First, we will review the financial readjustments and consequences of divorce and remarriage. Then, we will analyze the processes by which child support is determined and awarded, and payment is collected from the noncustodial parent.
Divorce results in a significant decline in the income of women compared with that of men after divorce. However, there is some improvement in the economic well-being of divorced women if remarriage occurs relative to the divorced state (see the article by Teachman and Paasch). Family income after divorce drops on the average by more than 20% and, as previously indicated, a substantial number of divorced women with custody of children live in poverty (39%). Poverty is not only more prevalent in these families, but it starts immediately after marital disruption, and it lasts longer than for two-parent families living in poverty.
The substantial increase in the percentage of mother-child families living below the poverty line following divorce results, in part, from the fact that a large fraction of these families were close to the poverty line as intact families before divorce. This situation occurs in a larger proportion of African-American families because they generally have lower income levels.
Conversely, in single-parent families, the substantial increase in family income with remarriage is immediate and significantly reduces the incidence of poverty. The current trend of lower remarriage rates probably increases the duration of poverty, but the countervailing trend for increased cohabitation of unmarried parents may decrease the poverty rate.
Teachman and Paasch point out that employment of divorced mothers may not be "an effective buffer against economic deprivation." The number of mothers with children who are employed outside the home increases after divorce, but the average amount they earn declines, although it constitutes about 60% of women's postdivorce income. Over time the proportion of these working mothers declines to just above what it was before marriage disruption. As discussed by Teachman and Paasch, this decline is probably the result of a number of factors, including lack of prior continuous work experience; employment in low-status and part-time jobs, usually without career advancement opportunities; low wages; discrimination against single mothers in the workplace; the costs and constraints of child care; and the availability of public assistance benefits, especially those that erode with earned income.
Public assistance plays a substantial role in the financial well-being of divorced women and children. Immediately following divorce, the number of children living in families receiving public assistance through the Aid to Families with Dependent Children (AFDC) program doubles and the number receiving food stamps triples. These numbers continue to increase slightly over time. According to Teachman and Paasch, the proportion of average family income constituted by these benefits increases from 18% before divorce to 25% to 30% after divorce. These benefits go to those most in need. Mothers in the lowest third of the income distribution before divorce are 18 times more likely to receive these benefits after divorce than those in the highest third of income distribution before divorce.
Taken together, the major cash (such as AFDC and earned income tax credits) and noncash (such as food stamps, Medicaid, and housing subsidies) public assistance programs are critical to decreasing the effects of poverty on divorced women who are awarded child custody, although many of these families remain in poverty even after these benefits are taken into account. However, these programs were not intended to provide long-term support for raising children. They are based on the premise that this responsibility remains with both parents. Thus, child support from the noncustodial father is central to maintaining the financial status of children after divorce and also has a significant effect on welfare costs.
Historically, state laws have established the responsibility of the noncustodial parent to provide child support under general guidelines of reasonableness, delegating the implementation to local courts (see the article by Garfinkel, Melli, and Robertson). State court judges were given considerable discretion in determining what constituted an adequate amount of money for noncustodial child support and in approving the support settlements negotiated by the parties' lawyers. These private agreements were usually approved. The rules which judges developed focused on the needs of the child and on the ability of the noncustodial parent to pay. However, the application of these rules and the exercise of judicial discretion resulted in considerable variation in the awards from case to case, even given similar family circumstances. Furthermore, these awards have generally been regarded as inadequate to cover a fair share of the reasonable costs of raising the children.
In contrast to this traditional approach to child support, as a result of federal legislation passed in 1984 and 1988, court-ordered child support awards over the past decade have had to conform to standardized numerical formula guidelines or judges have had to provide appropriate reasons for deviation from the standards. This federal legislation was enacted, in part, to have more child support (including available medical insurance) provided by the noncustodial parent, usually the father, and to contain the growing costs of the AFDC program. The states were required to adopt a numerical formula guideline to determine the amount of child support awarded as a condition for receiving federal funds for their AFDC programs and were authorized to initiate automatic wage withholding for AFDC cases. States were also authorized to withhold wages of noncustodial parents to provide child support in non-AFDC cases starting in 1994.
Almost all of the states have adopted variants of one of two approaches for income sharing between custodial and noncustodial parents to support their children: either the income shares formula or the percentage of income formula, both of which are discussed in the article by Garfinkel, Melli, and Robertson. Issues which receive special attention are the inclusion of actual child care costs in support awards; the provision for ordinary and extraordinary medical care expenditures; the treatment of higher education costs; the way in which child support orders are updated for changing child needs and parental income; the ways in which remarriage and multiple support obligations are taken into account; and the effect of dual residence on child support obligations.
Even with the implementation of federal guidelines for determining awards, substantial problems persist. Child support awards continue to be small, much less than the reasonable costs of child rearing, and the pattern of payments is often irregular (see the articles by Teachman and Paasch, and by Roberts). The average amount of support received by divorced mothers in 1989 was $3,138 per year for a family with an average of slightly more than 1.5 children. In addition, the receipt of support payments declines over time. Further, a large proportion (28%) of divorced mothers do not have a child support award at all. Of the 72% who do have awards, 25% do not receive any payment. Nevertheless, the receipt of child support payments, even at a low level, can make a significant difference in the economic well-being of divorced low-income mothers with children. In 1989, although child support payments represented 17% of the total income of all divorced mothers who received them, they made up 38% of the total income of divorced mothers and children living in poverty because of their low income.
As discussed by Teachman and Paasch, research to determine how much child support absent fathers can reasonably afford to pay suggests they can afford three to four times the amounts they are currently paying or two to three times what they are currently obligated to pay under child support awards. If this increase were received by custodial parents, children would be benefited economically and, possibly, by the absent father's increased involvement in their lives (see the article by Thompson). However, a substantial reduction in welfare cost would not necessarily result because payments would not be distributed equally among divorced mothers; those at higher income levels are more likely to receive a greater proportion of the increased payments.
All mothers, whether divorced or never married, who have custody of their children may be awarded child support. However, about 42% of all custodial mothers and 56% of all poor custodial mothers are not awarded child support. The reasons for the absence of awards are varied and include a mother's decision not to pursue an award, often to get custody without dispute; privately arranged settlements for support; inability to establish paternity or locate the known father; and the inability of the father to pay or the mother to afford the costs of legal proceedings to enforce awards. Marital status is the most important factor in being awarded child support; as noted above, 72% of mothers who were married receive child support awards on divorce while only 24% of never-married mothers receive support awards from their children's biological father. However, having a court-ordered award, which is an important determinant in obtaining payment from many fathers, does not guarantee payment. Payment compliance, which is not public and somewhat insulated from normative and legal pressures, is highly dependent on the father's motivation and ability to pay. Teachman and Paasch, Garfinkel and colleagues, and Roberts analyze a number of additional factors that have a significant influence on mothers' obtaining awards and receiving payment. The children of low-income women, whether divorced or never married, are especially disadvantaged under the present system of obtaining support from a noncustodial father.
The enforcement of child support award orders presents additional problems such as locating the noncustodial parent, serving legal papers on the parent, scheduling timely hearings, undertaking discovery, obtaining and implementing health insurance orders, and collecting arrears in payments (see the articles by Roberts, by Carbone, and by Thompson). The inadequacies of the current enforcement system have obvious serious consequences for the specific children who would have been the immediate beneficiaries of the awards that are not paid. They also have broader policy implications by contributing to the increasing number of children who live in poverty and the untoward effect of this trend on our society.2
Roberts makes a number of very specific recommendations to strengthen some aspects of the state system and suggests complementary federal responsibilities. We believe a number of these changes could be beneficial. At the state level, these include offering parents easy means to routinely establish paternity of newborn infants and children by voluntary agreement; streamlining the legal processes for determining contested paternity at low cost, including the provision of appropriate genetic testing; developing a greater capacity to locate parents through access to federal records such as tax returns and a sharing of this database among all the states; having the states continue to be responsible for establishing and modifying custody, visitation, and child support orders but requiring that a national guideline be used as a rebuttable presumption of the level of child support to be paid; and requiring states to deal with interstate cases under the Uniform Interstate Family Support Act (UIFSA) that has been approved by the National Conference of Commissioners on Uniform State Laws.
At the federal level, Roberts recommends adoption of a national guideline, percentage of income, to determine the economic contribution of the noncustodial parent because of its basic fairness and ease of administration and because it does not create work disincentives. In addition, she proposes the creation of a national registry for child support orders within the Internal Revenue Service (IRS); the gradual transfer of responsibility for enforcement of child support orders from the states to the IRS; and the authorization of the IRS to withhold wages for child support, collect quarterly payments from the self-employed for child support, and routinely apply all of the other IRS collection mechanisms against those who do not pay. The IRS would also be charged with the responsibility for keeping records and dispensing payment to custodial parents.
All of the efforts to increase the number of child support awards, have the amount of the awards represent an appropriate contribution toward the costs of caring for children, and assure payment of awards will accomplish little when the noncustodial parent does not earn enough to make the required payments. A direct government payment to make up the difference between what the noncustodial parent can reasonably be required to pay and a basic level of child support has been proposed. This idea is usually incorporated in what is referred to as a Child Support Assurance program (see the articles by Teachman and Paasch, by Garfinkel and colleagues, and by Roberts). This difficult and controversial issue also needs to be considered within the context of providing financial support for neverdivorced families who live in or near poverty. Poor divorced families are a special subset of this problem because of the complex state and federal systems which currently exist to provide support for these children. Thus, child support assurance relates closely to a variety of proposals for welfare reform, job training, and creation of employment opportunities. It should not be considered in isolation.