Marriage rates in the U.S. are down, but it’s not entirely because of a cultural shift or the economy. Those are both factors, but here’s another one: the government.
New research suggests that when couples, who receive public assistance, including housing assistance, food stamps, and Medicaid choose to get married, they face high penalties. Whereas, those who remain in cohabiting relationships get to keep the same levels of benefits. In some cases the disincentive created by marriage penalties makes marriage more unappealing. Cohabitants can simply avoid disclosing to authorities that they are the biological parents of the kids in the household or that they share household costs.
According to the report, most safety net programs are means-tested, meaning they have high phase outs as household income rises. Arkansas for example, is one of the states with the highest marriage penalties. If a non-parent marries a parent with two children and their combined income is $40,000, they would lose approximately $13,248 in benefits, or 32 percent of total household income. But if the cohabit, there is no penalty.
That’s a big reason not to say ‘I do’ down the line.
The Wall Street Journal reports:
“Historically, low-income couples have faced especially onerous marriage penalties, because most safety-net benefits are means-tested (with steep phase-out rates or even cliffs)” applied on those who are married, researchers Douglas J. Besharov and Neil Gilbert wrote. “Marriage could easily reduce or end the benefits of a single parent with children.”
The effects vary from state to state, and depend on the relationship between the couple living together, whether or not they have children, whether they share expenses and how much money they earn.
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The effects also vary by program. In a paper released Tuesday, researchers at the Urban Institute found the additional-child tax credit and the earned-income tax credit had the largest effect on creating either marriage penalties or bonuses, depending on the state and how the earnings were divided among the couple.
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Of course there are other financial, social and emotional reasons for couples to get married, and those might outweigh the drawbacks of losing social welfare benefits.
But for couples who already live together, and who already rely on two incomes to support their household, those incentives are fewer.
The report suggests a few solutions including enforcing current rules that hold cohabiters to the same marriage penalties. That would require accurately tracking of cohabitation rather than waiting for people to self-report, which not surprisingly rarely happens. The report concludes:
One option would be to enforce existing rules. One could go further and treat all cohabiting households (whether or not they are both the biological parents) as potential economic units for all means-tested benefits. A default rule could be adopted that all couples cohabiting for longer than a set period of time (perhaps one or two years) are automatically treated as economic units.
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Since a major problem is the suddenness of benefits cutoffs, one could consider consolidating or coordinating the major means-tested programs and removing benefit cliffs. Marriage bonuses and penalties are a result of the sometimes high marginal tax rates generated from the cumulative phase-ins and phase-outs of various means-tested programs.
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Although politically unlikely, a similar consolidation or at least coordination of U.S. means-tested benefits has been proposed by many analysts as a way to encourage work, as well as marriage.
Most promising might be to adopt the tax code’s approach to marital income, which is designed not to discourage marriage…
… As in the tax code, that would not mean ignoring all of a cohabiting household’s higher income. Rather, an adjustment could be made to reflect society’s interest in stable family arrangements. To reduce costs and to prevent abuse, this special treatment might be provided for only a transition period.
This research reminds us that policies have unintended consequences which in this case is a direct impact on the breakdown of the family. Economists agree and research has shown that married adults are more economically stable than their unmarried counterparts. Married couples with children also tend to have higher incomes than their cohabiting adults.
We can’t address poverty in this nation without talking about the central role of marriage and a two-parent household. The Great Society solutions did nothing more than lower more Americans into poverty over the years and triggered negative incentives which penalized rather than encouraged the institution of marriage among the poor. Government least of all should be pushing Americans, who need financial help and economic stability, away from solutions that can help them to achieve it.