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Why middle income adults face marriage penalties

Posted August 1

Some low- and middle-income couples are choosing cohabitation over marriage rather than risk losing income provided by government aid that favors single parents, according to research released Monday.

The American Enterprise Institute's "Marriage, Penalized: Does Social-Welfare Policy Affect Family Formation?" found that more than four in 10 families in America receive some kind of governmental assistance that requires a so-called means test to qualify.

Governmental assistance, including Medicaid or SNAP, was found to be more generous when couples are unmarried and cohabiting, allowing them to avoid reporting their total combined income when applying for the public financial aid. If these couples report their joint income, they might fall above the threshold and not qualify for means-tested aid.

The income requirements for such aid programs create a marriage penalty that discourages marriage and family formation, the study concluded.

"Having a baby is really stressful and marriage gives some sense of emotional and social stability and commitment that will help them navigate the challenge of being parents together," said Bradford Wilcox, an author of the study, visiting scholar at AEI, director of the National Marriage Project and sociology professor at the University of Virginia.

Delaying marriage

The marriage penalty was not found to affect couples of all incomes and marital status. The poorest couples were generally not impacted by the marriage penalty while the low- to middle-income couples were influenced the most in their decisions to marry or not.

Couples who are unmarried and just had one baby or married couples whose children are 2 and under whose income fell close to the lower threshold of the marriage penalty were not affected. "Most in this latter group are in the lowest two quintiles of family income for families with children 2 and under (less than $48,000)," according to the study.

However, couples whose oldest child is 2 or older and their income fell in the upper threshold of the marriage penalty were 2 to 4 percentage points more likely to put off marriage if they faced ineligibilty for Medicaid and food stamps by combining income.

"The reach of means-tested programs are extending higher up the income ladder," Wilcox said.

However, the marriage penalty didn't apply to all government programs, either. Researchers did not find any correlation for TANF (Temporary Assistance for Needy Families) affecting marriage rates among lower-income couples.

Researchers said the impact on family formation is far-reaching. When couples choose to delay marriage, there is a higher chance they will never get married, and never reach the level of commitment that comes with marriage and provides an environment where children can thrive.

"Children are also much more likely to realize the American Dream if they are raised in an intact, married family: that is, they are more likely to succeed in school, be gainfully employed, and achieve upward economic mobility if they are raised in a family headed by two stably married parents," according to the report.

Additionally, couples who choose to be married and stay married are less likely to be poor as they acquire more income-generating assets over time than couples who are divorced or never married.

Despite those benefits of marriage, according to a 2015 analysis of Census Bureau data, cohabitation rates in the U.S. had nearly doubled over the past quarter century and nearly two-thirds of women ages 19-44 from 2011 to 2013 had lived with a partner outside of marriage.

Cultural and economic factors

The researchers refered to a survey, sponsored by the Deseret News and the Center for the Study of Elections and Democracy at Brigham Young University, that found that almost one-third of Americans ages 18 to 60 said they knew someone who delayed marriage because they did not want to lose their means-tested government aid.

But in a panel discussion on Monday on the research at the AEI headquarters in Washington, D.C., experts said that cultural and economic factors played a larger role in delaying marriage than marriage penalties.

Kathryn Edin, a panelist and professor specializing in welfare at Johns Hopkins University, discussed current cultural pressures on the expectations of marriage that cause couples to feel like they are not financially stable enough for marriage, if they are reliant on means-tested programs, she explained.

Edin said society has "hyped up a vision of the family that becomes unachievable." The pressures to have a big wedding and have a stable career before marriage has trickled down to the poor and lower middle class.

According to Reihan Salam, a political columnist, author and editor for the National Review, gender gaps in the labor markets may have something to do with delaying marriage because women are having more success in the labor market, causing "a cultural change where men are the secondary earners."

While women are having rising success in the labor market, they are delaying marriage because men are becoming less attractive mates with their sinking success in the labor market, according to a recent Pew report on young adults' living arrangements.

Richard Fry, an author of the report, explained that today's generation views marriage as a final destination instead of a stepping stone because they are waiting until they are more financially stable until they make commitments to a partner.

Solutions

According to the report, policymakers have devoted more attention to the education and work components of the American Dream than to marriage because public policy is less capable of encouraging marriage than stressing education and work.

"Public policy may have a modest effect on marriage when it comes to these types of marriage penalties," Wilcox said.

Researchers recommended deliberate changes in government tax policy to make it easier for couples to combine incomes without losing needed government benefits if they decide to marry:

  • Double the income threshold for married couples with children under 5 to remain eligible for Medicaid and other benefits.
  • Offer a refundable tax credit up to $1,000 to married couples with children under 5 to offset any income loss due to marriage penalties.
  • Provide states financial incentives to run experimental programs that could eliminate the marriage penalty. The researchers didn't offer examples of what those programs could be.
  • Encourage state unemployment caseworkers to treat two-parent families similarly to one-parent families. For example, states could ease the work requirements for two-parent families to receive cash welfare.
Additionally, the researchers encouraged more use of the federal Earned Income Tax Credit among married couples. Low-income couples often don't consider the benefits of the EITC when contemplating marriage as a way to offset any loss of government aid.

"I don't think we should condition receiving assistance for food and medical care to not being married," Wilcox said. "These solutions aim to help aid couples who are at the beginning stage of their life together when they are more financially vulnerable."

However, in the short term, it would be expensive to increase the income threshold for Medicaid and food stamps, he said, even though it is a reasonable way to address the marriage penalty issues.

Edin said the role the marriage penalty plays in delaying marriage is so small compared to other factors that she questioned the value of changing government policies to eliminate such penalties.

Email: mmcnulty@deseretnews.com

Twitter: megchristine5

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