We often hear of the financial cost of getting married – I have known many couples who have delayed or even refused to get married because of the eye watering cost of holding a massive party for all their (and their parents’) friends.
But the financial cost of not getting married is less often discussed, perhaps because it is deferred. Instead, the cost of cohabitation is generally borne by the next generation. Children in the USA from intact married households are 70 per cent more likely to graduate than their peers from non-married households. Girls from married households are half as likely to become pregnant and boys are half as likely to end up in prison. And the effect is even wider than the merely the household. According to Harvard economist Raj Chetty, one of the strongest predictors of economic mobility for lower-income children is the amount of two-parent families in their community.
Thus, one would think that there would be fiscal policies in place to incentivise marriage. Or, at the very least, it would be a good thing to not have policies that dissuade people from tying the knot. But, according to Bradley Wilcox and Erik Randolph at the National Review Online, this is not the case. Instead, there are a number of tax and welfare policies that often penalise marriage.
And we are not talking about trivial penalties. Instead, they generally fall hardest on working class families in the lower half of the USA’s income distribution and can remove anywhere between 10 and 30 per cent of a family’s real income. One study found that a working-class couple in Arkansas stood to lose 32 per cent of their real income if they were married.
While there have been partially successful efforts to remove marriage penalties in the tax code in Congress in the last few years, there have been no changes to means-tested policies that most affect the working-class.
The authors point to the earned-income tax credit (EITC) for example. Take a couple that has two children together and that earn $10 and $15 per hour respectively. If the parent with the lower wage files as the head of household with two children, then they will be paid $5,605 EITC. If the couple were married, then the EITC they would be awarded would be $275 only.
A similar approach to the food stamps benefit sees the same couple receive $6,108 on an EBT debit card for the purchase of food if they are unmarried and the lower-earning parent claims the benefit. If they were married, this ruse (which is easy since many states do not check who is living in the household) would not work and their combined income would make them ineligible for the EBT. Finally, the authors point to Medicaid as the largest welfare programme which also penalises the married and is associated with higher unmarried childbearing and more cohabitation.
So what can be done? The first is a streamlining of the Byzantine welfare assistance programme. A fully integrated system in one state-level agency would better coordinate assistance and ensure that responsibility rests at one door, rather than being spread across federal and state agencies.
Secondly, the cumulative effect of the various welfare policies needs to be assessed for marriage penalties. This should balance the financial advantages and disadvantages of marriage so that the most problematic rules (like the EITC rules discussed above) can be removed as barriers to marriage.
Finally, the individual programs need to have clearly communicated rules for married couples so that it is clear that they will not financially suffer if they tie the knot. For example, Medicaid needs to clearly communicate to the working-class that getting married will not be an impediment to getting health-care coverage and that the eligibility threshold for married couples is commensurate with that for single parents.
Without any changes to these welfare policies, is it much of a surprise that a majority of children born to working-class parents have been born out of marriage in recent years? Or that the vast majority of upper-middle-class parents continue to have children in marriage as they recognise, and can afford, the strongest family institution? Marriage, and its attendant benefits, is increasingly becoming a luxury that only the rich can afford.