Effects of the Economic Downturn On Child Support Orders and Payments

Background and Purpose

We analyze the impact of unemployment and earnings declines on child support orders and payments. Using data from 2006-2009 in Wisconsin, we assess the responsiveness of the child support system to non-resident fathers' earnings changes and unemployment during economic downturns. We take into account variation across counties in both unemployment rates and child support enforcement policy, building on interviews with county administrators that document variation in policies (Kaplan, forthcoming).

Child support is an important source of income for single-parent families, especially given limited public assistance. Substantial research has documented the factors that affect child support payments and the effects of child support enforcement on child support orders and receipts, labor force participation/earnings, family/child well-being, and poverty. However, very few studies have examined the consequences of unemployment for child support. This issue is especially important given the current economic crisis and high unemployment rates.

Method

We use longitudinal administrative data from Wisconsin child support and unemployment records. Unemployment Insurance records provide information on both quarterly earnings and unemployment benefits. The analyses consider earnings, child support orders, and payments for all cases statewide in which the father owes support in 2006, examining outcomes from 2007-2009. Analyses consider differences for divorced and non-marital couples, and for couples living in counties with more and less severe economic declines. Regression models of payments have key independent variables reflecting changes in nonresident fathers' earnings and employment and changes in country economic conditions. We also consider fixed-effects analyses that exploit changes within an individual father's payments as general economic conditions change and as his economic condition changes. This study builds on previous analyses that considered the relationship between child support order and payment changes and changes in nonresident parents' earnings during a period of relatively stable macroeconomic conditions (e.g., Ha et al., forthcoming).

Results

We find that as the earnings of a nonresident father change, there are relatively few changes in child support orders, but more sizeable changes in child support payments. Preliminary results also show that increases in general county unemployment rates are weakly associated with declines in individual earnings, but that declines in individual earnings are strongly associated with declines in child support payments. Because orders do not often change with changes in earnings, but fathers who experience unemployment have a difficult time paying, many fathers build up substantial child support debts.

Implications

This study has potentially important implications for policy and practice. The findings point to the importance of advocating for social policies that provide additional income and employment supports for single-parent families, since child support receipts are likely to decline at a time when they may be facing their own unemployment. Moreover, our findings suggest the importance of extending employment and related services to non-resident fathers. This research informs our understanding of ways in which current policy helps to alleviate, or compound, disadvantage.