We have spent a great deal of time this semester exploring the experiences of low-income couples, including unmarried mothers and fathers. Many current social policies are based on the assumption that marriage has financial consequences for poor families. But it all seems so complicated: what are the actual financial consequences if unmarried parents decide to get married, or perhaps just cohabit?
One website, administered by the U.S Department of Health and Human Services, Administration for Children and Families, offers some insight into this question. The Marriage Calculator helps policy makers, researchers, and the general public to understand the financial consequences of marriage for individuals earning less than about $40,000 per year. Users can see how taxes and public assistance change when a couple's living arrangement changes from living apart to cohabiting to married.
Open the calculator and "create" information for a hypothetical single mother family and potential spouse. Then specify a set of transfer programs that the couple might use. The calculator will then display the financial impact of getting married; cohabiting that is either reported or not reported to government programs; and continuing to live apart. Write a response to your exercise. What was the most cost-effective solution for your hypothetical couple? Why do you think this is the case?
21 comments:
For the exercise, I elected to test a case similar to those included in the end of Flat Broke with Children where Hays describes welfare mothers who exploit the system. The selections made exemplified the Burger-Barn Syndrome. The mother did not work, had few assets, and had three children with fathers different from the intended partner. The man worked full-time at a minimum wage job, possessed a small amount of assets ($3,000), and owned a car with a low fair market price ($3,000). Additionally, the couple was considered for all of the available social insurance programs, including Temporary Assistance for Needy Families (TANF); Medicaid and the State Children’s Health Insurance Program (SCHIP); Food Stamps; Women, Infants and Children (WIC); housing; and childcare.
Calculation revealed that the most cost-effective solution for the hypothetical couple was to cohabit without reporting it to government programs. Total income when living apart or cohabiting without reporting it was $150 more than total income when married, $692 more than total income when cohabiting and reporting it to government programs, $1061 more than the income of the woman alone, and $2093 more than the income of the man alone. I was surprised by this conclusion because it contradicts one of the two primary tenets of welfare reform under the Temporary Assistance for Needy Families: the idea can marriage will lift the poor out of poverty. The calculator proves that in this instance marriage actually decreases the total earnings of the couple. Living with someone increases the amount of money entering the home through the combination of incomes. However, being married also increases total taxes and decreases benefits such as food stamps, ultimately leading to lowered total earnings. A mother with three children cannot be lifted out of poverty by marrying a full-time minimum wage worker. Throughout the book, Hays suggests that the practical reality of welfare reform actually contradicts its beliefs. Thus, many low-income individuals may choose not to marry in order to avoid additional taxes or may cheat the welfare system by not reporting cohabiting, exemplifying to what Hays refers to as the System-Screwed-Me Syndrome. I think that marriage being one of the most cost-effective solutions was a product of the intention of welfare reform to increase marriage rates among the poor. However, the fact that cohabiting without reporting it is actually more cost-effective than marriage attests to the discrepancy between welfare reform in theory and welfare reform in practice and leaves room for improvement in the program.
The couple I constructed for the marriage calculator would do better to cohabit or live apart. Their monthly income together is 3196. The woman’s monthly income alone is 1289 and the man’s is 1907. I put the woman on WIC, gave them childcare subsidies and housing subsidies. According to the calculator the government takes out more taxes from them when there are married versus living apart/cohabiting. This makes it better for them also, to not report their welfare benefits.
The only reason I can come up with for why it is better my hypothetical couple to not get married is because of taxes. In all of the situations they had no disposable income. The only thing that was significantly different was the amount of taxes taken out.
I forgot to mention earlier that I gave them a 2 year old daughter. Her monthly childcare payments before the subsidy were $700. When I originally came up with this scenario I set the monthly payments in the 2000’s because I feel that was more realistic. The quality of this 700 dollar childcare is probably not the best.
Overall, I feel the couple should at least cohabit because then they could support one another emotionally at least. Even if there is not much gain.
With the inputs I used for my couple, similar to blogger 335, the marriage calculator shows that the couple would do better living apart or cohabiting and not reporting it to the government. The couples monthly income without any programs to assist them would be $3813, with the female making $1733 and the male making $2080. The couple was also considered for all the programs, including: TANF, Medicaid, Food Stamps, WIC, Housing and Childcare. I also put that the couple had been on TANF and Work for 12 months already. The couple also has a three-year-old daughter, along with an infant son. The childcare costs before subsidies was $900. If the couple were to live apart or cohabit, they would have a total monthly income to $5152, instead of the $3812. This is a major difference of $1340 a month. This increase is due to WIC with $169 monthly, housing subsidy of $733 monthly and finally the childcare subsidy of $649 monthly. I believe that this is true because if they get married their combined total income is calculated, making it more difficult for them to receive assistance from the programs. Married couples also get taxed more according to the marriage calculator. According to the calculator, I would definitely stay unmarried as it is more cost-effective.
I thought this exercise was pretty interesting. What this “marriage calculator” shows is that in the United States, it pays to be single, literally.
The most cost effective solution for my hypothetical couple stated that the couple would do better living apart or cohabiting and not reporting it to the government. I am assuming this is because I had both the husband and wife working two low paying jobs ($10 per hour and $15 per hour respectively) and I applied this couple to all programs, except the child care subsidy because I choose to make my children between the ages of 10 and 13, so they no longer needed child care, they were old enough to attend after school activities or sports. According to the marriage calculator, if my couple was married, their housing would cost an extra $658 per month. The charts show that single woman get more help financially from government programs versus women that are married. I guess it is assumed that women who are married have another means of income and therefore are not struggling as bad as a single mother with children.
Not only does this continue to promote a female headed household as well as it promotes the “working mom” similar to the work plan (vs. the family plan) we read about in Flat Broke.
The hypothetical family I created was similar to those previously discussed by everyone here. The family had three children, all under the age of five. The mother was working a full time job and was barely earning 11 dollars an hour. In general, the family would be better off not being married because a lot of their income would be taken from them. The family would be better off living apart or cohabiting. The monthly income for the family was approximately $4,420. The woman was earning $1993 and the man would earn $2427. I put the single mother on TANF and WIC to help her with her three children.
The calculator proved that in order for less taxes to be taken from the family, it is better if they live apart. The most cost-effective solution for my couple would be the same as what .335 said because of the role the government plays in taking out more taxes when they are married. I think that living apart is the best thing for my hypothetical couple because the reporting of their incomes may not be as strict as when a couple is married. Also, the benefits they get as individuals or single mother may be more beneficial for the children. It was interesting what 233 said, about single families. Although marriage may seem something essential in the American Dream, single families are becoming more and more popular and this may be a major factor in their decision to marry.
This turned out to be a very eye opening exercise. My hypothetical single mother worked full time at a low income wage of $9 per hour in Washington D.C. She had two young kids under the age of 3. They qualified for all the programs except TANF. The potential spouse also worked full time and earned $15 an hour. I assumed that since the potential spouse earned a higher wage that it would be smart financially for the single mother to marry or cohabitate with him. However, the Marriage Calculator showed otherwise.
The results showed like the other bloggers that remaining single was the best choice next to cohabitating unreported. This result supports blogger .231’s idea that “it pays to be single” in America. If the family did decide to get married it would translate into a major financial loss of about $1467 per year. In addition, their child care subsides, food stamps and housing subsidies would be minimized. Their cost-benefit relationship of getting married would thus result in the costs outweighing the benefits. I think that this may be the case because with the increase in income of two earners that came about through this hypothetical marriage they may not qualify for as much assistance and will be taxed more.
I think that these results make welfare’s idea, that Hays discussed in Flat Broke with Children, of encouraging marriage to low income families ridiculous. It is obviously not going to be beneficial for them financially and will in some cases make their living situation harder. As blogger .240 mentioned it further explains the high cases of the feminization of poverty that are linked to Hay’s referral of the System-Screwed –Me Syndrome.
Overall, it seems contradictory and surprising that being a single low-income earner is more beneficial than a married low income family.
Using The Marriage Calculator, I create a hypothetical family, very similar to everyone who have already replied to this Unit 3 blog. The mother or the woman of this hypothetical family is living from paycheck to paycheck, where she works a full 40 hours a week and is only making 13 dollars per hour. In my hypothetical there are three children, two sons and one daughter, where each of them are still a baby or a toddler. After using the marriage calculator, it seems that it would be a better idea to cohabitate and not get married. If the man and the woman were to live together, and get married, the income that they make would be taken away from them. Living apart, the woman would be making $2253, while the man is making $2600. Since the mother is not making much, I chose to put the mother on the WIC (Woman, Infants, and Children) Program, where she would be receiving $75. In my opinion, the best way for this problem, is to live apart. Just like what .305 said, not living together may be better for the hypothetical couple, getting married. On top of that, since the mother is single, she would be getting benefits that she would not be able to get if she was married. When I grow up, I do plan on getting married, however, I do agree with .305 in that it seems as though being a single parent or living apart is getting more and more common.
Life is expensive; when you split it with someone it is a little less expensive. Anyone living with a roommate has fewer expenses to worry about than someone who is living alone in the same apartment. It is more logical to live with someone if money is tight so that they can pay half of the rent, half of utility costs, and half of grocery bill etc. Therefore an unmarried parent deciding to get married or cohabitating is economically beneficial. I do not think there are any consequences that come along with parents deciding to get married or living together, unless they are having domestic issues. Financial wise, it is smarter to do. Everything can be split in half and the income may increase in the households if both parents are taking turns working. Childcare may also be less of an issue to worry about if the parents work in shifts, so that one parent can look after the child while the other parent is at work vice versa.
However, when it comes to living on the border line of poverty levels, a married couple may have a hard time getting federal assistance. This happens because most of the policies are means tested. So if the government sees that a couple is earning more than a certain amount in a year, they may not be eligible for certain programs they might need. There are pros and cons to each decision. I personally believe that a married couple will have a better financial standing than a non married separates parent. Using the calculator, I put in realistic scenarios of hourly wages and saw that I can make up to a sufficient amount when I am partnered up with someone who makes equal to what I make. I then did the exercise without a partner and I would only then qualify for certain programs. But then when you calculate childcare costs and child support money, it doesn’t make any sense to raise a child alone. I would see a much greater benefit in receiving help from my partner than the government programs. I used a couple form Flat Broke, and my hypothesis was correct, the cost effective solution for my couple would be to cohabitate. They would also qualify for some programs if they were not married or did not report to the government of their cohabitation.
I chose to comment on this posting because I thought it would be really interesting to see what the benefits or detriments would be to getting married. Most people view marriage as being better than being single in terms of financial security and stability for the future. It was interesting to see someone present an argument that marriage may be detrimental financially for some people. For my situation I put that both myself and my partner were working 40 hours a week, I had a car worth 2,000.00 dollars and he has a car worth 3,000.00. We have have two sons together aged 7 and 5 and he is the father of both. Currently he was paying 800 a month in child support for our sons and child care was 500 a month for both boys. I also put that I was making 9.00 dollars an hour and he was making 10.00 dollars an hour. I put that I was using everything but WIC which included TANF, subsidized housing, food stamps etc. Finally I put that my total assests came up to 20,000 dollars and his came up to 30,000. The computer asked me to enter how many months I had already been on TANF; I entered five months. After the calculation was complete it stated that more taxes would be taken and ultimately our total income together both if we got married or co-habitated would be a negative value. We also would no longer be eligible for subsidized housing and child care. Clearly the most cost-effective thing for my partner and I to do is not get married and live apart or if we are going to co-habitate it shouldn't be reported. The reason I think people lose so much of their benefits when they get married or they co-habitate is because the prior to getting married or living with their partner the government was providing assistance based upon the assumption that it was a one-parent home and thus the mother would need more money since she was receiving her income. If she gets married; even if she marries a man who is not the father of her children; the government now judges her situation as a two-parent income home. It assumes that she now has the financial support of her husband or partner and thus the government doesn't need to provide as much money for her. In fact the combined income of the two adults may be so much so that she would no longer be eligible for any benefits. I really enjoyed this blog it really puts marriage into perspective.
The woman I created for this exercise earned $10.00 an hour, while working 40 hours a week. Her assets amounted to $500, and her vehicle was worth $2,000. The man also worked 40 hours a week, for a wage of $12.00 and hour. His assets were worth $1000, and his car was also worth $1000. He is the father to none of the children. Child number 1 is a 16 year old boy, child number 2 is a 12 year old boy, and child number 3 is a 7 year old girl. The mother receives $500 a month for every child from the other parent. The cost of the overall monthly childcare is $2,500. The family lives in Maryland and participates in TANF, Medicaid, Food stamps, WIC, public housing, and subsidized child care.
For this family, the worst case scenario would be marrying and not reporting it to government programs, making their total income -486. Furthermore, the best solution seems to be for them to cohabit and not report it to government programs, giving the a total income of $5,202 a month. Apparently, the families income would suffer if they were to get married instead of cohabiting, making their total income and report to government programs $-153. Overall, the better pay off for this family would be to cohabit and not report to government programs, rather than get married.
According to my marriage calculator, it wouldn't matter id the couple was married or living single because the amounf of income ended up being the same (3,738). The couple was not receivng any aid from, any government programs. The hourly wage I gave to the husband was 13/hr. The hourly wage I gave to the wife was 10/hr. I chose these wages based on how much I currently make. I was interested in seeing what the income would be for the avaerage teenager/college student if they had to get married. In this situation I gave the couple two children (4 and 5 years old). I was thinking more along the lines of what would've happened if the woman had gotten pregnant at 16. She also recieves $300 in child support in order to help support her children financially.
I think the reason why the income ended up being the same was because the hourly wage was so low and any "extra" money went to taxes. On their own they would've ended up with the same income but they would've each had to spend their personal money to support their current lifestyle. The only major difference was that the woman had more income (because of child support) but since she had to hypothetically raise these children on her own, it would've cost more out of pocket for child care, food, etc. In my opinion I think the coupld should co-habit. This way, they could share the responsibilities and split up the labor to be done at the house. (such as cooking,cleaning, working out schedules to take the kids to school or child care, etc).
When doing the marriage calculator, I quickly realized it would be best if the hypothetical couple remained single or cohabit reporting their relationship to the government. The amount of income decreased nearly double the amount of income prior to getting married or reporting cohabitating. The couple lost government assistance and was left to pick up the new amount that the government no longer funded. Having such dramatic results, it is evident that it is extremely financially smart to remain single if you are faced with financial difficulties. I chose to have the child to be 3 years- old, in order to see the effect the childcare subsidy would have in result to a married couple. I thought since both parents had low- income jobs paying hourly wages of $10 & $8, the childcare subsidy would either get better or remain the same. Since the family would be living in poverty, I assumed that the government would attempt to assist families in such conditions. However, I found that once the parents married, their childcare government financial assistance terminated. The government no longer gave aid to this family just for singing a paper to solidify their relationship as married.
I think that the government ended giving money to this hypothetical family because the incomes emerged to create a larger total income. However, prior to having the socially accepted title of “married”, the combined income of both parents equaled to the same amount. These results almost encourage single parent households because the financial benefits are greater for a single parent. As I grow up, I hope to get married and have children. Due to my culture, I would also hope to have relative care as my main form of childcare. I agree with blogger 305 that single parent households are coming more and more common. I do not think the financial differences that are involved with marriage, will cause me to not marry.
In doing this activity, the idea of cohabitation seems to be the better option for me and my long term boyfriend. My calculation revealed that I would lose benefits if I were to get married. I used my real life as a guide to putting in the numbers in the calculator. For example I put my hourly wage of 11 dollars and my boyfriends’ as $15. I did however make up the fact we had a child to see how the childcare support would help us out. I applied for WIC, SNAP (food stamps), subsidized child care and TANF. I did not qualify for TANF, the rest I received when I was unmarried. I received $3,121 all together as my total income as a single mother, vs. $2,737 when I was married. A $384 dollar difference. Although that may not seem like so much, I must remember that 384 times 12 months is a grand total of $4,608- so cohabitating without reporting is the way to go. Official marriage may have to wait until me and my boyfriend are financially stable, as the chart shows how I would be cut off from the benefits if I were to get married. Even the child care support would be cut off and that was the most important to me as a “working mom” in this scenario. So I am faced with a trade off- to get officially married and pay the high taxes that take away my benefits, or to cohabitate and break the traditional family pattern. I choose cohabitation.
Milan,
I totally agree with you. It definitely puts marriage into perspective and breaks all the stereotypes of marriage being a great "combine of resources and flourishing together". I see you put 5 months I put 1 as in I am just starting to receive benefits and still was unable to receive childcare support. Even though I do have my partner there, we both are working- so who is to take care of my alleged 1 year old?
Great exercise to do!
This activity was certainly interesting but I will admit, I have mixed feelings about it. I feel as though this assignment (based on the results that others have reported having above) undermines the institution of marriage. I experimented with the calculator by first inputting information as the following: single, unemployed, with two children. Obviously, in this circumstance marriage is the most cost-effective way to go because the income of my husband would be solely my supportive financial system. I felt as though of all the calculations, this was the only one that would “recommend” marriage as the best financial situation. In my second calculation, the information I plugged in was similar to that of blogger 231. The man and woman worked fulltime with low paying jobs ($10 and $14 an hour). With school aged children, the results concluded that the couple would be better off remaining unmarried, to receive more benefits from the government. My question is – it may be financially a better situation, but is it a really a better emotional situation for the family? I feel as though this calculator highlights certain financial consequences of getting married, but does not focus on the other possible consequences on the children in a family, with two parents who aren’t married. Some bloggers above reported that their calculations concluded “co-habiting” was the best situation financially. However, it is also important to note that couples who cohabit together before marriage have higher rates of divorce. Is that not something to also consider?
The hypothetical family I entered in was a mother of two school aged children. She worked full-time making $8 an hour. He worked full-time making $8. The most cost-effective solution for my hypothetical couple would be for them to either not living together or not reporting it to the government. I think this is the case because the government takes both incomes and says they can help support each other, so they do not need our assistance. Marriage would hurt the couple very badly and they would not make it. The couple would lose $767 a month if they got married. While doing this exercise I feel the government is telling the poor they do not deserve to be married or live with others when they are in the financial situation they are in. Marriage has become a punishment for the poor. It is only made for the rich.
I agree with Jamie Gabrielle. We should be taking into consideration the emotion impacts that can happen if a family does not live together. I think this is one reason we are doing this activity to begin with, though. When doing the calculations, you realize in most scenarios the poor couples with children are better off financially not living together. This is crazy and shocking and we need to realize this is not how it should be. The people that should be more encouraged to live with others and have two parents for a child instead of one is the low-income people. The people who are struggling with money should be encouraged to live with others, so they can find emotional support in their own home. Also, less people would be looking for housing, going through depression, and they would stop feeling like they were all alone. Living with others can help the poor get better jobs because the other person might e able to watch their children. They can help each other find jobs and build resumes. In the end when they feel shut down from the world and feel they can not make it any further in life, the person they live with can help pull them back up. Emotionally, it is way better to live in groups and surround yourself with people that can help you.
The institution of marriage can pose great threat to financially unstable families. Because of the implications of government benefits some couples are forced to remain single or simply cohabitate in order to meet the family’s needs financially. I was initially surprised to see that in low income families structurally we as a society encourage the family to stay apart. If the family lived apart they had over $1500 in additional income. With cohabitation total income decreased a little as housing and child care subsidies were decreased or eliminated. It would thus make it a negative transition for the potential spouse to move into the home even if they were the father of the children. If the couple decided to marry they took an income loss of over $1500. Some government assistance such as WIC and tax breaks were eliminated. I believe that the most cost effective solution for this hypothetical couple is to remain living apart. If the couple cohabitates or gets married the benefits their family received would decrease hurting the family. It is sad that structurally we encourage the family to live apart, even if that means the splitting up of the biological parents. I believe that this is the case with this hypothetical family because if they lived together or got married their incomes would be combined pushing them over the poverty thresholds for these benefits. The previous posters agree with my conclusions in that their hypothetical situations also encouraged the family to live apart instead of marry. This is important in family science as we question whether American policy is destroying the importance of marriage and the family unit, a significant construct in American history.
For this exercise I actually created several different hypothetical situations to see how things would change. I varied the income of the parents, the amount the non-custodial parent was paying, how many kids I had and what programs I used.
I've always heard two different sides of financial benefits to getting married. When playing around with the calculator I realized that you get more money when you are either single or cohabiting, but didn't report it. It's hard to believe this is true despite the heavy push to promote marriage. Marriage produces higher taxes and less dispensable income. If I were a mother bordering the poverty line, this knowledge would certainly affect my attitudes towards marriage even if it could have positive effects on my children. I would rather have that couple extra hundred dollars a month than have a piece of paper that says I am married. This may be a factor in the increasing number of single-female headed households. The quote that has been rewritten by many of the previous bloggers, "it pays to be single," is a simple, ironic yet very true representation of the situation in our country right now. I'm sure if I totally agree that the opposite should be true either though. I don't think that all married couples should get the most breaks because I think that encourages unhealthy relationships to sustain, possibly effecting the child more negatively than growing up in a single-mother headed household.
I am a very big advocate of marriage. I think the union of two people is extremely special and the intent that marriage displays shows the bond between two people whom love each other and their commitment to a long life together. I plan to not live with my partner before being married but after using the Marriage Calculator, I can see why some people, especially, low income families choose to live together before paying for an expensive wedding. In the state of California, a woman working 40 hours a week with a wage of $7.50 an hour and a man working 40 hours a week with a wage of $11.00 an hour whom have a 7 year old boy and a 5 year old girl have significant money differences whether or not they are cohabitating or married. If the couple was cohabitating but not reporting to the government, they would be losing a total of $41.00 per month due to taxes, while if this couple were to be married, they would be paying $161.00 per month due to taxes as a married couple. I do not understand how our government can put this kind of stress on couples who are trying to do the right thing and start a stable family by initiating the process with marriage. I think this would highly discourage people to get married if they were to find the differences in taxes between getting married and just cohabitating without the government’s knowledge. I agree with student .335, not only is cohabitating a better way to save money, it also provides emotional support in tough times for the couple. I was sad to see the big differences using the Marriage Calculator and have a new perspective on families who live together but aren’t married; I still believe marriage is a sacred moment of joining two people who love each other, but if this prevents people from ever living together due to the high living costs, then I will now understand better where they are coming from and why they have made this decision.
My scenario:
Man and woman both working 40-hour weeks, one at $10/hour, one at $12/hour. Each had a car, one worth $2000 and the other worth $1000. They have three sons, ages 5, 6 and 8, and the father pays $300 per month in child support. The mother receives TANF, food stamps, WIC, medicaid, and SCHIP.
Unfortunately, it was most cost effective for the couple to cohabit and not report it to government programs. Getting married caused subsidies to decrease, and the amount received in other government assistance to decrease as well. This happens because the government assumes that if a couple gets married, that combined income will translate into more money for them. In reality though, that couple is already pooling their resources whether or not they're married. By not getting married, each person is being granted a higher amount in government assistance, and then that combined is the highest possible, versus getting married and some of it being taken away.
This exercise reveals that getting married may be beneficial for more affluent families, but not for families that rely on government aid. These families end up receiving less money from the government if they get married. This ends up favoring single-parent households, which is supposedly something that the government wants to decrease.
I created a hypothetical couple with the woman making $1560/month and the man making $2600/month, with 2 children, a boy aged 10 and a girl aged 6. I also elected to apply for all available government aid programs.
The calculator reported that either living apart or cohabiting without reporting to government would be the best option with the highest disposable income. This easily makes sense because reported cohabiting or getting married will both deduct the amount of eligible aid received compared to living separately either in reality or "on record", in the case of cohabiting without reporting.
This exercise helped me realize that for the informed individuals in the dilemma of living together or separately would either give up the option to live together entirely, or may be forced to resort to a degree of illegal standing in tax reporting. Unfortunately, it would be very unlikely that policy changes or adjustment of the eligibility requirements of such aid programs would be brought about just to encourage people to legally live together. These may be regarded as personal choices, and people will choose options that are most financially advantageous on their behalf, regardless of the legality of each option.
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