NOTHIN’ FROM NOTHIN’ LEAVES NOTHIN’:THE SECRET HISTORY OF CHILD SUPPORT

W. DENNIS DUGGAN, F.C.J.© 2006

You’ve probably heard of MollyOrshansky, right? Well, maybe not. Sheis the lady who invented poverty. O.K.,she really didn’t invent poverty but she isthe one who all by herself defined it. Butmore on that later, we need to talk aboutchild support.

Y o u h a v ep r o b a b l y h e a r dsomething about theC S S A — t h e C h i l dSupport Standards Act.You know, the non-custodial parent, almostalways the father, pays17% of his income forthe support of one child,25% for two, 29% forthree and so on. It’s theformula stupid! Thef o r m u l a t h a t i sguaranteed to produceuniversal dissatisfaction.Every mother thinks the support is notenough and every father thinks it is toomuch. Where did they get these numbers

and who invented them. Here is the restof the story.

In the early 1980's, a number ofpeople in the Federal government wereworried about the rising costs of welfare.They realized that if more child supportwas collected less welfare would be paid.

In 1984, Congresspassed the first childsupport guideline law.These guidelines werejust about universallyignored by the States. In1988 new legislation putteeth into the regulationsand the States were putunder the gun. By 1989,every state was requiredto have numeric formulas.The formulas were toprovide the presumptivelycorrect amount of childsupport and no deviations

were allowed unless the formulaproduced an amount that was “unjust orinappropriate.” (So, you could have an

award that was just but inappropriate orappropriate but unjust. Huh?)

Now, before you can invent a childsupport formula you have to figure outwhat child support is for. That’s easyright? It’s to provide a child with theproper standard of living as his or herparents have. Or, is it the amountneeded to care for a child? Maybe it’s theamount that the non-custodial parentwould have contributed to the children inan intact family. These are three verydifferent definitions of child support. Ishould probably mention that each hasbeen promulgated by a different unit ofNew York State government. The first isthe definition of the New York City Officeof Child Support Enforcement. Thesecond is from the New York StateDepar tment o f Chi ld Suppor tEnforcement. The third is from theState’s quadrennial child supportevaluation. Foolish consistency is thehobgoblin of small minds you say?

So, since no one in thegovernment knows what child support isfor, we must turn to—who else—expertconsultants. Four academics loom largein this area. Indeed, they have fourcornered the market. First is RichardWilliams, the president of Policy StudiesInc. PSI has a monopoly control over thestate studies which established eachstate’s formula. Second is IrwinGarfinkel, Professor of Urban Problems atColumbia School of Social Work.Garfinkel authored one of the nation’s firstchild support laws which became knownas the Wisconsin Model. Third is ThomasJ. Espenshade, Chair and Professor ofsociology at the Woodrow Wilson Schoolof Public and International Affairs.Princeton University. Fourth is David M.Betson, Professor of Economics,University of Notre Dame.

The economic underpinnings of

the child support formulas started withEngel’s Law.Ernst Engel was a German economist inthe last half of the Nineteenth Century.He discovered that as family incomesincreased, families of similar size devoteda lower percentage of their expendituresto food. The other side of the coin wasthat as family size increased, theydevoted a higher percentage of theirincome to food. These observations mayseem obvious now, but not so in 1850.The conclusion Engel drew was that theproportion of family expenditures devotedto food is inversely related to a family’sstandard of living.

A later refinement of Engel’s foodexpenditure equivalence scale wasproposed by Erwin Rothbarth. Rothbarthwas born in Germany in 1913, andeducated at the London School ofEconomics. He was a collaborator withJohn Maynard Keynes. Rothbarth usedexpenditures on certain adult items tomeasure comparative standards of living.At first, this was alcohol and tobacco.Now, it is adult clothing. There you haveit. The child support formulas all acrossAmerica are based on either theexpenditures for adult clothing or food—Ikid you not, you can look it up.

Here is how it works. Take ahusband and wife with a yearly householdincome of $60,000. On average theywould spend about 2% of their income onclothing----or about $1,200. Lets add achild to that family and figure out howmuch that family would be earning whenthe parents were again able to spend$1,200 on adult clothing. It turns out thatthis family’s household income would beabout $90,000. Rothbarth’s Law saysthat these two families have the samestandard of living because they spend thesame amount on adult clothing and adultclothing expenditures are a valid proxy for

overall standard of living. The inferenceto be drawn here is that this family had toearn an extra $30,000 after having a childbefore their standard of living was thesame when they had no child and,therefore, the “cost” of this child is$30,000 per year.

The actual computations used toarrive at the CSSA percentages aresomewhat more complicated than thisexample—but not much. At its base isthe assumption that expenditures foradult clothing can be extrapolated to theproper costs of raising a child. If thisstrikes you as a bit of voodoo economics,you are not alone. Economists woulddescribe the formulas as a “Continuity ofMarginal Expenditures” model. Thismodel relies on two things for its validity;that adult clothing expenditures form avalid equivalence scale for allexpenditures and that the ConsumerExpenditure Survey validly tracks adultclothing expenditures. Both of theseassumptions are troublesome at best.

Here is an example of what ismeant by a marginal expenditure and howit would relate to the cost of a child. Saythe monthly rental for a one bedroomapartment for a husband and wife is$800. Now they have a child and must geta two bedroom apartment which costs$1,000. The marginal housing cost forthe child would be $200. The deficienciesof looking at child rearing costs this wayare obvious. For example, what is thenew marginal cost of jointly consumeditems like heat and the use of commonareas. Anyone who has experiencedtheir teenage child drain a forty gallon hotwater tank with one shower has anintuitive understanding of marginal costs.

So, in the real world, whereeconomists fear to tread, how are theformulas working?Not so well I think. First, the formulas,

just by chance, could be providing theright amount of child support. But that isnot a very sound basis for law or socialpolicy. When looked at closely, the policymakers who devised these formulas couldjust have easily used the SWAG method----scientific wild ass guess—and come upwith the same answers. In fact, manypeople suspect that this is the methodthey did use

The formulas in New York havevirtually no scientific basis when appliedto families with joint or near joint custody.Because of this, our appellate courtshave devised the bizarre presumption thatthe richest parent is deemed to be thenon-custodial parent. (See, Baraby v.Baraby, 250 AD2d 201) The New Yorklaw also has nothing to say about parentswho split custody of two or more children.The Courts have just invented rules forthose situations. Or, how about parentswho both split custody of some kids andshare custody of others. Use Rock,Paper, Scissors for that answer. (See, forexample, Voncino v. Fuhrman, 3 Misc3 291).rd

Similar shortcomings are foundwhen parents start new families. Here isan example for a father who earns$40,000 per year. If a mother has fourkids with four different fathers, she wouldcollect $25,120 in child support per year.If the father had four kids with fourdifferent moms he would pay $19,400per year. However, If the father had fourkids with just one mom, he would pay$11,500 in child support. I don’t know,are we subsidizing a promiscuous motheror a faithful dad? Since each mother-ledhousehold has exactly the samecomposition, it is clear that we aretreating the children differently, eventhough sneakers cost the same for eachmom.

Is there a way out of this

quagmire? Yes and no. First it should berecognized that great strides have beenmade in America over the last twentyyears in the area of collecting childsupport and, on balance, the formulashave been a good thing. The FederalOffice of Child Support Enforcement hasadvanced child support collection byseveral valence levels. The child supportenforcement environment has gonethrough two stages and is now in its third.The first stage involved setting up of theformulas and the tracking and collectionprocess with Support Collection Units.The second stage involved the coerciveprocesses such as wage deductionorders and license revocations. Thesecond stage has reached a point ofdiminishing returns. The third stage is theproactive one which involves such thingsas early, helpful interventions and jobtraining. However, much more can bedone. Here are ten recommendations.

1. Change or increase the passthrough. A custodial parent on welfarecan receive a “pass through” from thenon-custodial parent’s support that is paidto DSS, but it caps out at $50 per month.This pass through should be modeled onthe Earned Income Tax Credit orincreased to $200 per month.

2. Don’t wait until fathers are$5,000 in arrears and then drop thehammer. Intervene with some help whenthey are three payments behind. TheFederal Office of Child SupportEnforcement gets a data dump everyevening of every child support paymentmade to every support collection unit inevery state in the Union. They knowwhen a person gets three paymentsbehind before the mother does.

3. Suspend support paymentsduring incarceration. I know, its popularto be punitive and to sit on our moral highhorse. However, these fathers eventually

do get out of jail and when they are hitwith $15,000 in arrears it drives them intothe underground economy and furtherdistances them from their children. Theycan’t even get a driver’s license let alonea job. Anyway, they can’t pay when theyare in prison—unless we put them to workin a worthwhile paying job that providedthem with a job skill they could use whenthey got out. Now there is a radical idea.

4. Step down the formula amountsfor time spent with the non-custodialparent. California and many other statesdo this when, for example, the fatherstarts to have the children for more that35% of the time. Ask some highparenting time dad how much it costs totake three kids to the mall and the movieson a Saturday afternoon and also pay hischild support.

5. Reduce the reimbursement ordelay collection for public assistancearrears. DSS often makes half-heartedattempts to collect support from deadbeatparents. But when they are successful, itcan result in a huge arrearage against anon-custodial parent. This often results indiverting child support from the child backinto the coffers of DSS. We don’t ask thecustodial parent to pay back the welfarepayments. Wait until the child is 18before trying to collect DSS arrears.

6. Develop formulas for low,middle and upper standards of living. Allfamily expenditures are not alike andfamilies spend there moneys in verydifferent ways. One size does not fit all

7. Develop formulas to addressthe situation of split and shared custodyand newly formed and blended families.

8. Establish paternity at birth.Every child has the right to have theidentity of his or her father identified.

9. Use imputed income with careand develop specific standards andguidelines. Every self-employed

“contractor” in New York State makes$19,500 per year. (How does he pay forthat new Ford F-350 with the extendedcab and towing package?)

10. Number one most importantchange needed to improve children’slives: Universal government suppliedhealth care from conception to age 21.

If we had a perfect child supportcollection system there would remainthousands of children without adequatesupport. The reason is simple—poverty.If you sat for a day in the support part ofa Family Court this is what you would see:On the one side of the courtroom wouldbe an overwhelmed single mother whoworks two jobs at $7.75 per hour. Thefirst job is to support her self and herchildren. Her second job is to pay fordaycare so she can work her first job. Onthe other side of the courtroom would bea father who is unemployed,underemployed or never employed. I amtalking about a 36 year old man who hasheld a paycheck job for maybe twelvemonths total for his entire adult life.

Finding solutions to these twoproblems seems impossible for twoprimary reasons. First, we sort of knowwhat works but not how to sustain it on a

large scale and for a long duration.S e c o n d , w e h a v escapegoated the poor and wehave no political will to helpthem. The war on poverty hass lowly morphed in to a wa ragainst the poor. So , who was th is Mo l l yOrshansky and how did sheinvent poverty. Molly workedf o r t h e S o c i a l S e c u r i t yAdministrat ion in the 1960 's.She s tud ied the Depar tmento f A g r i c u l t u r e ’ srecommendat ions for a basichealthy diet and what it would cost. Shealso noticed that an average family backthen spent about 33% of their income onfood. Putting the two together, shecomputed how much, say, a family of fourwould need to purchase a basic healthydiet and then she multiplied it by three toget the poverty level for that family. Inother words, if a family could not afford abasic healthy diet, they were in poverty.Despite many changes in our expenditurepatterns (for example we now spend onlyabout 17% of our incomes on food.) MollyOrshansky’s formula is still used tocompute the poverty threshold.