Family fragmentation (e.g., divorce and unwed childbearing) in America costs U.S. taxpayers $112 billion a year and over $1 trillion per decade, according to a new study released on Tuesday.
“We are confident this is a minimum figure because of the uniformly cautious assumptions built into our methodology,” the lead author of the study notes. For example, the $112 billion per year cost figure does not include a number of large government programs, such as the Earned Income Tax Credit (EITC), Medicaid for the elderly and Medicare for unmarried adults, or public education spending.
Some of the highest costs come from programs such as:
Medicaid – $27.9 billion
Forgone U.S. income, FICA, and state & local tax receipts – $22.3 billion
Justice system – $19.3 billion
Food Stamps – $9.6 billion
The key link here is between marriage and poverty. Marriage reduces poverty, and conversely, the breakdown of marriage is a primary cause of poverty. In 2006, about 28 percent of children in the U.S. lived in single-parent families. The poverty rate of children living in single-parent families is about 38 percent, compared to 8.1 percent for children living in married-parent families.
The new study estimates that if single mothers married, about 60 percent of single-mother households would be lifted out of poverty, which means that the overall number of individuals living poverty would be reduced by 31.7 percent and the number of children living in poverty would be reduced by 36.1 percent.
Each year, government spends well over $500 billion on means-tested programs (e.g., Medicaid, Temporary Assistance for Needy Families, and Food Stamps), of which about one-third goes to single-parent households (http://www.heritage.org/Research/welfare/Test080101.cfm). If “the share of expenditures on government antipoverty programs that is due to family fragmentation is equal to the percent of poverty that results from family fragment,” as the author of the study reasonably assumes, then family fragmentation would result in significant costs to taxpayers through these antipoverty programs.
Studies have also shown that married men are less likely to commit crimes and that children raised in intact families are less likely to commit crimes later in life. So there are costs to through the justice system as well.
Another way that taxpayer costs are generated is through forgone tax receipts. Studies have shown that childhood poverty impacts future work productive. Economists have estimated that child poverty reduces income by $170 billion at the national level. Combining that figure and the reduction rate in child poverty from marriage, the new study estimates that “marriage would increase taxable earnings by over $61 billion per year”—a figure that would have yielded some $22.3 billion in taxes paid each year.
Because the taxpayer costs of family fragmentation are high, even small gains would yield large returns. For example, if the rate of family fragmentation is reduced by 1 percent, this would lead to $1.12 billion in savings for taxpayers each year, the new study estimates.
The study concludes:
Finding new ways to strengthen marriage and reduce unnecessary divorce and unmarried childbearing is a legitimate and pressing public concern.
Because of the very large very large taxpayer costs associated with high rates of divorce and unmarried childbearing, and the modest price tags associated with most marriage-strengthening initiatives, state and federal marriage-strengthening programs with even very modest success rates will be cost-effective for taxpayers.