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Unleash The Bill Collectors On Deadbeat Dads


Economic Viewpoint

UNLEASH THE BILL COLLECTORS ON DEADBEAT DADS

More than one in five U.S. children live in poverty. This is mainly because of a spectacular growth in the number of families headed by unmarried mothers, compounded by low or nonexistent child-support payments by noncustodial fathers. Fortunately for the children, as well as the mothers, it is possible to greatly increase the number of fathers who meet their obligations.

It is far too easy for fathers to dump the financial as well as the emotional burdens of raising children on mothers. More men will hesitate to father children if they know they'll have a tougher time evading the duty to support them.

Children can benefit emotionally as well as materially when their fathers support them. And if more dads were forced to pay up, they might be more likely to spend time with their kids--since they would no longer be avoiding detection.

A 1993 Urban Institute study estimates that incomes of many one-parent families would rise above the poverty level if all child-support obligations were met. But the American Fathers Coalition--a group of child-support payers--claims the delinquency figures are inflated by mothers' failure to report the payments they receive. This coalition also believes fathers sometimes fall into arrears because child-support awards are excessive.

This group makes some valid points, but it is still important to improve compliance with child-support obligations. Congress passed legislation in 1984 and 1988 requiring states to make stronger collection efforts, with the Federal government footing most of the bill. It is now easier to garnishee wages, even when fathers have moved to other states, and to jail those who refuse to pay. Computer systems allow states to keep better track of where fathers live and how much they owe.

PATERNITY WARDS. As part of his welfare-reform package, President Clinton recently proposed stiffening these laws by establishing national clearinghouses to track interstate cases, by denying occupational permits and driver's licenses to fathers who don't pay up (some states already have such rules), and by requiring hospitals to establish and record who the father is for every baby born.

Although federal laws and state efforts have increased the numbers of fathers who pay up, statistics compiled by the Health & Human Services Dept.'s Office of Child Support Enforcement show that state agencies are collecting money in less than 19% of their child-support cases. Many fathers continue to successfully avoid detection by state governments--in some cases by fleeing to another state.

One reason for the low figure is that state collection agencies concentrate on helping mothers on welfare, including efforts to establish the identity of the fathers. States emphasize welfare cases because public spending is reduced when families receive enough child support to go off welfare.

But many women not on welfare are also failing to get the support due them. Some women who were not being helped by state agencies have turned to private collectors to track down the fathers of their children. These collectors have often been quite successful: They may garnishee the wages of fathers or get local authorities to jail deadbeats until they pay up.

BOUNTY HUNTERS? Private collectors usually charge a small nonrefundable fee, but their main source of revenue is a contingency payment that usually ranges from one-quarter to one-third of what they collect. This may seem like a big cut, but these fractions are not out of line with fees charged by companies collecting other kinds of debt. Yet some children's advocacy groups oppose the involvement of for-profit collection companies, because they hate to see large sums being siphoned off that should be going to the children. But mothers usually turn to private companies only after they fail to get what is due them through ordinary channels. And after all, 67% of what is collected privately is a lot better than 100% of nothing.

Private collectors often succeed where state agencies fail, because government officials lack financial incentives to track down fathers who are in arrears. Therefore, state agencies should take a cue from what some mothers are doing: Hire private companies to locate and collect from recalcitrant fathers.

Private collectors hunting down deadbeat fathers for state governments may evoke the notorious bounty-hunter system of the Old West, but it would be an effective response to the failure of state agencies. Privatization of state collection efforts has precedents in other kinds of debt: States have hired private companies to collect unpaid traffic fines, for example.

Congress should adopt most of the President's recommendations to strengthen the government's hand in collecting child support. But the laws already on the books would be much more effective in reducing the number of children raised in poverty if state governments and more mothers hired private collectors to track down deadbeat fathers.GARY S. BECKER


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