Wednesday, March 28, 2012

Marital Status, the Safety Net and the Recession

Copyright, The New York Times Company

The expanding social safety net is part of the reason that unmarried women who are heads of household have gone back to work more slowly than married women have.

Last week I showed how employment rates fell significantly more during the recession for unmarried (and nonelderly) women who are heads of households than they did for married women.

The first chart below shows how this result is probably not attributable to sharply different layoff rates by marital status, because the number of unmarried women who were in their first month of unemployment, expressed as a ratio to the number of unmarried employed women, changed essentially in parallel with the number of married women in their first month of unemployment.

United States Census Bureau

What seems to be especially different between married and unmarried women is their propensity to be unemployed for long periods. The second chart shows the number of women in their seventh month of unemployment (that is, weeks 27-30). Unemployment this long increases much more among unmarried women.

United States Census Bureau

A similar chart could be drawn for the eighth month, the ninth month and so on. The point is that married and unmarried women enter unemployment at about the same rate, but unmarried women leave it more slowly.

A few readers who commented on last week’s post suggested that unmarried women experience more discrimination than married women do, and that’s why they are slower to return to work.

It would be nice to have more direct evidence on that hypothesis; for now, I note that this is the opposite kind of discrimination than what prevailed during the Great Depression, when married women were often prohibited from working while unmarried women were permitted to work.

Part of the difference in labor-market experiences has to do with the safety net. Many safety-net programs, like the Supplemental Nutrition Assistance Program, which provides food stamps, and Medicaid, base eligibility on family income.

A married woman (and her family) with a husband earning above the poverty line – the vast majority of husbands do so – is ineligible for a number of safety-net programs regardless of whether she’s employed, because her family’s income is above the poverty line regardless of her employment status.

Unmarried household heads, on the other hand, are usually the sole breadwinner for the family, and when their income falls to zero, the household income essentially does, too. For this reason, more unmarried women who are heads of households can expect anti-poverty programs to help them when they are out of work than married women can.

In other words, anti-poverty programs provide significantly more cushion for unmarried women than they do for married women.

An unintended but unavoidable consequence of providing someone a cushion when they are without work is that they are provided with less incentive to get back to work.

By definition, married women have husbands and unmarried women do not, and husbands can many times be a source of support. But husbands can provide more flexible support than government programs do. After all, husbands know their wives better than the government does and thereby do less to discourage women from getting back to work than government benefit rules do.

Note, too, that the safety net expanded during 2008 and 2009 in ways that were more accessible to unmarried women. The Supplemental Nutrition Assistance Program became more generous in a number of ways, and, as noted, it provides less cushion for the average married woman than it does for the average unmarried woman head of household.

For a time, the 2009 American Recovery and Reinvestment Act paid for 65 percent of the health insurance costs for unemployed people, but only if those people could not join a spouse’s health insurance plan. Thus, as the law’s health insurance subsidy appeared and then was phased out, it had different effects on the incentives to get back to work among unmarried people than it did among married people.

A great many unmarried women have been unable to find work through no fault of their own. At the same time, we know that the safety net affects the propensity of people to work.

Unless incentives suddenly stopped mattering during this recession, it appears that the expanding social safety net explains some of the excess nonemployment among unmarried women who are heads of households.

No comments: