The January issue of Family Lawyer Magazine published an article about the rise of the gig economy and what it means for divorce. I have been thinking about that and the subject came back to mind when Saturday’s Wall Street Journal published an article, “The Post Paycheck Economy.”
In pre 1984 days, collection of child support was hit or miss with a lot of “miss.” In those days there was no wage attachment. The only real remedy was contempt, and the only viable contempt tool was to toss the obligor in the clink. That often did the trick, but it was messy and cumbersome. Wage attachment was the “ticket” to efficient support collection. Counties can also ding credit reports and even freeze and seize bank accounts, but most are reluctant to do so.
As we (hopefully) emerge from the pandemic of 2020-2021 it’s time to realize that lots about our economy has changed. Yes, people did have remote jobs before 2020 but when I was chatting with a person in my firm who recruits staff positions, she reported that today one of the first questions posed during job placement interviews is “where” work is located. The people employed at this firm will remain W-2 employees for the foreseeable future, but many employers today are finding sound reasons to outsource jobs to independent contractors. As the Journal observed many jobs which were historically performed in offices don’t seem to need that “in office” element, especially when telecommunications allow people to meet collaboratively while sitting at home.
Gig employment presents child support collection problems from the outset. There is no wage to attach. This is not new. Self-employment has always been with us, but it is now becoming more prevalent. It’s a problem for the obligor as well. Some get paid up front for contract work. Others get paid upon conclusion. So, the obligor now must budget to pay from lump sum receipts rather than the pay as you go aspect of fortnightly or bi-monthly paychecks. And, as all of us in the support collection business know, things like housing, transportation, insurance and other needs often tend to take a seat ahead of money for the unworthy ex or the ungrateful children.
For years the General Assembly has dabbled with the concept of charging interest on overdue child support. There has been opposition to this because as sums due for support rise because of interest charges, collection rates do not correspond and matching federal entitlements paid to states for efficient collection of support would go down. In sum, less money from the feds to promote collection of support. Calculating and applying interest is also another impediment although not a big one. So far, Pennsylvania has resisted interest on overdue support, but that may need to change as wage attachment collections yield to less reliable mail in or electronic payments from the people owing the support.
Meanwhile, for those on the receiving end, word that the obligor has gone “gig” has to be a frightening one. Rent or mortgages not paid by the 10th of the month come with substantial penalties as do payments for cars and credit cards. Most people with these obligations take timely payment seriously, but when an obligor is faced with a choice between being late on the rent and incurring a certain penalty or deferring domestic obligations free of charge, the choice is made easy.
If, as, when, the percentage of payments coming through wage attachment begins to decline significantly there will be a corresponding drop in federal payments to states in support of the collection system. To this writer’s mind, the imposition of interest on arrears does little to encourage prompt payment. But the mortgage industry has taught us well that the threat to see a 5% penalty (e.g., $50 on a $1,000 payment that is late) does seem to have a curing effect on tardiness. The point is that the late payment problems exists; it is probably going to be a exacerbated as wage attachments decline in relation to total payments and it is in the interest of the system and the people supported by it to address the problem now with a change in the law.