Touchy subjects are a pattern in this column. As I end the year, I want to touch upon another subject that is not on the radar of mainstream media; garnishments. No, not the green stuff on your plate no one eats at fancy restaurants. I am talking about financial garnishments.
The garnishments of wages in our country are shrinking the spending power of the middle and lower classes at an alarming rate. The Federal Poverty Rate only accounts for incomes before garnishments. Currently, tracking of real income after garnishments remains unmonitored. While I do not have an exact figure, I do have some facts that can give us an idea of how serious the problem is in our country.
What is a garnishment? In a technical sense, Child Support and the IRS are the firsts that come to people’s minds. Student loans that go defaulted are also garnished from wages. Currently, 7 million people are in default. Another garnishment is creditor debt. 13% of Americans are likely to go into default. This will lead to additional garnishments. (Before you judge, medical debt is the second highest reason for bankruptcy and credit debt.) Medical debt is also a garnishment. Not the bills itself, but for those who are poor and receiving public assistance, they are being garnished for medical insurance, medications, and bills related to medical expenses by local municipalities where the laws allow. (Four states do not allow these types of garnishments at this time.)
What about garnishments that are not called garnishments? For example, Obamacare? If you do not have health insurance, you will have to pay a penalty of $95.00 individual, and up to $225.00 per family household. A penalty is a garnishment, albeit not through your payroll tax. However, the affordable care act garnishes your wages in another way. There has been a shift to offering single coverage at an inexpensive rate and family coverage having a huge increase this year. Some families are absorbing those increases through their payroll. Again, this is a garnishment.
How about unpaid court fines? Court fines can be accumulated through many means. Traffic violations are a common one but not the sole reason. Courts can charge you for paperwork and fine you along the way for not paying a bill on time. This leads to garnishments of your wages. The next time you see a single mom or dad in a van full of children pulled over for a routine traffic stop, they could be subject to a future garnishment. When faced with a choice of paying the rent or groceries versus a fine, sustenance wins out every time over court fees, thus leading to larger fines.
I am sure research could find more garnishments for consideration for this article. The bottom line is people are overburdened to the point that it impacts our sustainability as a individual and greater yet, a family unit. While some garnishments are fair and equitable, it can be argued that the expansion of alternative garnishments have deepened the divide for many families to support a living wage. The greater the pressures are on livable wages, we will see an even further decline of the middle and lower classes.
Why is this important issue not on the radar? Political aspirations aside for many in office, the problem is too large. Similar to other issues regarding debt, the government has no solutions to the problem. Healthcare and student loans have been spiraling out of control for the past 3 decades. It is politically easier to rely on garnishments than solutions. Politicians will ignore the problem until it reaches a boiling point with the voters. Until then, trillions of dollars of garnishments will wear down our economy. Garnishments impact disposable income, and this will impact consumer spending. Stop gaps such as refunds from the Federal Government only temporarily fix the problem. People tend to use refunds for daily living expenses instead of paying off back debt. Until all levels of governments decide to look at the entire problem, many will suffer from the oppression of garnishments. Hopefully in 2015, more politicians will examine the problem that we are an over garnished society.