Recent Study Discusses the Incomes of the Newly Divorced: Do They Earn Less Money?

A recent study published by the St. Louis Federal Reserve Bank indicates that married men tend to earn more money than single men and other workers. The study sought out to gauge the impact of divorce on an individual’s labor income.

According to the study, although the divorce rate is decreasing over time, there remains a large number of divorced individuals in the U.S. In 2022, nearly 14% of the population between the ages of 25 and 65 were divorced or separated. In 2001, that figure was nearly 16%.

Income data from the U.S. census establish the annual wage and salary income of employed workers ages 25 to 65. Data from 2022 is divided between those who were divorced in the past 12 months and those who were not. The data shows that individuals who were divorced in the past 12 months earned less money than those who were not. The average income difference across all ages was 12%.

Reasons for loss of income are unclear 

Most of the research done in this area considers the effect of divorce on expenses. The recently divorced tend to pay more money and have greater expenses family-wide than those who remain married. Different living arrangements influence how much money the family as a whole has to pay for living expenses. Two residences add up to higher expenses.

Divorces also matter when it comes to one’s tax status, health care spending, child care expenses, and more. Divorces also impact wealth since retirement accounts and other assets are often split between the parties to a divorce.

This study, however, sought to determine the impact of divorce on income. Why do recently divorced workers tend to earn less than their married counterparts? The data stops short of indicating a reason why recently divorced workers earn less, but it could be due to working fewer hours, changes to their mental health, or taking on lower-paying jobs.

Sadly, the census data survey on work hours typically asks questions such as: “During the past 12 months, how many hours did you usually work?” This question combines data from before and after the divorce leading to a smudging of information that renders any analysis impossible.

The most likely reasons for earning less money after divorce tend to gravitate toward mental health. An individual who is recently divorced is facing a significant change in their life and this upheaval could have mental health consequences. Those who have mental health problems also tend to have physical health problems brought on by alcoholism, depression, and anxiety.

Another important question that the census data cannot address is whether or not the income loss was persistent or temporary. Do recently divorced workers tend to go back to earning what they earned before their divorce? How long does it take before they begin earning what they used to earn? The census data cannot answer this question effectively.

Talk to a Philadelphia, PA Divorce Lawyer Today 

The Law Offices of Lauren H. Kane represent the interests of those who are pursuing a divorce in Philadelphia. Call our Philadelphia family lawyers today to schedule an appointment, and we can begin discussing your next steps right away.

Source:

stlouisfed.org/on-the-economy/2024/feb/effect-divorce-workers-incomes