Working Paper: NBER ID: w30724
Authors: Anthony A. Defusco; Brandon M. Enriquez; Margaret B. Yellen
Abstract: Wage garnishment allows creditors to deduct money directly from workers’ paychecks to re-pay defaulted debts. We document new facts about wage garnishment between 2014–2019 using data from a large payroll processor who distributes paychecks to approximately 20%of U.S. private-sector workers. As of 2019, over one in every 100 workers was being garnished for delinquent debt. The average garnished worker experiences garnishment for five months, during which approximately 11% of gross earnings is remitted to their creditor(s). The beginning of a new garnishment is associated with an increase in job turnover rates but no intensive margin change in hours worked.
Keywords: wage garnishment; debt collection; administrative payroll records
JEL Codes: D14; G5; J22; K35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage garnishment (J31) | job turnover rates (J63) |
| garnishment (M52) | financial strain (H60) |
| garnishment (M52) | disparities in garnishment rates (K35) |
| garnishment (M52) | increase in rates driven by student debt (G51) |