Some workers lose up to a quarter of their paychecks paying off old debt from credit cards, medical bills and student loans, as well as child support.
The recession and its financial impacts are still being felt – and paid for – by millions of Americans.
According to a new ADP report, 7.2 percent of U.S. workers had wages garnished in 2013 to pay off child support and other debt, including credit cards, medical bills and student loans.
Other report findings include:
- Highest rate. Among employees ages 35 to 44, 10.5 percent of employees’ wages were garnished, the highest rate of all ages. Half owed child support, but the rest mainly owed consumer debts. Also, the garnishment rate was highest (10 percent) among American workers earning $25,000 to $39,999 per year. More people were garnished for consumer debts in this group than child support, which marks a significant change from prior years. “In the past, the vast majority of wage garnishments went to secure child support payments or to collect on unpaid taxes,” NPR said.
- Big hits. Forty-eight percent of manufacturing companies had at least one employee whose wages were being garnished. Transportation and utility companies ran a close second at 42 percent. The lowest percentage – 23 percent – were in professional and business services, financial activities, and education and health services. “This disparity suggests a possible relationship between garnishment and blue- and white-collar job categories,” ADP said.
- Different region, different rate. The Midwest had the highest percentage of garnishment at 8.9, and the Northeast region had the lowest at 4.9 percent.
Garnishment can have a terrible impact on workers, especially those who are barely able to make ends meet.
Creditors and collectors have pursued struggling cardholders and other debtors in court, securing judgments that allow them to seize a chunk of even meager earnings. The financial blow can be devastating — more than half of U.S. states allow creditors to take a quarter of after-tax wages.
An ADP press release said wage garnishment is taking its toll on employees and their employers.
Employees who have their wages garnished can find it humiliating and stressful, often resulting in decreased workplace productivity and motivation. Employers may be exposed to financial risk when their employees’ wages are garnished by becoming liable to creditors for an employee judgment if they do not assist with the garnishment appropriately.
Did you realize that the wages of so many Americans are being garnished? Share your comments below or on our Facebook page.