At the request of ProPublica, ADP, the nation’s largest payroll services provider, undertook a study of 2013 payroll records for 13 million employees. ADP’s report, released today, shows that more than one in 10 employees in the prime working ages of 35 to 44 had their wages garnished in 2013.
Roughly half of these debtors, unsurprisingly, owed child support. But a sizeable number had their earnings docked for consumer debts, such as credit cards, medical bills and student loans.
ADP’s study, the first large-scale look at how many employees are having their wages garnished and why, reveals what has been a hidden burden for working-class families. Wage seizures were most common among middle-aged, blue-collar workers and lower-income employees. Nearly 5 percent of those earning between $25,000 and $40,000 per year had a portion of their wages diverted to pay down consumer debts in 2013, ADP found.
Perhaps due to the struggling economy in the region, the rate was highest in the Midwest. There, over 6 percent of employees earning between $25,000 and $40,000 — one in 16 — had wages seized over consumer debt. Employees in the Northeast had the lowest rate. The statistics were not broken down by race.
Currently, debtors’ fates depend significantly on where they happen to live. State laws vary widely. Four states — Texas, Pennsylvania, North Carolina and South Carolina — largely prohibit wage garnishment stemming from consumer debt. Most states, however, allow creditors to seize a quarter of a debtor’s wages — the highest rate permitted under federal law.