Chapter II. Indicators of Dependence

Last year's Interim Report to Congress recommended consideration of an extensive list of dependence indicators from a wide range of fields in an effort to examine the range of dependence from complete long-term dependence to total self-sufficiency. No attempt was made to prioritize among them, nor to distinguish between indicators of dependence and the risk factors associated with welfare receipt. In contrast, this first Annual Report attempts to narrow the focus and progress toward the charge of the Welfare Indicators Act.

Chapter I proposes that the multiple dimensions of dependence be assessed with a few key measures and includes for discussion a small set of indicators that, if determined to be useful in tracking welfare dependence, could be analyzed on a regular basis to help address the goal of reducing welfare dependence among families with children. As a starting point for discussion, the Advisory Board on Welfare Indicators suggested consideration of the following proposed definition of dependence. Some summary data on the proposed measures is also included.

A family is dependent on welfare if more than 50 percent of its total income in a one-year period comes from AFDC/TANF, Food Stamps and/or SSI, and this welfare income is not associated with work activities. Welfare dependency is the proportion of all families who are dependent on welfare.

The task of defining welfare dependence for the purpose of tracking it over time is a difficult one. In proposing a definition, the Advisory Board grappled with any number of issues. Acknowledging that simple recipiency is not a good measure of dependence, that dependence is not a single point but a continuum, that its multiple dimensions preclude a single measure of dependence, and that people dependent on private transfers are not at issue, the Advisory Board recommended that some arbitrary choices be made to advance the discussion.

The proposed definition is not without its limitations, if for no other reason than the complexity of the task. Many difficulties with the proposal revolve around data availability issues, which are discussed in Chapter IV. The seriousness of the issue is complicated by the challenge to identify a small set of indicators. This report recognizes that the definition is, at this point, only a proposal for discussion. For that reason, this chapter includes a broader set of program-related indicators of recipiency and dependence.

Indicators in this chapter focus exclusively on recipients of cash and nutrition assistance. They reflect both the range and depth of dependence through data relating recipients' level of welfare income, amount of earnings, duration of receipt, participation in other assistance programs, and participation in the labor force. A brief description of each indicator is included, along with trend data where available and a graphical illustration.

INDICATOR 1. DEGREE OF DEPENDENCE

This indicator captures the degree of dependence by examining total family income and the percentage of total family income from means-tested assistance programs.

• Eighty-three percent of the total population received no means-tested assistance in 1993. Table IND 1a reveals a similar pattern for 1992 (83 percent), 1990 (86 percent) and 1987 (85 percent).
• For all persons who received some assistance, most received 25 percent or less of their total family income from AFDC, Food Stamps and SSI (9 percent). Table IND 1a shows similar percentages for other years (9 percent in 1992, 8 percent in 1990, 8 percent in 1987).
• Table IND 1a shows that a larger percentage of non-Hispanic blacks received more than 50 percent of their income from means-tested assistance than Hispanics or non-Hispanic whites in all four years.
• As further shown in Table IND 1a, somewhat larger percentages of children age 0 to 5, compared to children of other ages, lived in families that received more than 50 percent of their total income from means-tested assistance programs.

Table IND 1a. Percent of Total Income from Means-Tested Assistance Programs for the Total Population, Selected Years

Note: Means-tested assistance includes AFDC, SSI and Food Stamps. While only affecting a small number of cases, general assistance income is included under AFDC. Total > 50% includes all persons with more than 50 percent of their income from these means-tested programs.

Source: Unpublished data from the SIPP, 1987, 1990 and 1992 panels.

For half of all recipients, AFDC and Food Stamps did not comprise more than 50 percent of total income at any time between 1982 and 1991. This was true for 55 percent of all recipients between 1972 and 1981.

The percentages of recipients who received more than 50 percent of total income from AFDC and Food Stamps for 6 to10 years are considerably smaller for all groups than the percentages for 1 to 5 years.

As shown in Table IND 1b, of child recipients, the percentage of black children in families who did not receive more than 50 percent of their income from AFDC and Food Stamps in any year increased across the two time periods (24 to 31 percent). In comparison, the same percentages for non-black children decreased substantially across the two time periods (50 to 37 percent).

Table IND 1b. Percent of Recipients with More than 50 Percent of Income from AFDC and Food Stamps by Number of Years

Source: Unpublished data from the PSID, 1972 - 1991.

• Not surprisingly, poorer families received a larger percentage of their income from transfer programs and Food Stamps while wealthier families received a larger percentage of their income from earnings.
• Poor individuals (less than 100 percent of poverty) received 41 percent of their total family income from means-tested assistance programs (transfer income and Food Stamps). In contrast, the percentage for those who are at least 200 percent above the poverty line is much lower (less than one percent).
• Those living in deep poverty (total family income less than 50 percent of the poverty line) relied heavily on transfer income from AFDC and SSI (36 percent of total family income) as well as Food Stamps (35 percent of total family income).
• The composition of income for all poor persons (less than 100 percent of poverty) is significantly different than that for those living in deep poverty (less than 50 percent of poverty). For example, the percentage of income from earnings for all poor individuals is nearly twice the percentage for those in deep poverty. The percentage of income from transfer programs is about two-thirds and the percentage of income from Food Stamps is less than half the percentage for the very poor.

Table IND 1c. Percent of Total Income from Various Sources by Poverty Status, 1992

Note: Transfer income is defined as AFDC and SSI. While only affecting a small number of cases, general assistance income is included under AFDC. Other income is non-transfer, non-earnings income such as child support, alimony, pensions, survivor benefits, interest and dividends. Poverty status categories are not mutually exclusive. Source: Unpublished data from the SIPP, 1992 panel.