Indicators of Welfare Dependence, 2001

Chapter II:
Indicators of Dependence

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Contents

Indicator:

1. Degree of Dependence
2. Receipt of Means-Tested Assistance and Labor Force Attachment
3. Rates of Receipt of Means-Tested Assistance
4. Rates of Participation in Means-Tested Assistance Programs
5. Multiple Program Receipt
6. Dependence Transitions
7. Dependence Spell Duration
8. Program Spell Duration
9. Long-Term Dependency
10. Long-Term Receipt
11. Events Associated with the Beginning and Ending of Program Spells

Following the format of the previous annual reports to Congress, Chapter II presents summary data related to indicators of dependence.  These indicators differ from other welfare statistics because of their emphasis on welfare dependence, rather than simple welfare receipt.  As discussed in Chapter I, the Advisory Board on Welfare Indicators suggested measuring dependence as the proportion of families with more than 50 percent of their total income in a one-year period coming from AFDC (now TANF), food stamps and/or SSI.  Furthermore, this welfare income was not to be associated with work activities.

The indicators in Chapter II were selected to provide information about dependence, following, to the extent feasible, the definition of dependence proposed by the Advisory Board.  Existing data from administrative records and national surveys, however, do not generally distinguish welfare benefits received in conjunction with work from benefits received without work.  Thus, it was not possible to construct one single indicator of dependence; that is, one indicator that measures both percentage of income from means-tested assistance and presence of work activities.

Instead, this chapter includes some indicators that focus on the percentage of recipients’ income from means-tested assistance, while other indicators focus on presence of work activities at the same time as welfare receipt.  Still other indicators present summary data and characteristics on all recipients, not limited to those with more than 50 percent of total income from welfare programs or those without work activities.

Overall, the indicators of dependency were selected to reflect both the range and depth of dependence.  Indicators in this chapter focus on recipients of three major means-tested cash and nutritional assistance programs: cash assistance through the Aid to Families with Dependent Children (AFDC) and the Temporary Assistance to Needy Families (TANF) programs, Supplemental Security Income (SSI) for elderly and disabled recipients, and the Food Stamp Program.

Here is a brief summary of each of the eleven indicators:

Indicator 1: Degree of Dependence.  This indicator focuses most closely on those individuals who meet the Advisory Board’s proposed definition of “dependence.”  Thus, it examines those individuals with more than 50 percent of their annual family income from AFDC/TANF, food stamps and/or SSI.  This indicator also shows the average percentage of income from means-tested assistance and earnings received by families with varied incomes relative to the poverty level (Indicator 1b).

Indicator 2: Receipt of Means-Tested Assistance and Labor Force Attachment.  This indicator looks further at the relationship between receipt of means-tested assistance and participation in the labor force.  This is an important issue because of the significant number of low-income individuals who use a combination of means-tested assistance and earnings from the labor force to get by each month.

Indicator 3: Rates of Receipt of Means-Tested Assistance.  This indicator paints yet another picture of dependence by measuring recipiency rates, that is, the percentage of the population that receives AFDC/TANF, food stamps, or SSI in an average month.  Program administrative data make these figures readily available over time, allowing a better sense of historical trends than is available from the more specialized indicators of dependence.

Indicator 4: Rates of Participation in Means-Tested Assistance Programs.  While means-tested public assistance programs are open to all that meet their requirements, not all eligible households participate in the programs.  This indicator uses administrative data and microsimulation models to reflect “take up rates” – the number of families that actually participate in the programs as a percentage of those who are eligible.

Indicator 5: Multiple Program Receipt.  Depending on their circumstances, individuals may choose a variety of different means-tested assistance “packages.”  This indicator looks at the percentage of individuals receiving AFDC/TANF, food stamps, and SSI in a month, examining how many rely on just one of these programs, and how many rely on a combination of two programs.

Indicator 6: Dependence Transitions.  This indicator uses data from the Survey of Income and Program Participation (SIPP) to look at the ability of individuals who are dependent on welfare in one year to make the transition out of dependence in the following year.

Indicator 7: Dependence Spell Duration.  Like Indicator 6, this indicator is concerned with dynamics of welfare receipt and welfare dependence.  It shows the proportion of individuals with short, medium, and long spells, or episodes, of AFDC receipt.  The focus is on individuals in AFDC families with no labor force participants.  Information on spell lengths for SSI and food stamps is provided in Indicator 8.

Indicator 8: Program Spell Duration.  One critical aspect of dependence is how long individuals receive means-tested assistance.  Like Indicator 7, this indicator provides information on short, medium, and long spells of welfare receipt.  It differs from Indicator 7 in looking at all recipients, regardless of attachment to the labor force, and in analyzing recipients of each of the three major means-tested programs – AFDC, food stamps, and SSI.

Indicator 9: Long-Term Dependency. This indicator uses data from the Panel Study of Income Dynamics (PSID) to examine dependency over a ten-year time period.  It measures dependency as individuals with more than 50 percent of their income from AFDC/TANF and food stamps, not counting SSI.

Indicator 10: Long-Term Receipt.  Many individuals who leave welfare programs cycle back on after an absence of several months.  Thus it is important to look beyond individual program spells, measured in Indicator 8, to examine the cumulative amount of time individuals receive assistance over a period of several years.  The issue of long-term receipt is particularly important in light of time limits that have been enacted under state TANF programs.

Indicator 11: Events Associated with the Beginning and Ending of Program Spells.  To gain a better understanding of welfare dynamics, it is important to go beyond measures of spell duration and examine information regarding the major events in people’s lives that are correlated with the beginnings or endings of program spells.  This measure focuses on receipt of AFDC.

INDICATOR 1:
DEGREE OF DEPENDENCE

Figure IND 1a.
Percentage of Total Income from Means-Tested Assistance Programs: 1998

Source:  March CPS data, analyzed using the TRIM3 microsimulation model.

• Less than 4 percent of the total population in 1998 received more than half of their total family income from TANF, food stamps and SSI.  This number has steady declined since 1993, when nearly 6 percent of the population could be defined as “dependent” on public assistance.  The decline in dependency over time was depicted in Figure SUM 1, in Chapter I.
• The vast majority (87 percent) of the total population received no means-tested assistance in 1998.  The inverse of this, or the percentage of those in families receiving at least one dollar of assistance from one of the three programs, is the recipiency rate of 13.5 percent shown in Figure and Table SUM 1, in Chapter I.
• In 1998, three out of four of individuals receiving some public assistance reported that TANF, food stamps, and SSI accounted for one-half or less of their total family income.
• As shown in Table IND 1a, a smaller percentage of non-Hispanic whites were receiving more than 50 percent of their annual income from means-tested assistance programs in 1998 (2 percent) than the percentage of non-Hispanic blacks and Hispanics similarly dependent on public assistance (11 percent and 7 percent, respectively).
• Very young children (birth to five years) were more likely than children of other ages to be in families receiving some amount of public assistance.  In addition, 8 percent of very young children were dependent on public assistance in 1998.

Figure IND 1b.
Percentage of Total Income from Various Sources, by Poverty Status: 1998

Source:  March CPS data, analyzed using the TRIM3 microsimulation model.

• Those in families with incomes below the poverty level received nearly half (48 percent) of their total family income from earnings and about a third (32 percent) of their total family income from means-tested assistance programs (AFDC/TANF, SSI, and food stamps) in 1998.  In contrast, those with family incomes over 200 percent of the poverty level received the majority (85 percent) of their incomes from earnings and less than one percent of their income from means-tested assistance (a percentage so small as to not be visible in Figure IND 1b).
• The percentage of family income received from earnings is inversely proportional to overall family income relative to the poverty line.  For example, the percentage of income received from earnings for those living in deep poverty (below 50 percent of poverty) was only 27 percent, compared to 48 percent for all poor individuals in 1998.
• On average, children were more likely than the elderly to live in families receiving a higher percentage of their income from means-tested assistance programs, as shown by Table IND 1b.  The elderly received more income from other sources, including Social Security benefits and private pensions.

INDICATOR 2:
RECEIPT OF MEANS-TESTED ASSISTANCE
AND LABOR FORCE ATTACHMENT

Figure IND 2a.
Percentage of Recipients in Families with Labor Force Participants,
by Program: 1998

Source: March CPS data, analyzed using the TRIM3 microsimulation model.

• In 1998, 56 percent of individuals who received TANF, 57 percent of individuals who received food stamps, and 37 percent of individuals who received SSI were in families with at least one person in the labor force.

• About one-fourth of TANF and food stamp recipients live in families with a part-time labor force participant.  In contrast, SSI recipients were more likely to live in families with no labor force participant, or in families with a full-time worker.

• As shown in Table IND 2a, among recipients of TANF, food stamps, and SSI, a larger percentage of children under age 6 were in families with at least one full-time worker, as compared to children ages 6 to 15. 

• Working-age male recipients of TANF and food stamps were more likely than working-age females to be in families with at least one full-time worker.

INDICATOR 3:
RATES OF RECEIPT OF MEANS-TESTED ASSISTANCE

Figure IND 3a.
Percentage of the Total Population Receiving AFDC/TANF, by Age: 1970-1999

Source:  U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, and U.S. Bureau of the Census, Resident Population Estimates of the United States by Age and Sex, April 1, 1990 to July 1, 2000, Internet release date January 2, 2001 (Available online at http://www.census.gov).

• Although the survey data needed to examine overall welfare receipt and dependency are not yet available past 1998, administrative data for AFDC/TANF, food stamps, and SSI provide measures of recipiency for each of these three programs through 1999, as shown in Figures IND 3a, IND 3b, and IND 3c.  Additional administrative data are shown in Appendix A.

• Less than 3 percent of the population received TANF in 1999.  This is the lowest rate of AFDC/TANF receipt in the 28 years shown in Table IND 3a.  The percentage of the total population receiving AFDC/TANF has dropped significantly since 1994, when it was at a 25-year high of over 5 percent. 
• AFDC/TANF recipiency rates have been much higher over time for children than for adults, with the child recipiency rates also showing more pronounced changes over time. Between 1993 and 1999, the receipt of AFDC/TANF receipt among children was cut in half (from 14 to 7 percent), the most rapid decline in a generation.

Figure IND 3b.
Percentage of the Total Population Receiving Food Stamps, by Age: 1975-1999

Source:  USDA, Food and Nutrition Service, Office of Analysis, Nutrition, and Evaluation, Characteristics of Food Stamp Households, Fiscal Year 1999, and earlier reports, and U.S. Bureau of the Census, Resident Population Estimates of the United States by Age and Sex, April 1, 1990 to November 1, 2000, Internet release date January 2, 2001 (Available online at http://www.census.gov).

• The food stamp recipiency rate, like the AFDC/TANF recipiency rate shown previously in Figure IND 3a, has fallen sharply in recent years.  The percentage of all persons receiving food stamps peaked in 1994, at nearly 11 percent, but dropped to less than 7 percent in 1999, its lowest point since 1979.
• As with AFDC/TANF, food stamp recipiency rates have been much higher over time for children than for adults.  Between 1980 and 1999, the percentage of all children who received food stamps was between two and one-half to three times that for all adults 18 to 59.
• Similar trends in food stamps recipiency – largely reflecting changes in the rate of unemployment and programmatic changes – existed across all age groups over time, as shown in Table IND 3b.  The percentages of individuals receiving food stamps within all age groups declined from 1984 through 1988, rose in the early 1990s, peaked in 1994, and fell sharply between 1994 and 1999.

Figure IND 3c.
Percentage of the Total Population Receiving SSI, by Age: 1974-1999

Source:  Social Security Administration, Office of Research, Evaluation, and Statistics, Social Security Bulletin ·Annual Statistical Supplement · 2000 (Data available online at http://www.ssa.gov/statistics), and U.S. Bureau of the Census, Resident Population Estimates of the United States by Age and Sex, April 1, 1990 to November 1, 2000, Internet release date January 2, 2001 (Available online at http://www.census.gov).

• Unlike the recipiency rates for AFDC/TANF and food stamps, which have been influenced by outside factors such as the economy and welfare reform, overall recipiency rates for SSI show less variation over time.  After trending downward slightly from 1975 to the early 1980s, the proportion of the total population that receives SSI has risen from 1.7 percent in 1983 to 2.4 percent in 1999.  As shown in Table IND 3c, the total number of recipients has grown by 70 percent over the same period, from 3.9 million to 6.6 million people.
• Elderly adults (aged 65 and older) have much higher recipiency rates than any other age group.  The gap has narrowed, however, as percentage of adults aged 65 and older has been cut nearly in half, declining from 11 percent in 1974 to less than 6 percent in 1999.
• The proportion of children receiving SSI increased gradually between 1975 and 1990, and grew more rapidly in the early-to-mid 1990s, reaching a high of 1.4 percent in 1996.  The rate has since fallen, with 1.2 percent of children receiving SSI in 1999.

INDICATOR 4:
RATES OF PARTICIPATION
IN MEANS-TESTED ASSISTANCE PROGRAMS

Figure IND 4. 
Participation Rates in the AFDC/TANF, Food Stamp and SSI Programs:  Selected Years

Source:  AFDC and SSI participation rates are tabulated using TRIM3 microsimulation model, while food stamp participation rates are from a Mathematica Policy Research, Inc. model.  See Tables IND 4a, IND 4b, and IND 4c for details.

• Whereas Indicator 3 examined participants as a percentage of the total population (recipiency rates), this indicator examines participating families or households as a percentage of the estimated eligible population (participation rates, also known as “take up” rates).

• Participation rates for both AFDC/TANF and the Food Stamp Program fell significantly between 1995 and 1998.  In contrast, the SSI participation rate showed a slight net increase over this time period. 

• Only 56 percent of the families estimated as eligible for AFDC/TANF actually enrolled and received benefits in an average month in 1998.  This was significantly lower than traditional participation rates, which ranged from 77 to 86 percent between 1981 and 1996.

• For the first time, in 1998 the SSI participation rate was significantly higher than the TANF rate – 71 percent versus 56 percent – while the food stamp participation rate was only slightly lower – 54 percent.

Table IND 4a.
Number and Percentage of Eligible Families Participating in AFDC/TANF:
Selected Years

Calendar Year	Eligible Families (in millions)	Participating Families (in millions)	Participation Rate (percent)
1981	4.8	3.8	80.2
1983	4.7	3.7	77.7
1985	4.7	3.7	79.3
1987	4.9	3.8	76.7
1988	4.8	3.7	78.4
1989	4.5	3.8	83.6
1990	4.9	4.1	82.2
1992	5.6	4.8	85.7
1993	6.1	5.0	81.7
1994	6.1	5.0	82.6
1994 (revised)	6.1	5.0	82.1
1995	5.7	4.8	84.3
1996	5.6	4.4	78.9
1997	5.6	3.7	67.5
1997 (adjusted)	5.4	3.7	69.2
1998 (adjusted)	5.4	3.0	55.8
Notes:  Participation rates are estimated by an Urban Institute model (TRIM3) which uses CPS data to simulate AFDC/TANF eligibility and participation for an average month, by calendar year.  There have been small changes in estimating methodology over time, due to model improvements and revisions to the CPS.  Most notably, since 1994, the model has been revised to more accurately estimate SSI participation among children, and in 1997 and 1998 the model was adjusted to more accurately exclude ineligible immigrants.  The numbers of eligible and participating families shown above include the territories and pregnant women without children, even though these two small groups are excluded from the TRIM model The numbers shown here implicitly assume that participation rates for the territories and for pregnant women with no other children are the same as for all other eligibles.  Source:  DHHS, Administration for Children and Families caseload tabulations, and unpublished data from the TRIM3 microsimulation model.

• The eligible population for AFDC/TANF declined by only 5 percent between 1995 and 1998, according to estimates shown in Table IND 4a.  Thus the large caseload declines over that period were largely a result of declining participation or “take up” rates among the eligible populations.

Table IND 4b.
Number and Percentage of Eligible Households Participating in the Food Stamp Program: Selected Years

	Eligible Households (in millions)	Participating Households (in millions)	Participation Rate (percent)
September 76	16.3	5.3	33
February 78	14.0	5.3	38
August 80	14.0	7.4	52
August 82	14.5	7.5	51
August 84	14.2	7.3	52
August 86	15.3	7.1	47
August 88	14.9	7.0	47
August 90	14.5	8.0	55
August 91	15.6	9.2	59
August 92	16.7	10.2	62
August 93	17.0	10.9	64
August 94 (o)	17.0	11.0	65
August 94 (r)	15.9	10.7	67
August 95	15.5	10.4	67
August 96	15.9	10.1	63
September 97	15.0	8.5	56
September 98	14.0	7.6	54
Note: Eligible households estimated from a Mathematica Policy Research, Inc. model that uses CPS data to simulate the Food Stamp Program.  Caseload data are from USDA, FNS program operations caseload data.  There have been small changes in estimating methodology over time, due to model improvements and revisions to the CPS.  Most notably, the model was revised in 1994 to produce more accurate (and lower) estimates of eligible households.  The original 1994 estimate and estimates for previous years show higher estimates of eligibles and lower participation rates relative to the revised estimate for 1994 and estimates for subsequent years. Source:  U.S. Department of Agriculture, Food and Nutrition Service, Trends in Food Stamp Program Participation Rates: Focus on September 1997.

• The proportion of eligible households who participated in the Food Stamp program fell from 63 percent in 1996 to 54 percent in 1998, a drop of 9 percentage points.  This is the third year in a row that there has been a decline in Food Stamp participation rates.

• In addition, there was a decline in the number of households eligible for the Food Stamp program, from almost 16 million in August 1994 to 14 million in September 1998.  This decline was driven by new eligibility restrictions on aliens and able-bodied adults without dependent children, growth in the economy, changes in the TANF program, and other factors.

• The significant drop in participating households, from 10.1 million households in August 1996 to 7.6 million households in September 1998, reflects the combined effect of a decline in the eligible population and lower participation rates.

Table IND 4c.
Percentage of Eligible Adult Units Participating in the SSI Program, by Type: 1993-1998

• In contrast to the declining participation rates for the AFDC/TANF and Food Stamp programs, the participation rate for adult units in the SSI Program has been increasing, from 62 percent in 1993, to 71 percent in 1997 and 1998.  Note, however, that some of the apparent growth between 1996 and 1997 may be due to a revision in estimating methodology, as noted above.

• In 1998, as in past years, disabled adults in one-person units had a higher participation rate (78 percent) than both aged adults in one-person units (64 percent) and adults in married-couple units (48 percent).

INDICATOR 5:
MULTIPLE PROGRAM RECEIPT

Figure IND 5.
Percentage of Population Receiving Assistance from Multiple Programs (TANF, Food Stamps, & SSI),
Among Those Receiving Assistance: 1998

Source: March CPS data, analyzed using the TRIM3 microsimulation model.

·          Of the 9 percent of the population in families receiving TANF, food stamps, or SSI benefits in an average month in 1998, nearly two-thirds (63 percent) received assistance from only one program.  Most of these received food stamps or SSI benefits only.  Another pattern of benefit receipt, found in over one-fourth of those with any receipt, was TANF and food stamps.

·          Children are more likely than others to live in families receiving TANF and/or food stamps.  For example, 8 percent of children under six lived in families receiving both TANF and food stamps in an average month in 1998, as shown in Table IND 5a.

·          The percentage of individuals receiving assistance from at least one program among  AFDC/TANF, food stamps, and SSI in an average month decreased during the mid-to-late 1990s (from 13 percent in 1993 to 9 percent in 1998), as shown in Table IND 5b.  The decline was most dramatic for those receiving a combination of AFDC/TANF and food stamps. 

Table IND 5a. Percentage of Population Receiving Assistance from Multiple Programs (TANF, Food Stamps, SSI), by Race and Age: 1998
	Any Receipt	One Program Only			Two Programs
		TANF	FS	SSI	TANF & FS	FS & SSI
All Persons	9.0	0.4	3.9	1.4	2.4	0.9
Racial Categories
Non-Hispanic White	5.7	0.2	2.4	0.9	1.4	0.7
Non-Hispanic Black	21.9	0.6	10.0	2.7	6.3	2.3
Hispanic	15.4	1.5	6.4	2.4	4.1	1.0
Age Categories
Children Ages 0-5	17.9	1.2	7.9	0.7	7.6	0.5
Children Ages 6-10	15.6	0.9	7.5	0.7	6.1	0.4
Children Ages 11-15	12.8	0.7	5.4	0.9	5.2	0.6
Women Ages 16-64	8.5	0.4	3.8	1.2	2.2	1.0
Men Ages 16-64	5.2	0.2	2.5	1.2	0.6	0.7
Adults Age 65 and over	7.9	0.0	1.9	3.8	0.0	2.2
See below for notes and source.

INDICATOR 6:
DEPENDENCE TRANSITIONS

Figure IND 6.
Dependency Status in 1995 of Persons Who Received More than 50 Percent of Income
from Means-Tested Assistance in 1994, by Race

Source:  Unpublished data from the SIPP, 1993 panel.

• Nearly four-fifths (79 percent) of all recipients who received more than 50 percent of their total income from means-tested assistance programs in 1994 also received more than 50 percent of their total income from these same programs in 1995.
• Of recipients who received more than 50 percent of their total income from AFDC, food stamps and SSI in 1994, a larger percentage of non-Hispanic whites became “less dependent” in 1995 (received 50 percent or less of their total income from means-tested assistance programs) compared to Hispanics and non-Hispanic blacks.
• As shown in Table IND 6, a slightly larger percentage of women who received more than half of their total income from means-tested assistance programs in 1994 remained “dependent” in 1995 compared to the same percentage for men (79 percent compared to 73 percent).

INDICATOR 7.
DEPENDENCE SPELL DURATION

Figure IND 7.
Percentage of AFDC Spells of Individuals in Families with No Labor Force Participants
for Individuals Entering Programs During the 1993 SIPP Panel, by Length of Spell

Source:  Unpublished data from the SIPP, 1993 panel.

• Forty-three percent of AFDC spells for individuals in families with no one in the labor force ended within a year.
• Over one-quarter (27 percent) of AFDC spells for individuals in families where no one participated in the labor force lasted four months or less.
• As shown in Table IND 7, a smaller percentage of AFDC spells to children in families with no labor force participants ended in four months or less compared to their adult counterparts (25 percent compared to 31 percent).
• Spells shown in Figure IND 7 are limited to spells of recipients in families without any labor force participation.  Spell lengths are shorter in Figure IND 8, which shows spells for all recipients, including those in families with labor force participants.  For example, whereas only half (50 percent) of spells shown in Figure IND 7 end in 20 months or less, over two-thirds (69 percent) of all AFDC spells last 20 months or less, as shown in Figure IND 8.

INDICATOR 8:
PROGRAM SPELL DURATION

Figure IND 8.
Percentage of AFDC, Food Stamp, and SSI Spells for Individuals Entering Programs
During the 1993 SIPP Panel, by Length of Spell

Source:  Unpublished data from the SIPP, 1993 Panel.

• Short spells lasting 4 months or less accounted for 31 percent of AFDC spells, 24 percent of SSI spells, and 33 percent of food stamp spells.
• Over one-half of all AFDC and food stamp spells lasted one year or less (56 percent and 60 percent, respectively).  In contrast, only 32 percent of SSI spells ended within one year.  The percentage of SSI spells that lasted more than 20 months is twice the percentage of AFDC and food stamp spells that lasted this long (see Table IND 5).
• As shown in Table IND 8, for AFDC spells, a larger percentage of short spells (lasting 4 months or less) and a smaller percentage of long spells (lasting more than 20 months) occurred among non-Hispanic whites compared to non-Hispanic blacks and Hispanics.
• A larger percentage of AFDC and food stamp spells among adults ages 16 to 64 ended within 4 months compared to spells among children.
• Short spells are less common among recipients in families without labor force participants, as shown previously in Figure and Table IND 7.