Indicators of Welfare Dependence:  Annual Report to Congress, 2005

Chapter III.
Predictors and Risk Factors
Associated with Welfare Receipt

[ Main page of Report | Contents of Report ]

Contents

Economic Security Risk Factors

• ECON 1.  Poverty Rates
• ECON 2.  Deep Poverty Rates
• ECON 3.  Experimental Poverty Measures
• ECON 4.  Poverty Rates with Various Means-Tested Benefits Included
• ECON 5.  Poverty Spells
• ECON 6.  Child Support
• ECON 7.  Food Insecurity
• ECON 8.  Lack of Health Insurance

Employment and Work-Related Risk Factors

• WORK 1.  Labor Force Attachment
• WORK 2.  Employment among the Low-Skilled
• WORK 3.  Earnings of Low-Skilled Workers
• WORK 4.  Educational Attainment
• WORK 5.  High School Dropout Rates
• WORK 6.  Adult Alcohol and Substance Abuse
• WORK 7.  Adult and Child Disability
• WORK 8.  Labor Force Participation of Women with Children under 18

NonMarital Birth Risk Factors

• BIRTH 1.  Nonmarital Births
• BIRTH 2.  Nonmarital Teen Births
• BIRTH 3.  Nonmarital Teen Births within Age Groups
• BIRTH 4.  Never-Married Family Status

The Welfare Indicators Act challenges the U.S. Department of Health and Human Services to identify and set forth not only indicators of welfare dependence and welfare duration but also predictors and causes of welfare receipt. However, welfare research has not established clear and definitive causes of welfare receipt and dependence. Instead, it has identified a number of risk factors associated with welfare use. For the purposes of this report, the terms “predictors” and “risk factors” are used somewhat interchangeably.

Following the recommendation of the Advisory Board, this chapter includes a wide range of possible predictors and risk factors. As research advances, some of the “predictors” included in this chapter may turn out to be simply correlates of welfare receipt, some may have a causal relationship, some may be consequences, and some may have predictive value.

The predictors/risk factors included in this chapter are grouped into three categories: economic security risk factors, employment-related risk factors, and risk factors associated with nonmarital childbearing.

Economic Security Risk Factors (ECON). The first group includes eight measures associated with economic security. This group encompasses five measures of poverty, as well as measures of child support receipt, food insecurity, and lack of health insurance. The tables and figures illustrating measures of economic security are labeled with the prefix ECON throughout this chapter.

Poverty measures are important predictors of dependence, because families with fewer economic resources are more likely to be dependent on means-tested assistance. In addition, poverty and other measures of deprivation, such as food insecurity, are important to assess in conjunction with the measures of dependence outlined in Chapter II.

Reductions in caseloads and dependence can reduce poverty, to the extent that such reductions are associated with greater work activity and higher economic resources for former welfare families. However, reductions in welfare caseloads can increase poverty and other deprivation measures, to the extent that former welfare families are left with fewer economic resources.

Several aspects of poverty are examined in this chapter. Those that can be updated annually using the Current Population Survey include: overall poverty rates (ECON 1); the percentage of individuals in deep poverty (ECON 2), and poverty rates using alternative definitions of income (ECON 3 and 4). The chapter also includes data on the length of poverty episodes or spells (ECON 5).

This chapter also includes data on child support collections (ECON 6), which can play an important role in reducing dependence on government assistance and thus serve as a predictor of dependence. Household food insecurity (ECON 7) is an important measure of deprivation that, although correlated with general income poverty, provides an alternative measure of tracking the incidence of material hardship and need, and how it may change over time. Finally, health insurance (ECON 8) is tied to the income level of the family, and may be a precursor to future health problems among adults and children.

Employment and Work-Related Risk Factors (WORK). The second grouping, labeled with the WORK prefix, includes eight factors related to employment and barriers to employment. These measures include data on overall labor force attachment and employment and earnings for low-skilled workers, as well as data on barriers to work. The latter category includes incidence of adult and child disabilities, adult substance abuse, and levels of educational attainment and school drop-out rates.

Employment and earnings provide many families with an escape from dependence. It is important, therefore, to look both at overall labor force attachment (WORK 1), and at employment and earnings for those with low education levels (WORK 2 and WORK 3). The economic condition of the low-skill labor market is a key predictor of the ability of young adult men and women to support families without receiving means-tested assistance.

The next two measures in this group (WORK 4 and WORK 5) focus on educational attainment. Individuals with less than a high school education have the lowest amount of human capital and are at the greatest risk of being poor, despite their work effort.

Measures of barriers to employment provide indicators of potential work limitations, which may be predictors of greater dependence. Substance abuse (WORK 6) and disabling conditions among children and adults (WORK 7) all have the potential of limiting the ability of the adults in the household to work. In addition, debilitating health conditions and high medical expenditures can strain a family's economic resources. The labor force participation of women with children (WORK 8) is also a predictor of dependence.

Nonmarital Birth Risk Factors (BIRTH). The final group of risk factors addresses out-of-wedlock childbearing. The tables and figures in this subsection are labeled with the BIRTH prefix. This category includes long-term time trends in nonmarital births (BIRTH 1), nonmarital teen births (BIRTH 2 and BIRTH 3), and children living in families with never-married parents (BIRTH 4). Children living in families with never-married mothers are at high risk of becoming dependent as adults, and it is therefore important to track changes in the size of this vulnerable population.

As noted above, the predictors/risk factors included in this chapter do not represent an exhaustive list of measures. They are merely a sampling of available data that address in some way the question of how a family is faring on the scale of deprivation and well-being. Such questions are a necessary part of the dependence discussion as researchers assess the effects of welfare reform.

Economic Security Risk Factor 1.
Poverty Rates

Figure ECON 1.
Percentage of Persons in Poverty, by Age: 1959-2003

Source: U.S. Bureau of the Census, "Poverty in the United States: 2003," Current Population Reports, Series P60-226 and data published online at http://www.census.gov/hhes/www/poverty.html.

• The official poverty rate was 12.5 percent in 2003, an increase over the rate of 12.1 percent in 2002. Even so, the percentage of persons living in poverty in 2003 was below the poverty rates experienced in most of the 1980s and 1990s.
• Children under 18 had a poverty rate of 17.6 percent in 2003, up from 16.7 percent in 2002. As in past years, the child poverty rate is considerably higher than the overall poverty rate.
• The poverty rate for the elderly (persons ages 65 and over) was 10.2 percent in 2003, down slightly from the 2002 rate. This was a far lower poverty rate than the rate for children under 18 (17.6 percent) and similar to adults ages 18-64.
• Poverty rates by race are affected by a change in the questionnaire that allows individuals to report one or more races. The poverty rate for individuals reporting black race alone was 24.4 percent, as shown in Table ECON 1; the rate for those reporting black alone or in combination with other races was 24.3 percent (data not shown). Under either measurement, the gap between black and white poverty rates was close to 14 percentage points, slightly higher than the historic low of 13 percentage points in 2000 and 2001; but significantly lower than the early 1990s, when it exceeded 21 percentage points.

[ Go to Contents ]

Economic Security Risk Factor 2.
Deep Poverty Rates

Figure ECON 2.
Percentage of Total Population below 50, 100, and 125 Percent of Poverty Level, 1975-2003

Source: U.S. Bureau of the Census,"Poverty in the United States: 2003," Current Population Reports, Series P60-226 and unpublished tables available online at http://www.census.gov/hhes/www/poverty.html.

• The percentage of the population in "deep poverty" (with incomes below 50 percent of the federal poverty level) was 5.3 percent in 2003, compared to an overall poverty rate of 12.5 percent. Only about 4 percent of the population was "near-poor" (had incomes at or above 100 percent but below 125 percent of the federal poverty level).
• In general, the percentage of the population with incomes below 50 percent of the poverty threshold has followed a pattern that reflects the trend in the overall poverty rate, as shown in Figure ECON 2. The percentage of people below 50 percent of poverty rose in the late 1970s and early 1980s, but then, after falling slightly, rose to a second peak in 1993. The rates for 100 percent of poverty and 125 percent of poverty followed a somewhat similar pattern with more pronounced peaks and valleys.
• Over the past two decades, there has been an overall increase in the proportion of the poverty population in deep poverty. From a low of 28 percent of the poverty population in 1976, this population rose to nearly 43 percent in 2003.
• The total number of poor people in 2003 was 35.9 million, as shown in Table ECON 2. While higher than the previous year, this number was 3.4 million lower than the peak of 39.3 million in 1993.

[ Go to Contents ]

Economic Security Risk Factor 3.
Experimental Poverty Measures

Figure ECON 3.
Percentage of Persons in Poverty Using Various Experimental Poverty Measures by Age: 2002

Source: U.S.Bureau of the Census,"Poverty in the United States: 2002," Current Population Reports, Series P60-222, available online at http://www.census.gov/prod/2003pubs/p60-222.pdf, and unpublished CPS data from the U.S. Census Bureau.

• Three experimental measures of poverty (developed by the Census Bureau in response to the recommendation of a 1995 panel of the National Academy of Sciences) yield poverty rates that are similar to the official poverty measure overall, but differ by age and other characteristics.
• Experimental measures generally show lower poverty rates among children than the official measure, partly because they take into account non-cash benefits that many children receive. Conversely, experimental measures show higher rates of poverty among the elderly than the official measure, in part due to the inclusion of certain out-of-pocket health costs in these measures.
• All three alternative measures shown in Figure ECON 3 take into account geographic adjustments (GA) in housing costs; the measures can also be calculated with no geographic adjustment (NGA), as shown in Tables ECON 3a and 3b.See note to Table ECON 3a.

[ Go to Contents ]

Economic Security Risk Factor 4.
Poverty Rates with Various Means-Tested Benefits Included

Figure ECON 4.
Percentage of Total Population in Poverty with Various Means-Tested Benefits Added to Total Cash Income: 1979-2003

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1980-2004, by the Congressional Budget Office.

• The official poverty rate — the definition of which includes means-tested cash assistance (primarily TANF and SSI) in addition to pre-tax cash income and social insurance — was 12.5 percent in 2003, as shown in the bold line with empty boxes in Figure ECON 4. Without cash welfare, the 2003 poverty rate would be 13.2 percent, as shown by the top line in the figure above.
• Adding other non-cash, public assistance benefits to this definition has the effect of lowering the percentage of people who have incomes below the official poverty rate. Adding in the value of food and housing benefits reduces the poverty rate to 11.2 percent in 2003.
• When income is defined as including benefits from the Earned Income Tax Credit (EITC) and federal taxes, the percentage of the total population in poverty decreases to 10.4 percent in 2003. Federal taxes and tax credits have had a net effect of reducing poverty rates since the significant increases in the size of the EITC in 1993 and 1995.
• The combined effect of means-tested cash assistance, food and housing benefits, EITC and taxes was to reduce the poverty rate in 2003 by 2.8 percentage points, as shown in Table ECON 4. Net reductions in poverty rates were somewhat lower during the recession of the early 1980s, and somewhat higher in the mid-1990s, largely due to expansions in the EITC.

[ Go to Contents ]

Economic Security Risk Factor 5.
Poverty Spells

Figure ECON 5.
Percentage of Poverty Spells for Individuals Entering Poverty during the 1993 and 2001 SIPP Panels, by Length of Spell

Source:  Unpublished tabulations from the Survey of Income and Program Participation, 1993 and 2001 panels.

• About half of all poverty spells that began during the 2001 SIPP panel ended within four months, and 77 percent ended within one year.Only 15 percent of all such spells were longer than 20 months.
• Spells of poverty that began between 1993 and 1995 were similar to those between 2001 and 2003; 47 percent ended within four months and 16 percent were longer than 20 months.
• Poverty spells among adults ages 65 and older were more likely to last longer than 20 months (21 percent) than spells among other age groups, as shown in Table ECON 5a.

[ Go to Contents ]

Economic Security Risk Factor 6.
Child Support

Figure ECON 6.
Child Support Collections Received by Families, by Receipt of IV-D Services and Other Assistance
(Billions of 2001 Dollars): 1993-2001

Source: Unpublished tabulations from the Current Population Survey, Child Support Supplement, 1994-2002.

• In 2001 families reported receiving $22.9 billion in child support payments from the non-resident parent. This amount represents current year support received for a twelve-month period and does not include amounts paid for prior periods (arrearages) or amounts retained by the federal and state government to recoup welfare costs. Total child support collections have increased by 26 percent since 1993, after adjusting for inflation.
• The amount of payments received by families who also received AFDC/TANF cash assistance at some point in the year has declined, from $2.2 billion in 1993 (in inflation-adjusted dollars) to $1.0 billion in 2001. This partly reflects the decline in the AFDC/TANF caseloads. In addition, some states no longer "pass-through" any payments to families receiving TANF. Prior to the enactment of PRWORA in 1996, states were required to pass-through the first $50 of any child support collected.
• Child support payments to families who did not receive TANF, but received another form of public assistance (SSI, food stamps, Medicaid or housing assistance) increased significantly between 1993 and 2001, from $2.3 to $4.0 billion (in 2001 dollars). This group of families includes former TANF recipients, as well as families at risk of turning to cash assistance. The increased collections for this group more than offset the decline in payments to TANF families.
• The total amount reported received by families through the child support enforcement system (title IV-D of the Social Security Act) was $12.8 billion, or 56 percent of all child support payments received by families, as shown in Table ECON 6.

[ Go to Contents ]

Economic Security Risk Factor 7.
Food Insecurity

Figure ECON 7.
Percentage of Households Classified by Food Security Status: 2003

Source: U.S.Department of Agriculture, Economic Research Service, Household Food Security in the United States, 2003.

• A large majority (89 percent) of American households was food secure in 2003 — that is, showed little or no evidence of concern about food supply or reduction in food intake.
• The prevalence of food insecurity with hunger in 2003 was estimated to be 3.5 percent. During the twelve months ending in December 2003, one or more members of these households experienced reduced food intake and hunger at times during the year as a result of financial constraints. Food insecurity would be lower if measured over a monthly basis.
• An additional 7.7 percent of households experienced food insecurity, but were without hunger, during the twelve months ending in December 2003. Although these households showed signs of food insecurity in their concerns and in adjustments to household food management, little or no reduction in food intake was reported.
• Poor households have a higher rate of food insecurity with hunger (12.6 percent) than the 3.5 percent rate among the general population, as shown in Table ECON 7a. Only 1.2 percent of families with incomes at or above 185 percent of the poverty level showed evidence of food insecurity with hunger.

[ Go to Contents ]

Economic Security Risk Factor 8.
Lack of Health Insurance

Figure ECON 8.
Percentage of Persons without Health Insurance, by Income: 2003

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 2004.

• Poor persons were twice as likely as all persons to be without health insurance in 2003 (31 percent compared to 16 percent). While the ratio varied across categories, persons with family income at or below the poverty line were more likely to be without health insurance regardless of race/ethnicity, gender, educational attainment, or age.
• Hispanics were the ethnic group least likely to have health insurance in 2003, among both the general population and those with incomes below the poverty line.
• While non-Hispanic black individuals in general were less likely to have insurance than non-Hispanic white individuals, poor non-Hispanic black individuals were about as likely to have insurance as poor non-Hispanic white individuals.
• Among all persons, education levels were inversely related to health insurance coverage. However, among poor persons, educational attainment made little difference as to whether individuals had health insurance.
• As shown in Table ECON 8, about half of poor people ages 25 to 34 are without health insurance. Among the general population, individuals ages 18 to 24 are the most likely to be without health insurance.

[ Go to Contents ]

Employment and Work-Related Risk Factor 1.
Labor Force Attachment

Figure WORK 1.
Percentage of Individuals in Families with Labor Force Participants

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 2004.

• In 2003, 71 percent of the total population lived in families with at least one person working on a full-time, full-year basis (FT/FY), as shown in Table WORK 1a. The percent of full-time, full-year workers was slightly lower than in 2002, although still higher than during most of the 1990s, as shown in Table WORK 1b.
• Overall, 14 percent of the population lived in families with no labor force participants and 15 percent lived in families with part-time and/or part-year labor force participants in 2003.
• Persons of Hispanic origin were less likely than non-Hispanic whites or non-Hispanic blacks to live in families with no one in the labor force in 2003 (9 percent compared to 15 and 17 percent, respectively).
• Working-age women in 2003 were more likely than working-age men to live in families with no one in the labor force (8 percent compared to 6 percent), as shown in Table Work 1a.Men were more likely than women to live in families with at least one full-time, full-year worker (81 percent compared to 77 percent).

[ Go to Contents ]

Employment and Work-Related Risk Factor 2.
Employment Among The Low-Skilled

Figure WORK 2.
Percentage of All Persons Ages 18 to 65 with No More than a High School Education
Who Were Employed at Any Time during Year: 1968-2003

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1969-2004.

• Employment rates for women with a high school education or less generally increased during the 1980s and 1990s, although this trend has shown some modest reversal since 2000. Employment levels have been higher among low-skilled non-Hispanic white and black women (67 and 65 percent, respectively, in 2003) than among low-skilled Hispanic women (57 percent).
• In contrast, employment levels for men with a high school education or less have decreased over the past three decades. The decline has been steepest among non-Hispanic black men, whose employment level in 2003 (66 percent) was considerably lower than those of non-Hispanic white and Hispanic men (81 and 85 percent respectively).
• As shown in Figure and Table WORK 2, employment levels for non-Hispanic black men with a high school education or less were 1 percentage point higher than those of similarly educated non-Hispanic black women in 2003. In contrast, there was a 14 percentage point difference in employment levels of non-Hispanic white men and women with a high school education or less, and a 28 percentage point difference between similarly educated Hispanic men and women.

[ Go to Contents ]

Employment and Work-Related Risk Factor 3.
Earnings of Low-Skilled Workers

Figure WORK 3.
Mean Weekly Wages of Women and Men Working Full-Time, Full-Year with No More than a High School Education, by Race (2003 Dollars): Selected Years

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1981-2004.

• Average weekly wages of low-skilled women have been consistently lower than those of low-skilled men. For example, the average weekly wages of non-Hispanic black women without a high school education who worked full-time, full-year were 77 percent of those of men of the same race, education, and work status in 2003 ($464 compared to $605).
• Non-Hispanic white women have had the highest average weekly wages among low-skilled women working full-time, full-year reaching $561 in 2003. This level is a 20 percent increase over their mean weekly wages in 1980. Over the same time period, non-Hispanic black women and Hispanic women’s weekly wages increased at slower rates (8 percent and 5 percent, respectively).
• For men, the gap between mean weekly wages of non-Hispanic white and black full-time workers with low education levels has narrowed somewhat over time. Since 1980, the mean weekly wage for low-skilled non-Hispanic black men working full-time has increased by 5 percent, while the mean wage for their white counterparts has declined slightly (by 1 percent). In 2003, the mean weekly wage for low-skilled non-Hispanic black men was $605, or 79 percent of the $766 weekly wage for low-skilled non-Hispanic white men.
• Over the past two decades, both Hispanic women and men’s wages have lagged behind non-Hispanic whites and blacks among low-skilled full-time workers. In 2003, Hispanic women’s wages were 25 percent lower than non-Hispanic white women and 9 percent lower than non-Hispanic black women. Hispanic men trailed non-Hispanic white men by 33 percent and non-Hispanic black men by 16 percent.

[ Go to Contents ]

Employment and Work-Related Risk Factor 4.
Education Attainment

Figure WORK 4.
Percentage of Adults Ages 25 and over, by Level of Educational Attainment: 1960-2003

Source: U.S. Bureau of the Census, "Educational Attainment in the United States, 2003," Current Population Reports, P20-550, and earlier reports.

• There has been a marked decline over the past 40 years in the percentage of the population that has not received a high school education. This percentage fell from 59 percent in 1960 to 15 percent in 2003.
• The percentage of the population receiving a high school education only (with no subsequent college) was 25 percent in 1960 and rose to 39 percent in 1988. Since then this figure has fallen to 32 percent in 2003, although some of this decline is a result of a change in the survey methodology in 1992 (see note to Table WORK 4).
• Between 1960 and 1990, the percentage of the population with some college (one to three years) doubled, from 9 percent to 18 percent. The apparent jump in 1992 is a result of a change in the survey methodology (see note to Table WORK 4), but the trend continued upward, reaching 25 percent in 2003.
• The percentage of the population completing four or more years of college has more than tripled from 1960 to 2003, rising steadily from 8 percent to 27 percent.

[ Go to Contents ]

Employment and Work-Related Risk Factor 5.
High-School Dropout Rates

Figure WORK 5.
Percentage of Students Enrolled in Grades 10 to 12 in the Previous Year Who Were Not Enrolled and Had Not Graduated in the Survey Year, by Race/Ethnicity: Selected Years

Source: U.S.Department of Education, National Center for Education Statistics, Dropout Rates in the United States: 2001 and earlier years (based on Current Population Survey data from the October supplement).

• Dropout rates for teens in grades 10 to 12 (all races) generally declined during the 1980s, from a high of 6.7 percent in the late 1970s to a low of 4.0 percent in the early 1990s. The rate then began rising in the early 1990s, reaching as high as 5.7 percent in 1995. Since then, it has fallen and remained relatively stable, at or below 5.0 percent since 1996.
• Dropout rates among Hispanic and non-Hispanic black teens have fluctuated considerably over this period. Still, dropout rates are generally highest for Hispanic teens and lowest for non-Hispanic white teens. In 2001, the dropout rate was 8.8 percent for Hispanic teens, compared to 6.3 percent for non-Hispanic black teens and 4.1 percent for non-Hispanic white teens.

[ Go to Contents ]

Employment and Work-Related Risk Factor 6.
Adult Alcohol and Substance Abuse

Figure WORK 6.
Percentage of Adults Who Used Cocaine or Marijuana or Abused Alcohol, by Age: 2003

Source: U.S. Department of Health and Human Services, National Survey on Drug Use and Health, 2003.

• In 2003, young adults (ages 18 to 25) were more likely than older adults to report alcohol abuse, marijuana use, or cocaine use in the past month. For example, more than one in six (17 percent) of adults 18 to 25 reported using marijuana in the past month during 2003, compared with 8 percent of adults 26 to 34 and 3 percent of adults 35 and older.
• The percentage of persons reporting binge alcohol use was significantly larger than the percentages for all other reported behaviors across all age groups, as shown in TableWORK 6.
• Among all adult age categories, the use of cocaine, marijuana and alcohol abuse did not increase or decrease more than 1 percentage point between 2002 and 2003, as shown in Table WORK 6.

[ Go to Contents ]

Employment and Work-Related Risk Factor 7.
Adult and Child Disability

Figure WORK 7.
Percentage of the Non-Elderly Population Reporting a Disabilityby Race/Ethnicity and Age: 2003

Source: Unpublished tabulations from the National Health Interview Survey, 2003.

• In 2003, non-elderly adults were more likely than children to have an activity limitation, 11.2 percent compared to 7.3 percent.
• While non-elderly adults were more likely than children to report an activity limitation, a higher percentage of children than adults were actually recipients of disability program benefits in 2003 (6.1 percent compared to 4.6 percent), as shown in Table WORK 7.
• Among both non-elderly adults and children, rates of activity limitation were somewhat similar for non-Hispanic whites and non-Hispanic blacks in 2003, but lower for Hispanics, as shown in Table WORK 7.

[ Go to Contents ]

Employment and Work-Related Risk Factor 8.
Labor Force Participation of Women with Children

Figure WORK 8.
Labor Force Participation of Women with Children under 18: 1975-2003

Source: U.S. Department of Labor, Bureau of Labor Statistics, unpublished tabulatio