Final Synthesis Report of Findings from ASPE "Leavers" Grants

Chapter V
Household Income

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Contents

1. Average Monthly Income of Welfare Leavers
2. Income Sources
3. Poverty and Family Income Relative to Needs
4. Chapter Summary 

Endnotes

Household income is an important indicator of the well-being of welfare leavers. Yet only about half of the ASPE-funded leaver studies fully examine the income of leavers. There are several important reasons for this. First, most leaver studies focus on the first year after leaving—very few leavers are likely to achieve economic security in such a short period of time. Indeed, most leavers will have low incomes. Second, income is very hard to measure accurately. Perhaps the most reliable source of income data are tax records; such records are highly confidential and are rarely available for research purposes. Most information on income comes from survey data, but to obtain fairly accurate income information, the survey generally must devote a great deal of time to ask about each possible income source and then obtain the amount. Even among the studies that do ask about income, the amount of time and number of questions devoted to obtaining income data varies. Finally, income is only one measure of well-being, and many surveys ask about explicit hardships leavers face. Hardship information is discussed in a later chapter.

This chapter presents information on the average monthly incomes of welfare leavers and notes how incomes vary across groups of leavers such as those who remain off TANF for a full year (continuous leavers), those who are currently working, and those who never worked since exit. It then examines leavers' sources of income, focusing primarily on non-governmental sources (government transfers are featured in Chapter IV on program participation). Again, it examines how sources of income vary across different groups of leavers. Finally, it examines the poverty status of leaver families.

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 A. Average Monthly Income of Welfare Leavers

Eight of the leaver studies reviewed here obtain data on income through surveys (Arizona, the District of Columbia, Illinois, Iowa, Missouri, Washington, Cuyahoga County, and the Bay Area). Figure V.1 and Table V.1 show that mean monthly incomes range from $1,054 in Illinois to $1,440 in Iowa.²⁹

Figure V.1
Mean Monthly Income of Single-Parent Welfare Leavers: Survey Findings

Note: See table V.1 for more information

Table V.1:
Income of Single-Parent Welfare Leavers: Survey Findings

State/ Study	Exit Cohort	Timing of Survey	Monthly Income1 ($)
			Mean	Median
Arizona	1Q98	12-18 months	1,361 2	1,195
District of Columbia3	4Q98	~ 12 months	1,091	800
Illinois3	Dec. 1998	6-8 months	1,054	895
Iowa	2Q99	8-12 months	1,440	n.a.
Missouri3	4Q98	26-34 months	1,427	1,166
Washington	Oct. 1998	6-8 months	1,208	1,000
Cuyahoga Co.4	3Q98	14-21 months	1,169	n.a.
Bay Area	4Q98	6-12 months	n.a.	1,400
1Income data are reported for households in Illinois and Missouri, families in Arizona and Washington, and for welfare cases in all other studies. 2Arizona reports income including food stamps; we present an adjusted version of income, reducing reported income by 7% because 7% of the average family income of welfare leavers in Arizona comes from food stamps. Data calculated from public use data file. 3Income data reported for all cases, not just single-parent cases.. 4Includes cash value of food stamps. Source: See Appendix B for a complete listing of the leavers studies referenced.

Illinois' mean income is somewhat below DC's mean of $1,091, which is the second lowest, while Iowa's mean is only slightly higher than Missouri's mean of $1,427, which is the second highest. Even if one focuses on DC and Missouri, one sees that mean monthly incomes are more than $300 apart. This translates into a difference of over $3,600 a year. Median incomes also vary across the states. In the six studies that report this information, median incomes range from $895 in Illinois and DC to $1,400 in the Bay Area. However, the Bay Area median is far higher than the second highest median income: $1,195 in Arizona. 

There are several important differences across the studies that likely affect reported incomes, but for every potential explanation, there is a counter-example. For example, studies that ask about income a few months after exit are likely to find lower incomes than studies that ask about income one or two years after exit. In fact, Missouri, which asks about income two-and-one-half years after exit, reports a very high average monthly income for leavers. On the other hand, among the studies asking about income a year or less after exit, both Washington and the Bay Area have relatively high incomes while Illinois' average income is, in fact, low. Similarly, surveys that ask detailed questions about income sources, such as Missouri's survey, likely will find higher average incomes than those that simply ask respondents to estimate their monthly incomes in a single question like the DC and Illinois surveys. In addition, income differences may reflect differences in the cost of living. Consequently, it is not surprising to see high average incomes for the Bay Area; however, the average incomes in Iowa and Missouri are also high, yet the cost of living in Iowa is far lower than in California's Bay Area counties. Even if we cannot easily account for the range of reported incomes, it is important to keep in mind that even the highest average incomes—around $1,400 a month—are just about equal to the poverty line for a family of four. 

Next, consider how the incomes of welfare leavers vary based on their ability to stay off welfare as well as on their work status. Table V.2 compares the monthly incomes of continuous leavers with those of all leavers. In the four studies with the information needed to make this comparison, both mean and median incomes of continuous leavers are considerably higher than those of leavers in general. Differences in mean income between continuous and all leavers range from $60 in Washington to $182 in DC; differences in median monthly incomes range from $55 in Illinois to $200 in DC.

Table V.2:
Monthly Income of Single-Parent Welfare Leavers--Comparison with Continuous Leavers: Survey Findings

State/ Study	Mean ($)		Median ($)
	All Leavers	Continuous Leavers	All Leavers	Continuous Leavers
Arizona1,2	1,361	1,476	1,195	1,265
District of Columbia3	1,091	1273 1	800	1,000 1
Illinois4	1,054	1,131	895	950
Washington	1,208	1,268	1,000	1,100
1Data calculated from public use data file. 2Arizona reports income including food stamps; we present an adjusted version of income, reducing reported income by 7% because 7% of the average family income of welfare leavers in Arizona comes from food stamps. 3Income data reported for all cases; not just single-parents. 4Data differ from table V.1 because we present information on all leavers here. Source: See Appendix B for a complete listing of the leavers studies referenced.

Table V.3 compares the incomes of leavers by their work status. Only Arizona, DC, and Washington produced public use data files that allow us to make this comparison. The table shows that currently working leavers have monthly incomes far above those of leavers in general. For example, mean monthly income for working leavers in Arizona is $1,727, almost $400 higher than the mean for all leavers. Similarly, in DC and Washington, the mean employed leaver has a monthly income that is over $250 higher than the average leaver. In addition, working leavers in all three sites have higher incomes than leavers who are currently jobless. DC and Washington's data also allow analysts to distinguish between leavers who never worked since exit and those who have worked but are currently jobless; however, the data show only a small difference in the average incomes of these two groups of jobless leavers.³⁰

Table V.3:
Monthly Income of Single-Parent Welfare Leavers By Employment Status: Survey Findings

State/ Study	Employment Status
	All Leavers ($)	Currently Employed ($)	Not Currently Employed ($)	Never Worked Since Exit ($)
Arizona1,2
Mean	1,361	1,727	892	n.a.
Median	1,195	1,400	720	n.a.
District of Columbia3
Mean	1,091	1,353	675	647
Median	800	1,102	500	547
Washington4
Mean	1,227	1,462	870	884
Median	1,000	1,200	576	601
1Data calculated from public use data file. 2Arizona reports income including food stamps; we present an adjusted version of income, reducing reported income by 7% because 7% of the average family income of welfare leavers in Arizona comes from food stamps. 3Income data reported for all cases; not just single-parents. 4Figures based on calculations of public use data files differ slightly from those in published reports. Note: All data calculated from public use data file. Source: See Appendix B for a complete listing of the leavers studies referenced.

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B. Income Sources

Next, consider the sources of income for welfare leavers. Here, the focus is primarily on private sources; public sources of support are discussed in much more detail in Chapter IV. Table V.4 shows the share of leavers receiving income from up to four different sources: a leaver's own earnings, the earnings of other family members, child support, and financial help from family and friends. Definitions of these sources vary across studies, so comparisons should be made with caution. 

Table V.4:
Single Parent Leavers' Income from Private Sources: Survey Findings

State/ Study	Exit Cohort	Timing of Survey Post Exit	Percent of Leavers With Income From:
			Own Earnings	Other Earnings	Any Earnings	Child Support	Family/ Friends
District of Columbia1	4Q98	~12 months	60	n.a.	64	11	11
Georgia	1Q1999-2Q2000	~ 6 months	69	n.a.	n.a.	n.a.	59
Illinois	Dec. 1998	6-8 months	63	n.a.	66 2	31 3	14
Iowa	2Q99	8-12 months	60	37	n.a.	28	25 4
Massachusetts	Dec 1998- Mar 1999	~ 12 months	71	16	77	46	18
Missouri	4Q98	26-34 months	65	n.a.	80	22	n.a.
South Carolina5	Oct 1998-Mar 1999	12 months	61	n.a.	67	26 6	4 6
Washington	Oct. 1998	6-8 months	60	21	n.a.	23	n.a.
Cuyahoga County	3Q98	14 - 21 months	69	21	n.a.	13	12
1Income data reported for all cases; not just single-parents. 2Head or spouse/partner only; other household members' earnings not included. 3Data reported of cases with an absent parent. 4Loans or financial help from friends or family. 5Data for continuous leavers only. 6Primary source of support. Source: See Appendix B for a complete listing of the leavers studies referenced.

Since about three out of five leavers are working, it is not surprising to find that 60 to 71 percent of leavers in the nine surveys that ask about the sources of income report having income from earnings. In addition, leavers may have access to the earned income of other household members. Four studies explicitly ask about earned income from someone other than the family head. Three of the four report that about one out of five (16 to 21 percent) of leavers have some income from the earnings of someone other than the leaver. Iowa's survey finds the highest proportion of leavers (37 percent) with income from the earnings of someone other than the family head. Five studies report a composite, "any earned income" measure. The results range from a low of 64 percent in DC to a high of 80 percent in Missouri. 

In six out of eight studies with information on child support, over 20 percent of leavers report receipt. In Massachusetts, however, nearly half of all leavers (46 percent) say they have some income from an absent parent. A relatively small share of DC and Cuyahoga County leavers say they receive child support: 11 and 13 percent, respectively.

Finally, the share of leavers reporting that they receive financial assistance from friends or family ranges from a low of 4 percent in South Carolina to a high of 59 percent in Georgia. In South Carolina, leavers are not asked to identify all their sources of support; rather they must identify their primary source of support. Thus it is not surprising that South Carolina's reported share is low. Georgia's survey, on the other hand, asks if a family needed help from family and friends and not whether the leaver actually received this help. Consequently, it is not surprising that Georgia's reported share is high. Excluding these two studies, the share of leavers reporting support from family or friends ranges from 11 percent in DC to 25 percent in Iowa.³¹

Next, consider how important different sources of income are for welfare leavers. Although several studies present this information, there is no standard way to group income sources or assess the average contribution of each source to total families income. Consequently, this synthesis relies on information in Iowa's and Missouri's published report and public use data available from Arizona and Washington to make these comparisons. Even with this limited set of information, the measures of income sources are not strictly comparable across sites. Also, because public use data are used to examine these leaver sub-groups, the set of income sources differs slightly from the set used above. Here, the sources of income considered are own earnings, earnings of other adults, government aid apart from TANF, TANF, and child support.

 This synthesis uses three measures to examine the importance of these sources of income. First, the synthesis reports the average amount of income a leaver receives from a specific source for all leavers who have any income from that source. In other words, the average earnings of leavers who actually have earned income are examined; leavers with no earnings are omitted. Second, the report looks at the share of total income that a particular source represents for families that have income from that source. Finally, it examines the share of total income that a particular source represents for all families, not just those with income from that source. In other words, non-earners are included in this measure. In this final measure, the shares sum to 100 percent and the importance of each share reflects both the proportion of families with income from a given source as well as the amount of income from that source.

 Table V.5 shows that among leaver families whose heads have earnings, average monthly own (e.g. head's) earnings is $1,079 in Arizona, and $951 in Washington. For these families, head's earnings represent 69 and 73 percent of family income in Arizona and Washington, respectively. For those families that actually have income from the earnings of someone other than the family head, this income is actually quite high; higher than head's earnings, in fact. In Arizona, the average earnings of others is $1,677 which represents 73 percent of the income of families with this source of income; in Washington, average earnings of others is $1,391, representing 65 percent of family income. Missouri's study reports information on total household earnings: leavers with earned income average $1,395 in earnings, representing 85 percent of their households' incomes.

Table V.5:
Mean Monthly Income and Share of Income By Source of Income for Single-Parent Welfare Leavers: Calculations from Public Use Data Files

State/Study	Source of Income
	Own Earnings	Other Earnings	Child Support	Government Aid1	TANF
Mean Income By Source for Those With Income From Source2 ($)
Arizona	1,079	1,677	242	383	286
Missouri3	1,395 4	n.a.	226	n.a.	281
Washington	951	1,391	285	924	n.a.
Share of Income By Source for Those With Income From Source2 (%)
Arizona	69	73	28	36	45
Missouri3	85 4	n.a.	27	n.a.	53
Washington	73	65	29	62	n.a.
Share of Income By Source Across All Families5 (%)
Arizona	42	38	3	3	12
Iowa6	45	37	6	10 7	n.a.
Washington	47	27	6	17	n.a.
1Government aid includes various public support programs. In Arizona, it includes food stamps, SSI, SSDI, General Assistance, and 'other assistance.' Washington includes SSI, Social Security, General Assistance, Unemployment Compensation, retirement benefits, worker's compensation, and 'other assistance.' 2Zero values excluded from calculations. 3Data from published report. 4Total household earnings. 5Zero values included in calculations. 6Calculated from data in published report. Data does not sum to 100% because of rounding and item non-response. 7Includes TANF. Source: See Appendix B for a complete listing of the leavers studies referenced.

Child support is an important income supplement to those families that receive it. Among leavers receiving child support, the average monthly amount ranges from $226 in Missouri to $285 in Washington and represents just over one-quarter of these leavers' family incomes. 

Many leavers rely on government assistance and some have returned to TANF. Among families receiving non-TANF aid in Arizona, the average value of aid, including the cash value of food stamps, is almost $400, and it represents about one-third of a leaver's income. Families that return to TANF receive an average of about $300 a month, and this represents about half the income among leavers who return to TANF in Arizona and Missouri. Washington reports information on all government assistance including TANF. In total, leavers in Washington that receive any government aid receive an average of $924 a month, representing 62 percent of family income for these leavers. 

Finally, the bottom third of Table V.5 examines the share of total income that each particular source represents for all families, not just those with income from that source. ³² These shares cannot be computed from Missouri's published data; however, information from Iowa's leaver study can be included. Overall, head's earnings account for between 42 and 47 percent of leavers' family incomes and are the single most important source of income in Arizona, Iowa, and Washington. Earnings of others is the next most important source of income, accounting for over one-third of income for leavers in Arizona and Iowa; in Washington, other earnings represents 27 percent of family income. Thus, overall, earned income accounts for over three-quarters of leavers' family incomes. Child support plays a very small role in family income overall, ranging from 3 to 6 percent across the three studies. Government aid including TANF accounts for 10 to 17 percent of family income. 

Income Sources for Subgroups of Leavers

Continuous Leavers. Table V.6 examines differences in sources of income for both continuous and all leavers.³³ In both Arizona and Iowa, families that have remained off TANF for at least a year are more likely to have earnings from the family head than leavers in general. Continuous leavers in Arizona are also slightly more likely to have other earned income and to receive child support. For these two income sources, there is little difference between continuous and all leavers in Iowa. Continuous leavers in both studies are less likely to receive government assistance than leavers in general.

Table V.6:
Mean Monthly Income and Incidence By Source for Single-Parent Welfare Leavers With Income From Select Sources--Comparison of Continuous Leavers: Calculations from Public Use Data Files

State/ Study	Source of Income
	Own Earnings	Other Earnings	Child Support	Government Aid1	TANF
Percent with Source
Arizona
All Leavers	50	30	16	47	16
Continuous Leavers	56	34	20	39	6 2
Iowa3
All Leavers	60	42 4	28	35	n.a.
Continuous Leavers	69	41 4	33	19	n.a.
Amount for Those With Income From Source ($)
Arizona
All Leavers	1,079	1,677	242	383	286
Continuous Leavers	1,118	1,711	242	396	327 2
1Government aid includes various public support programs. In Arizona, it includes food stamps, SSI, SSDI, General Assistance, and 'other assistance.' Iowa includes TANF, SSI, Social Security, General Assistance, Unemployment Compensation, Child care assistance, emergency assistance, and 'other assistance.' Washington includes SSI, Social Security, General Assistance, Unemployment Compensation, retirement benefits, worker's compensation, and 'other assistance.' 2A continuous leaver is defined as a leaver who did not return to assistance for 12 months. Arizona's survey took place 12-18 months post exit, therefore it is possible for some of the 'continuous leavers' to have returned to assistance after the twelve month period we use for the definition but within the survey period. 3Data from published report. 4Other income. Source: See Appendix B for a complete listing of the leavers studies referenced.

In Arizona, continuous leavers have slightly higher household head's earnings and other earnings than leavers in general. There are no differences in the average amount of child support between the two groups of leavers. Finally, continuous leavers who receive government aid in Arizona tend to receive slightly more government aid than leavers in general. This may indicate that continuous leavers who receive such aid may be getting SSI while other leavers receiving aid are only receiving food stamps or have returned to TANF, which provides lower benefits than SSI. ³⁴

Leavers' Sources of Income Based on Employment Status. Table V.7 shows the sources of income for leavers based on their employment status. Virtually all currently employed leavers and virtually none of the jobless leavers had earnings in the month prior to the survey.³⁵ One might expect that non-working leavers are more likely to have income from others, child support, and government assistance than those who are currently working. With the exception of child support, we find this generally to be the case. 

Table V.7:
Mean Monthly Income and Incidence By Source for Single-Parent Welfare Leavers With Income From Select Sources By Employment Status: Calculations from Public Use Data Files

State/ Study	Source of Income
	Own Earnings	Other Earnings	Child Support	Government Aid1	TANF
Percent with Source
Arizona
All Leavers	50	30	16	47	16
Currently Employed	—	29	17	35	6
Not Currently Employed	—	31	16	59	26
Iowa2
All Leavers	60	42	28	35	n.a.
Currently Employed	—	35	35	22	n.a.
Not Currently Employed	—	46	17	56	n.a.
Washington
All Leavers	60	21	24	22	n.a.
Currently Employed	—	20	26	17	n.a.
Currently Jobless	—	21	17	31	n.a.
Never Worked Since Exit	—	31	24	28	n.a.
Amount For Those With Income From Source ($)
Arizona
All Leavers	1,079	1,677	242	383	286
Currently Employed	1,084	1,737	251	306	259
Not Currently Employed	—	1,600	229	449	294
Washington
All Leavers	951	1,391	285	924	n.a.
Currently Employed	1,006	1,271	247	1,181	n.a.
Not Currently Employed	—	1,508	264	741	n.a.
Never Worked Since Exit	—	1,555	487	629	n.a.
1Government aid includes various public support programs. In Arizona, it includes food stamps, SSI, SSDI, General Assistance, and 'other assistance.' Iowa includes TANF, SSI, Social Security, General Assistance, Unemployment Compensation, Child care assistance, emergency assistance, and 'other assistance.' Washington includes SSI, Social Security, General Assistance, Unemployment Compensation, retirement benefits, worker's compensation, and 'other assistance.' 2Data from published report. Source: See Appendix B for a complete listing of the leavers studies referenced.

In Iowa, 46 percent of jobless leavers live in families with other earnings, compared with 35 percent of currently employed leavers. In Arizona, however, the share of leavers with other earned income does not vary much by employment status. In Washington, the comparison is more complex. Leavers who have never worked are substantially more likely to live in families with other earnings than currently employed leavers; among Washington leavers who have worked since exit, however, there is little difference between currently working and currently jobless leavers.

 In all three studies, working leavers are more likely to receive child support than non-working leavers, although the difference is minor in Arizona. Interestingly, in Washington, which allows us to examine leavers who never worked since exit, we find that leavers who never worked are almost as likely to receive child support as those who are currently working.

Not surprisingly, jobless leavers are far more likely to receive government aid than working leavers. Almost 60 percent of leavers who are not currently working received some form of government aid other than TANF in Arizona and Iowa compared with 35 and 22 percent of working leavers in those two states, respectively. In

Washington, only 17 percent of working leavers received such government assistance, compared with 31 percent of currently jobless leavers and 28 percent of leavers who never worked since exit.

 Finally, the bottom half of Table V.7 shows the average amount of monthly income from these sources based on the employment status of leavers, presenting contradictory information from the two studies with data that allow such comparisons. Among leavers who live with working adults, non-working leavers receive more other earnings, on average, than working leavers in Washington; the reverse is true in Arizona. In Arizona, there is only a modest difference in the amount of child support received by working leavers compared with other leavers. However, in Washington among families receiving child support, those who have never worked since exit receive over $200 more in child support than other leavers. And in Arizona, working leavers receiving TANF or other government assistance receive less on average than non-working leavers. In Washington, however, working leavers that receive government assistance generally receive more than non-working leavers. 

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C. Poverty and Family Income Relative to Needs

Four of the eight studies collecting information about leaver income explicitly examine the poverty status of leavers. Figure V.2 and Table V.8 shows that in Missouri, Washington, and Cuyahoga County, well over half of all single-parent leavers are poor. In Iowa, nearly half of all leavers are poor (47 percent) when focusing on cash income.³⁶ The Washington study compares poverty rates of TANF leavers with those of families still on TANF: although 58 percent of Washington's leavers are poor, a much higher percentage (86 percent) of families receiving TANF have incomes that fall below the poverty line.

Figure V.2:
Poverty Among Single-Parent Welfare Leavers: Survey Findings

Notes:See table V.8 for more information

Table V.8:
Poverty Among Single-Parent Welfare Leavers: Survey Findings

State/ Study	Exit Cohort	Timing of Survey Post Exit	% Poor	% Below 185% of Federal Poverty Level
Iowa	2Q99	8-12 months	47 1	80
Missouri	4Q98	26-34 months	58	89
Washington	Oct. 1998	6-8 months	58	n.a.
Cuyahoga Co.	3Q98	14-21 months	57 2	n.a.
1Iowa also provided a poverty rate based on income including food stamps, 41%. 2The poverty rate is based on income including food stamps. Source: See Appendix B for a complete listing of the leavers studies referenced.

Iowa and Missouri also report the share of single-parent leavers who have incomes below 185 percent of the federal poverty line. Above this level of income, most families become ineligible for virtually all low-income support programs including the earned income tax credit, and so this cutoff can be considered a rough marker for self-sufficiency. In Iowa, only one out of five leavers have incomes above 185 percent of poverty, and in Missouri, about one out of ten leavers have incomes above this threshold.

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D. Chapter Summary

While the average incomes of leavers vary from study to study, most leavers have low incomes. It is important to note that these low-income leavers may be eligible for various in-kind public supports such as food stamps, WIC, child care assistance, and Medicaid or other public health insurance programs, all of which can enhance their well-being and are not included in these income and poverty measures. In addition, low-income working leavers can receive cash support from the EITC, currently the largest program supporting low-income families in the United States. These sources of support are examined in Chapter IV.

Endnotes

²⁹The income "unit" varies slightly across the studies. For example, Illinois and Missouri report household income; Washington reports family income, and Arizona presents case income.
³⁰This phenomenon is examined in more detail below in the section on the sources of leavers' incomes.
³¹Iowa includes loans in addition to gifts as help from family/friends.
³²These shares are computed by dividing average income for those with the source by average family income. Shares sum to 100 percent subject to rounding and survey item non-response.
³³Table V.6 presents only the incidence and average amounts for each source. The share of income represented by each source for each sub-group of leavers with income from that particular source is quite similar to the shares reported for all leavers in Table V.5.
³⁴Note that in Arizona, some families designated as continuous leavers because they remained off TANF for a year, have returned to TANF by the time they are surveyed 12 to 18 months after exit.
³⁵Because surveys ask about current employment but income last month, there are a few leavers who had earnings last month but are currently jobless and a few who had no earnings last month but are currently working. Because the discussion assumes work status and income are reported contemporaneously, the analysis does not present the actual computation; rather, it assumes that all currently employed leavers have earnings and that no currently jobless leavers have earnings.
³⁶When the cash value of food stamps are counted, the poverty rate for Iowa's leavers drops to 41 percent.

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