Families on TANF in Illinois: Employment Assets and Liabilities. Household Income

06/10/2003

Because the heads of single-parent TANF cases have earnings that are, on average, low, they often rely on multiple sources of income to meet household expenses (Edin and Lein 1997). These sources may include the earnings of other members of the household and various forms of public assistance.

  • Over half of TANF cases are in households that receive income from earnings, typically from the case head, but earnings contributed by other household members can be substantial.

Two-fifths of TANF cases receive income from the earnings of the case heads, which have an average value of $616 per month (Table II.6). In addition, 21 percent of TANF cases are in households that receive income from the earnings of other household members averaging $927 per month. So, although few TANF cases receive income from the earnings of other household members, those that do, receive substantial amounts. Considering all household members, slightly more than half (54 percent) of TANF cases receive income from earnings, with an average monthly value of $817.

Table II.6
Sources and Monthly Amounts of Household Income
Income Source Has Source Average for Cases w/Source
Earnings
Case head 40% $616
Other HH members 21% $927
All HH members 54% $817
Public Assistance
TANF 86% $273
Food stamps 93% $317
SSI 15% $559
Other Sources
Child support 10% NA
All other 13% $244
Source: 2001-02 survey of Illinois TANF cases. HH: Households

Other studies of current and former TANF recipients have also found that people other than the case head may contribute large amounts of earned income to the household. For example, Kauff et al. (2002) found that in Iowa, 37 percent of one- and two-parent TANF cases that left welfare two years before the time of the survey received income from the earnings of other household members. The average amount of those earnings was $1,502 per month. Rangarajan and Johnson (2002) found that, in New Jersey, only 15 percent of one- and two-parent TANF cases received income from the earnings of the head's spouse or partner 40 months after going on assistance. However, at $1,383 per month, on average, those contributions were substantial for the cases that did receive them. Our focus on single-parent cases currently on assistance may account for finding lower, but still substantial, average earnings of other household members relative to the Iowa and New Jersey studies.

  • Almost all TANF cases receive food stamps, which provide somewhat more income than TANF cash grants.

Given the eligibility criteria for public assistance programs, almost all of this study's subjects can be expected to have income from various forms of assistance in addition to TANF. Eighty-six percent receive a TANF cash grant with an average value of $273 (Table II.6). (8) Food stamps are an even more important source of household income for TANF cases. Ninety-three percent of cases receive food stamps that are valued, on average, at $317 per month. Only a small portion of TANF cases (15 percent) receive Supplemental Security Income (SSI), but they receive an average of $559 per month through that program. (9)

TANF cases may also receive income from many other sources, such as child support, unemployment benefits, alimony payments, and gifts from friends or relatives. Thirteen percent receive income from one or more such source; 10 percent receive it from child support alone. The average income received from these sources is $244 per month (Table II.6).

  • The average total household income of TANF cases is $1,058 per month, more than half of which comes from public assistance.

Even though more than half of TANF cases receive income from earnings, it is nevertheless true that most of the income received by TANF cases comes from public assistance. TANF, food stamps, and SSI account for 57 percent of the total household income received by TANF cases (Table II.7). Earnings by all household members account for 40 percent of total income. Other sources, including child support, account for only 3 percent of total household income.

For TANF cases in which the head has earnings, earnings from all household members are the primary source of total household income. In fact, the relative importance of earnings and public assistance is reversed for these cases relative to all TANF cases. Earnings account for 58 percent of total income, and public assistance for 39 percent (Table II.7).

Table II.7
Total Monthly Household Income
  All TANF Cases Cases in Which the Head Has Earnings
Amount (incl. zeros) Percent of Total Amount (incl. zeros) Percent of Total
Earnings $418 40% $749 58%
Public Assistance        
TANF $236 22% $150 12%
Food stamps $298 28% $272 21%
SSI $78 7% $83 6%
Other Sources $29 3% $28 2%
Total Income $1,058 100% $1,281 100%
Source: 2001-02 survey of Illinois TANF cases.
  • The majority of TANF recipients in Illinois live in extreme poverty, but those with earnings are less likely than those without earnings to be extremely poor.

A comparison of monthly household income with Census Bureau poverty thresholds reveals that 93 percent of TANF cases are in households with an income below poverty, and 65 percent are in extremely poor households, that is, those with an income below 50 percent of poverty.(10) However, recipients with earnings do fare better than those without; workers are only half as likely to live in extreme poverty, and are twice as likely to live above the poverty line (Figures II.9 and II.10). We would not expect many TANF recipients to live above poverty, even with Illinois' generous earned-income disregard. The case head of a family of three in Cook County cannot earn more than $1,100 per month--an amount that is about equal to the poverty line--and still qualify for a TANF grant.

Figure II.9 Household Income Relative to the Poverty Level for Workers. Figure II.10 Household Income Relative to the Poverty Level for Nonworkers

Families have other resources available to them that are not reflected in this poverty analysis. The official poverty measure does not include food stamps, which, as shown in Table II.7, contributes nearly one-third of total household income for TANF recipients in Illinois. Working recipients can also benefit from the earned income tax credit (EITC). We did not measure the contributions of the EITC toward household income in this study, but in general, the extra boost it provides can be substantial. For example, families with one child receive refundable tax credits of up to 32 percent of their earnings, and families with two or more children receive credits of up to 40 percent (Center on Budget and Policy Priorities 2001).

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