The Welfare Indicators Act of 1994 requires the Department of Health and Human Services to prepare annual reports to Congress on indicators and predictors of welfare dependence. This first Annual Report on Welfare Indicators was developed with the advice and recommendations of the bipartisan Advisory Board on Welfare Indicators and the assistance of the U.S. Department of Agriculture, the Social Security Administration and the U.S. Bureau of the Census. This report marks a significant step toward achieving the stated purpose of the law -- "to provide the public with generally accepted measures of welfare receipt so that it can track such receipt over time and determine whether progress is being made in reducing the rate at which and, to the extent feasible, the degree to which, families depend on income from welfare programs and the duration of welfare receipt.
This report is the direct result of the foresight and leadership of Senator Daniel Patrick Moynihan. He sponsored the Welfare Indicators Act of 1994 to make it clear that reduction in welfare dependence is a national goal, and that regular measurement and assessment of progress toward that goal is necessary. The act calls for such measures, just as, for example, the Employment Act of 1946 called for regular measures that led to a better understanding of the critical problem of unemployment in this country. In introducing the bill, Senator Moynihan declared that the policy and responsibility of the Federal Government must be to strengthen families and promote their self-sufficiency. This report is a first step in documenting our progress toward that goal.
We recognize that it is difficult to develop consensus around a single measure of welfare dependence. Nevertheless, in an effort to be responsive to the intent of the Welfare Indicators Act, this report proposes for discussion and debate a definition of welfare dependence that was developed by the Advisory Board:
A family is dependent on welfare if more than 50 percent of its total income in a one-year period comes from AFDC/TANF, Food Stamps and/or SSI, and this welfare income is not associated with work activities. Welfare dependence is the proportion of all families who are dependent on welfare.
The Advisory Board's recommended definition is consistent with the working definition of "dependence" we adopted in last year's Interim Report that incorporated elements of degree and duration of receipt and behavior of the recipient. It takes a comprehensive view of dependence -- one that considers the range as well as the depth of dependence through indicators that measure how much and how long assistance is received, as well as whether the assistance supplements or supplants earnings. The recommended definition would count as work activities only unsubsidized and subsidized employment and work required to obtain benefits.
The proposed definition, unfortunately, cannot be measured precisely at this time with currently available data. Two data issues present potential problems. First, current data do not distinguish between cash benefits where work is required and cash benefits that are paid without any work effort. Thus, while income from private employment can be excluded in calculating welfare benefits, it is not currently possible to exclude work that is required to obtain benefits. Second, this report uses data from the Survey of Income and Program Participation (SIPP) to obtain measures of the proposed definition. The SIPP, like all large-scale surveys, has a significant time lag. For example, the most recent SIPP data currently available are for 1993. In spite of these relatively minor measurement problems, however, we believe this proposed definition of welfare dependence marks an important development, and we welcome further discussion of it.
In addition to discussing the proposed definition of dependence, this report highlights a few specific indicators of dependence that were recommended for consideration by the Advisory Board at their most recent meeting. It also presents for consideration a broader set of indicators of welfare recipiency and dependence, as well as a wide-ranging collection of predictors, or risk factors associated with welfare receipt. The Advisory Board was in agreement that, since the causes of welfare receipt and dependence are not clearly known, the report should include a larger set of risk factors associated with welfare receipt. Nonetheless, the report reduces the overall number of predictors and risk factors by about 20 percent from the number included in last year's Interim Report. Indicators of deprivation supplement the dependence indicators to ensure that dependence measures are not assessed in isolation.
Finally, we would note that the annual Indicators reports should be viewed in the context of the wide array of research and evaluation efforts supported and carried out by this Department, other Federal agencies, and the broader research community regarding the effects of the PRWORA and state and local welfare reform efforts on dependency and deprivation. Together, these research efforts should provide us with a rich array of information which no one approach could generate alone. We hope the Indicators report will focus and enrich these efforts and carry out Senator Moynihan's vision, by focusing researchers on the critical issue of dependency and shining a spotlight on national trends.
We are grateful to the members of the Advisory Board on Welfare Indicators for their hard work and wise counsel on this important and difficult issue.
Donna E. Shalala
U.S. Department of Health and Human Services
This first annual report on Indicators of Welfare Dependence benefits from the contributions of many people and could not have been completed without their efforts. The Advisory Board on Welfare Indicators, established by the Welfare Indicators Act of 1994, and appointed by the House of Representatives, the Senate, and the President, provided critical direction and wise counsel throughout the development of this report. Members of the Advisory Board include:
Eloise Anderson, Director, California Department of Social Services
Jo Anne B. Barnhart
Paul E. Barton, Director, Policy Information Center, Educational Testing Service
Martin H. Gerry, Director, Center for Study of Family, Neighborhood, and Community Policy, University of Kansas
Judith M. Gueron, President, Manpower Demonstration Research Corporation
Robert Greenstein, Executive Director, Center on Budget and Policy Priorities
Wade Horn, Director, National Fatherhood Initiative
Marvin H. Kosters, Resident Scholar and Director of Economic Policy Studies, American Enterprise Institute
Gerald H. Miller, Senior Vice President and Managing Director - Welfare Reform, Lockheed Martin IMS
Kristin A. Moore, Executive Director, Child Trends, Inc.
Joan M. Reeves, Commissioner, Philadelphia Department of Human Services
Gary J. Stangler, Director, Missouri Department of Social Services
Staff from the U.S. Department of Agriculture, Food and Consumer Service, and the Social Security Administration, Office of Research, Evaluation and Statistics, and the U.S. Bureau of the Census, Housing and Household Economic Statistics Division made valuable contributions to the report and were extremely helpful in gathering and providing data for use throughout the report.
Finally, vital assistance was provided by Greg Duncan of the Northwestern University Institute for Policy Research and Johanne Boisjoly of the Universite du Quebec a Rimouski, Departement des Sciences Humaines. They gathered and provided data on proposed indicators and assisted in drafting and producing the Interim Report.