The Welfare Indicators Act of 1994 (Pub. L. 103-432) directed the Secretary of Health and Human Services to develop indicators of the extent to which American families depend upon income from welfare programs. Welfare programs, as defined under the Act, include the Aid to Families with Dependent Children (AFDC) program, the Supplemental Security Income (SSI) program, and the Food Stamp Program (FSP). Under the Welfare Indicators Act, annual reports are to be made concerning:
- The rate at which families depend on income from these welfare programs;
- The degree and duration of welfare recipiency and dependence;
- Predictors of welfare dependence; and
- Additional data needed to assess issues relating to welfare dependence.
An Advisory Board on Welfare Indicators also was established under the Act to assist the Secretary in defining welfare dependence and in choosing appropriate data for inclusion in the annual reports. The Board consisted of a bipartisan group of experts appointed by the Senate, the House of Representatives and the President. The Board oversaw the production of the Interim Report to Congress, published last October, and they played a major role in shaping this report, which is the first of the annual reports to Congress required under the law.
This report addresses the requirements of the Welfare Indicators Act in several ways. In this first chapter, the specific summary measures of welfare dependence proposed by the Advisory Board are presented and discussed. These measures attempt to provide a small set of indicators that can be tracked routinely to monitor progress in reducing welfare dependence. It is anticipated that they will be published on an annual basis in much the same way that poverty measures, for example, are published. At this point the measures are still somewhat experimental and further comments and discussion are invited.
The second chapter of this report presents a broader group of indicators of welfare recipiency and dependence. These indicators include measures of the extent of recipiency for each of the three programs considered separately, as well as information on income from all three programs in combination. Interaction of AFDC, SSI and FSP benefits with periods of employment and with benefits from other programs are also shown. The chapter also includes data on movements onto and off welfare programs, and on the extent to which welfare recipiency in adolescence is correlated with later adult recipiency.
The Board expressed a strong view that dependence measures could not be assessed in isolation, since changes in these measures could result either from increases in work activity and other factors that would raise family incomes, or from sanctions in welfare programs that would reduce welfare program participation but might not improve the material circumstances of these families. Accordingly, they recommended that measures of deprivation such as poverty rates, with and without the inclusion of welfare benefits, be presented together with the dependence measures. This chapter follows that recommendation and presents data on several measures of deprivation over time periods corresponding to those shown for the recommended measures of dependence.
Chapter III focuses on "predictors" of welfare dependence -- risk factors believed to be associated with welfare receipt in some way. These predictors are shown in three different groups: those that concern families' degree of economic security, those that are related to the work status of adult family members, and those that relate to teen behaviors.1 Economic security -- including measures of poverty, receipt of child support, health care coverage, and so forth -- is important in predicting dependence in the sense that families with fewer economic resources are more likely to rely on welfare programs for their support. Factors related to work status are also important, because families must generally receive an adequate income from employment in order to avoid dependence without severe deprivation. And finally, teen behaviors are very important since a high proportion of long-term welfare recipients became parents as teens, often outside of marriage. Starting a family in these circumstances may lead to dependence because teens generally lack adequate skills, preparation and resources to support a child.
Chapter IV addresses the final goal set out above by discussing additional data that might be needed to construct better indicators and predictors. Although the measures included in this report are the best that could be constructed with currently available data, additional data would potentially provide greater insights into the problems associated with welfare dependence.
Further, data needs are likely to change over time as welfare programs change. Since the passage of the Welfare Indicators Act, significant changes have been made in the federal system of providing means-tested assistance to families. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) (Pub. L. 104-193), enacted in 1996, increased state flexibility and gave states considerably more freedom to operate their own assistance programs. These changes mean that variations across welfare programs are likely to increase greatly, and our measures may need to be revised substantially to reflect the many different things that states may do to assist needy families. Chapter IV discusses this problem in greater detail.
Welfare recipiency is a necessary pre-condition for welfare dependence, although the Advisory Board cautioned that the two are not the same thing. As discussed above, welfare programs have changed substantially in the recent past, and are continuing to change rapidly. Appendix A has therefore been included to give basic data on each of the three main welfare programs and their recipients over the past several years.
1 Because there are so many potential predictors and not all possibilities can be included here, additional details on potential risk factors and associated indicators are provided in Appendix B.