Indicators of Welfare Dependence: Annual Report to Congress, 1997. Measuring Welfare Dependence


Measuring welfare dependence is not a simple problem. How much income must be received from welfare programs before a family is considered "dependent?" Does dependence relate to the length of time that the family has received benefits, or only to the amount or proportion of income from welfare? Are families with some income from work dependent if they also receive welfare income? These are among the questions that the Advisory Board considered in attempting to define and measure welfare dependence.

This report retains the concept underlying the Interim Report -- that dependence is a continuum, with variations in degree and in duration. Families could be more or less dependent if larger or smaller shares of their total resources were derived from welfare programs. Further, the Advisory Board recommended that a family receiving one welfare check probably should not be classified as dependent, even if that check accounted for all of their income for the month in question. Dependence, in other words, has some inherent concept of recipiency in more than the very short term. Finally, the Board believed that income associated with work, even if it was ultimately provided by the public, should not be counted as assistance in estimating dependence.

Although many different measures of dependence could be constructed that would follow these guidelines, the Board recognized the need for a summary measure that could be tracked over time to give some broad indication of changes in the overall degree of welfare dependence in American society. They developed a particular definition of welfare dependence that fulfilled that need. For this purpose, they proposed that the following definition be put forward for discussion and debate:

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.

This measure is not without its limitations. The Advisory Board recognized that no single measure could fully capture all aspects of dependence and that their proposed measure should be examined in concert with other key indicators of dependence and deprivation. In addition, while the proposed definition would count unsubsidized and subsidized employment and work required to obtain benefits as work activities, currently available data do not permit distinguishing between welfare income associated with work activities and non-work-related welfare benefits. As a result, the data shown in this report overstate the incidence of dependence (as defined above) because work required to obtain benefits is classified as welfare and not income from work. Neither does this proposed definition capture all aspects of dependence. In particular it represents an essentially arbitrary choice of a percentage (50 percent) of income from welfare beyond which families will be considered dependent. However, it is relatively easy to measure and to track over time, and is likely to be associated with any very large changes in total dependence, however defined. For example, as the recent changes in welfare law move more recipients into employment or work-related activities, dependence under this definition should be expected to decline.

Unfortunately, any such declines cannot yet be observed using currently available data. The most accurate data on sources and amounts of income across the population as a whole are from the Survey of Income and Program Participation (SIPP).2 Because the SIPP is a large longitudinal survey of households it takes longer to collect and process than do program case records, and therefore representative data on all families appear somewhat later than do case record data.

Table SUM 1 shows the percentages of families who receive any welfare benefits and the percentage who would be considered welfare dependent under the above definition for the most recent years for which data are available.3 There is little trend discernable in these data. While there have been small year to year changes in both recipiency and dependence, the changes seen in the data available so far are not large enough to be statistically significant even in a survey as large as the SIPP.4 Overall, between four and five percent of all individuals would be considered welfare-dependent based on these data. These families represent about one-third of those who receive any benefits in each year.

Table SUM 1. Percent of the Total Population with More than 50 Percent of Income from Means-Tested Assistance Programs

  1987 1990 1992 1993
Any Receipt of Assistance More than 50% of Income Any Receipt of Assistance More than 50% of Income Any Receipt of Assistance More than 50% of Income Any Receipt of Assistance More than 50% of Income
All Persons 14.9 4.7 14.1 4.2 16.9 4.9 17.0 4.8
Non-Hispanic White 9.3 2.2 8.9 2.1 11.0 2.4 10.9 2.3
Non-Hispanic Black 40.9 15.7 36.6 14.6 41.0 15.9 41.8 16.3
Hispanic 28.3 10.9 29.5 8.3 33.3 10.5 33.9 10.3
Children 0-5 24.5 10.0 24.0 10.3 28.9 12.2 29.0 11.6
Children 6-10 23.2 10.1 20.2 8.5 23.8 9.5 24.0 9.2
Children 11-15 19.8 8.0 18.8 6.4 23.2 7.5 22.6 7.3
Women 16-64 14.4 4.6 14.1 4.6 17.0 5.0 17.3 5.0
Men 16-64 10.1 2.0 9.5 1.5 11.8 1.9 12.0 2.1
Adults 65+ 13.6 2.6 12.1 1.9 12.6 2.0 12.2 2.0

Note: Means-tested assistance includes AFDC, SSI and Food Stamps. While only affecting a small number of cases, general assistance income is included under AFDC.

Source: Unpublished data from the SIPP, 1987, 1990 and 1992 panels.

In considering the proposed definition of welfare dependence, the Advisory Board viewed SSI recipiency, which is generally related to either disability or old age, as somewhat different from AFDC and Food Stamp recipiency, because SSI recipients may be substantially less likely to be able to earn a significant amount. Table SUM 2 therefore presents data on the dependence indicator calculated three different ways: including income from all three programs, including AFDC and Food Stamp benefits only, and including SSI only. That table shows that in general most families who are dependent based on income from all three programs are also dependent under a definition that considers AFDC and Food Stamps alone. As might be expected, the only exception involves adults aged 65 and over, who are much more likely to be dependent on SSI than on the other two programs. Even so, however, only about two percent of elderly recipients are dependent under any definition. Non-whites and the very young are particularly likely to be dependent, and they are primarily dependent on AFDC and Food Stamps. Even in these populations, however, the vast majority of families do not meet the criteria for dependence.

Table SUM 2. Percent of the Total Population with More than 50 Percent of Income from Various Means-Tested Assistance Programs, 1992

  AFDC, SSI and Food Stamps AFDC and Food Stamps SSI Only
All Persons 4.9 3.8 0.7
Racial Categories
Non-Hispanic White 2.4 1.8 0.4
Non-Hispanic Black 15.9 12.3 2.1
Hispanic 10.5 8.9 1.2
Age Categories
Children Age 0 - 5 12.2 11.4 0.3
Children Age 6 - 10 9.5 8.6 0.3
Children Age 11 - 15 7.5 6.2 0.5
Women Age 16 - 64 5.0 3.8 0.8
Men Age 16 - 64 1.9 1.1 0.6
Adults Age 65 and over 2.0 0.3 1.4

Note: While only affecting a small number of cases, general assistance income is included under AFDC.

Source: Unpublished data from the SIPP, 1992 panel.

The Advisory Board's discussion also focused on the need for some measure of dependence that included the concept of recipiency over an extended period of time. Accordingly, they recommended the inclusion of an additional measure that considered what proportion of the population participating in welfare programs over various periods of time met the dependence criteria. Table SUM 3 summarizes that measure for two different time periods, 1972-1981 and 1982-1991.

Table SUM 3. AFDC Receipt and Percentage of Recipients with More than 50 Percent of Income from AFDC and Food Stamps by Number of Years

  All Recipients 1972 - 1981 All Recipients 1982 - 1991
Any AFDC AFDC & Food Stamps Any AFDC AFDC & Food Stamps
Years Receipt >50% of Income Receipt >50% of Income
0 Years -- 55 -- 50
1 - 2 Years 49 22 47 23
3 - 5 Years 28 14 28 15
6 - 8 Years 13 5 15 9
9 - 10 Years 11 4 11 4
  100% 100% 100% 100%
  Children 0 - 5 in 1972: 1972 - 1981 Children 0 - 5 in 1982: 1982 - 1991
Any AFDC AFDC & Food Stamps Any AFDC AFDC & Food Stamps
Years Receipt >50% of Income Receipt >50% of Income
0 Years -- 39 -- 34
1 - 2 Years 37 25 34 28
3 - 5 Years 29 21 29 16
6 - 8 Years 15 6 17 13
9 - 10 Years 19 9 20 8
  100% 100% 100% 100%

Note: "AFDC Receipt" is defined as whether the person received AFDC at any time during the year. "AFDC & Food Stamps >50% of Income" is defined as whether the person's AFDC and Food Stamps benefit was more than 50% of their yearly income. "0 Years" means that while the person received means-tested assistance, their benefits were 50% of their income for zero years during the time period. For example, a person listed as receiving AFDC for 6 - 8 years ("Any AFDC Receipt") may never have received benefits greater than 50% of their income (0 years, AFDC and Food Stamps >50% of Income).

Source: Unpublished data from the PSID, 1972 - 1991.

Even among families who were recipients, the majority were dependent on AFDC and Food Stamps for less than one year in total over each of these 10 year periods. For example, 11 percent of people who received welfare at all received it for 9 to 10 years, but only 4 percent of those who were dependent on welfare at any point were dependent for 9 to 10 years. As the spell of recipiency lengthened, it appears that recipients were more likely to supplement welfare with income from other sources such as earnings. There is a small tendency for the proportion of spells of welfare dependence that are longer to grow over this period, but the change is not large enough to be statistically significant.5

2 While the number of families dependent on welfare from a particular program could potentially be calculated using program data alone, the proportion of the total population who are welfare dependent could not be seen, because families may receive income from more than one program and it is not always possible to match records across programs to avoid double-counting such families. Additionally, studies have shown that reports of total income to household surveys such as the SIPP are typically more detailed and accurate than are reports to welfare program administrators. Finally, the definition of a "welfare unit" for program purposes does not always include all family members living in the same household.

3 While more recent data from the SIPP have been collected, due to a number of technical issues, they were not available for analysis at the time this report was drafted.

4 Standard errors can be calculated using the formula published in the Survey of Income and Program Participation Users' Guide.

5 For further discussion of standard errors for PSID estimates, see The Panel Study of Income Dynamics, A User's Guide.