Indicators of Welfare Dependence: Annual Report to Congress, 2000. Chapter II . Indicators of Dependence

03/01/2000

Following the format of the previous annual reports to Congress, this second chapter presents summary data related to indicators of dependence. These indicators differ from other welfare statistics because of their emphasis on welfare dependence, rather than simple welfare receipt. As discussed in Chapter I, the Advisory Board on Welfare Indicators suggested measuring dependence as the proportion of families with more than 50 percent of their total income in a oneyear period coming from AFDC, food stamps and/or SSI. Furthermore, this welfare income was not to be associated with work activities.

The indicators in Chapter II were selected to provide information about dependence, following, to the extent feasible, the definition of dependence proposed by the Advisory Board. Existing data from administrative records and national surveys, however, do not generally distinguish welfare benefits received in conjunction with work from benefits received without work. Thus it was not possible to construct one single indicator of dependence; that is, one indicator that measures both percentage of income from means-tested assistance and presence of work activities. Instead, this chapter includes some indicators that focus on the percentage of recipients’ income from meanstested assistance, while other indicators focus on presence of work activities at the same time as welfare receipt. Still other indicators present summary data and characteristics on all recipients, not limited to those with more than 50 percent of total income from welfare programs or those without work activities

Overall, the ten indicators of dependency were selected to reflect both the range and depth of dependence. Here is a brief summary of each of the ten indicators:

Indicator 1: Degree of Dependence. This indicator focuses most closely on those individuals who meet the Advisory Board’s proposed definition of “dependence.” In addition to examining those individuals with more than 50 percent of their income from AFDC, food stamps and/or SSI, it examines those with more than 0 percent, 25 percent and 75 percent of their income from such sources, showing various levels of dependence (Indicator 1a). Dependency over a ten-year ime period is also examined (Indicator 1b), as is the average percentage of income from means-tested assistance and earnings received by various families (Indicator 1c).

Indicator 2: Dependence Spell Transitions. This indicator looks at the ability of individuals who are dependent on welfare in one year to make the transition out of dependence in the following year.

Indicator 3: Dependence Spell Duration. Like Indicator 2, this indicator is concerned with dynamics of welfare receipt and welfare dependence. It shows the proportion of individuals with short, medium, and long spells, or episodes, of AFDC receipt. The focus is on individuals in families with no labor force participants, following the Board’s interest in welfare income that is not associated with work activities. Information on spell lengths for SSI and food stamps is provided in Indicator 5.

Indicator 4: Receipt of Means-Tested Assistance and Labor Force Attachment. This indicator looks further at the relationship between receipt of means-tested assistance and participation in the labor force. This is an important issue because of the significant number of low-income individuals who use a combination of means-tested assistance and earnings from the labor force to get by each month.

Indicator 5: Program Spell Duration. One critical aspect of dependence is how long individuals receive means-tested assistance. Like Indicator 3, this indicator provides information on short, medium, and long spells of welfare receipt. It differs from Indicator 3 in looking at all recipients, regardless of attachment to the labor force, and in analyzing recipients of each of the three major means-tested programs – AFDC, food stamps, and SSI.

Indicator 6: Long-Term Receipt. Many individuals who leave welfare programs cycle back on after an absence of several months. Thus it is important to look beyond individual program spells, measured in Indicator 5, to examine the cumulative amount of time individuals receive assistance over a period of several years. The issue of long-term receipt is particularly important in light of the five-year time limit in the TANF program.

Indicator 7: Multiple Program Receipt. Depending on their circumstances, individuals may choose a variety of different means-tested assistance “packages.” This indicator looks at the percentage of individuals combining AFDC, food stamps, and SSI, examining how many rely on just one of these programs, and how many rely on a two-program or three-program package.

Indicator 8: Events Associated with the Beginning and Ending of Program Spells. To gain a better understanding of welfare dynamics, it is important to go beyond measures of spell duration and examine information regarding the major events in people’s lives that are correlated with the beginnings or endings of program spells. This measure focuses on receipt of AFDC.

Indicator 9: Rate of Receipt of Means-Tested Assistance. This indicator paints yet another picture of dependence by measuring recipiency rates, that is, the percentage of the population which receive AFDC, food stamps, or SSI in an average month. These data are readily available over time for the last 3 decades, allowing a better sense of historical trends than is available from the more specialized Indicators of dependence presented above.

Indicator 10: Participation in Means-Tested Assistance Programs. While means-tested public assistance programs are open to all that meet their requirements, not all eligible households participate in the programs. This indicator reflects “take up rates” – the number of families that actually participate in the programs as a percent of those who are eligible.

Indicators in this chapter focus on recipients of three major means-tested cash and nutritional assistance programs: Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI) for elderly and disabled recipients, and the Food Stamp Program. Only limited administrative data are available to report on recipients of the new Temporary Assistance for Needy Families (TANF) program. These are shown in Indicator 9a, which reports TANF recipiency rates for 1998. Information on how other dependency measures were affected by the replacement of the AFDC program by the TANF program will not be available until SIPP and other national survey data for 1998 are available.

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