Indicators of Welfare Dependence: Annual Report to Congress, 2000. Economic Security Risk Factors (ECON).

03/01/2000

The first group includes six measures associated with economic security. This group encompasses three measures of poverty, as well as measures of child support receipt, food insecurity, and lack of health insurance. The tables and figures illustrating measures of economic security are labeled with the prefix ECON throughout this chapter.

Poverty measures are important predictors of dependence, because families with fewer economic resources are more likely to be dependent on means-tested assistance. In addition, poverty and other measures of deprivation, such as food insecurity, are important to assess in conjunction with the measures of dependence outlined in Chapter II. Reductions in caseloads and dependence can reduce poverty, to the extent that such reductions are associated with greater work activity and higher economic resources for former welfare families. However, reductions in welfare caseloads can increase poverty and other deprivation measures, to the extent that former welfare families are left with fewer economic resources.

Three aspects of poverty are examined in this chapter: overall poverty rates (ECON 1); the length of poverty episodes or spells (ECON 2); and the cumulative time spent in poverty over a decade (ECON 3). All three are measured using the official poverty rate, which counts all cash income, but does not take into account the value of non-cash benefits, such as food stamps, or the effects of the Earned Income Tax Credit or other taxes. Some more comprehensive measures of poverty were shown in Chapter I (see Tables SUM 4 and SUM 5). Further work on analyzing poverty trends under alternative poverty measures is under way, and next year’s report may include revised measures of poverty, following those recommended by the National Academy of Sciences.

This chapter also includes data on child support payments (ECON 4), which can play an important role in reducing dependence on government assistance and thus serve as a predictor of dependence. Household food insecurity (ECON 5) is an important measure of deprivation that, although correlated with general income poverty, provides an alternative measure of tracking the incidence of material hardship and need, and how it may change over time. Finally, health insurance (ECON 6) is both tied to the income level of the family, and may be a precursor to future health problems among both adults and children.

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