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

03/01/2000

Welfare dependence, like poverty, is a continuum, with variations in degree and in duration. Families may be more or less dependent if larger or smaller shares of their total resources are derived from welfare programs. The amount of time over which a family depends on welfare might also be considered in assessing its degree of dependency. Nevertheless, a summary measure of dependence to be used as an indicator for policy purposes must have some fixed parameters that allow one to determine which families should be counted as dependent, just as the poverty line defines who is poor under the official standard. The definition of dependence proposed by the Advisory Board for this purpose is as follows:

A family is dependent on welfare if more than 50 percent of its total income in a one-year period comes from AFDC, 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 the 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, existing data sources 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 welfare income associated with work required to obtain benefits is classified as welfare and not as income from work. This issue may be growing in importance under the increased work requirements of the TANF program. In 1998, the percentage of welfare recipients who were working (including employment, work experience, and community service) reached an all-time high of 27 percent, compared to the 7 percent recorded in 1992.2

This proposed definition also 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 is expected to decline.

In 1995, the most recent year for which complete population data are available on monthly income and benefit recipiency, 17 percent of the population received means-tested assistance, as shown in Figure SUM 1. Less than one-third of this group, or about 5 percent of the total population, would be considered "dependent" on welfare under the above definition. Recipiency and dependency rates in 1995 were lower than in 1993 and 1994, but were still higher than they had been in 1987 and 1990. These numbers are consistent with administrative data showing a peak in AFDC caseloads in 1993 and in food stamp caseloads in 1994 and a decrease in both programs since that time. What is not apparent from administrative records, but is shown in these national survey data, is that the dependency rate peaked in 1993, declining over the next two years until it reached 5.1 percent in 1995, close to the same level as in 1992.

Figure SUM 1. Recipiency and Dependency Rates: 1987-95

Figure SUM 1. Recipiency and Dependency Rates:  1987-95

Note: Recipiency is defined as receipt of any amount of AFDC, SSI, or food stamps during year. Dependency is defined as having more than 50 percent of annual income from AFDC, SSI and/or food stamps. While only affecting a small number of cases, general assistance income is included within AFDC income. Dependency rates would be lower if adjusted to exclude welfare assistance associated with working. Because full calendar year data for 1995 were not available for all SIPP respondents, 1995 estimates are based on a weighting adjustment to account for those who were not interviewed for the entire year.

Source: Unpublished data from the SIPP, 1987, 1990, 1992, and 1993 panels.

Recipiency and dependency rates are higher for non-Hispanic blacks and Hispanics than for non-Hispanic whites, as shown in Table SUM 1, which shows these rates for various racial and age categories. Recipiency and dependency also are higher for young children than for adults.

Table SUM 1. Recipiency and Dependency Rates: 1987-95

  1987 1990 1992 1993 1994 1995
Recipiency Rates
(Receipt of Any Amount of AFDC, Food Stamps, or SSI
)
All Persons 14.9 14.1 16.9 17.0 18.0 17.0
Racial Categories  
Non-Hispanic White 9.3 8.9 11.0 10.9 11.1 10.4
Non-Hispanic Black 40.9 36.6 41.0 41.8 43.2 40.9
Hispanic 28.3 29.5 33.3 33.9 37.1 34.6
Age Categories  
Children Ages 0 - 5 24.5 24.0 28.9 29.0 32.4 27.6
Children Ages 6 - 10 23.2 20.2 23.8 24.0 28.6 28.7
Children Ages 11 - 15 19.8 18.8 23.2 22.6 24.9 23.6
 
Women Ages 16 - 64 14.4 14.1 17.0 17.3 17.5 16.8
Men Ages 16 - 64 10.1 9.5 11.8 12.0 12.3 11.5
Adults Age 65 and over 13.6 12.1 12.6 12.2 12.3 12.2
Dependency Rates
(More than 50 Percent of Income from Means-Tested Assistance)
All Persons 4.7 4.2 4.9 5.9 5.6 5.1
Racial Categories  
Non-Hispanic White 2.2 2.1 2.4 2.8 2.6 2.3
Non-Hispanic Black 15.7 14.6 15.9 16.7 16.8 15.2
Hispanic 10.9 8.3 10.5 14.2 12.9 12.2
Age Categories  
Children Ages 0 - 5 10.0 10.3 12.2 13.3 12.5 10.6
Children Ages 6 - 10 10.1 8.5 9.5 12.3 12.0 11.6
Children Ages 11 - 15 8.0 6.4 7.5 10.5 9.3 9.1
 
Women Ages 16 - 64 4.6 4.6 5.0 5.8 5.5 5.2
Men Ages 16 - 64 2.0 1.5 1.9 2.7 2.5 2.3
Adults Age 65 and over 2.6 1.9 2.0 2.0 2.2 1.8

Note: Means-tested assistance includes AFDC, SSI and food stamps. While only affecting a small number of cases, general assistance income is included within AFDC income. Dependency rates would be lower if adjusted to exclude welfare assistance associated with working. Because full calendar year data for 1995 were not available for all SIPP respondents, 1995 estimates are based on a weighting adjustment to account for those who were not interviewed for the entire year.

Source: Unpublished data from the SIPP, 1987, 1990, 1992, and 1993 panels.

Dependency on assistance also varies depending upon which programs are counted as "welfare programs," as shown in Table SUM 2. Dependency is highest — 5.1 percent — when income from all three programs (AFDC, food stamps, and SSI) is counted, as in the first column of Table SUM 1 (and most of the report). Dependency is lower — 3.7 percent — when counting AFDC/TANF and food stamp benefits only, as in the second column of Table SUM 2. In general, 70 to 75 percent of individuals who are dependent under the standard definition also are dependent under the alternative definition that considers AFDC and food stamps alone (as is done in some measures in this report). Note, however, that the elderly depend more on SSI than on AFDC and food stamps; whereas 1.8 percent of elderly persons are dependent when counting the three major types of means-tested assistance, very few, 0.3 percent, are dependent when the definition is limited to AFDC and food stamps.

In general, non-whites and the very young were more likely to be dependent than other racial and age categories, 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. Percentage of the Total Population with More than 50 Percent of Income from Various Means-Tested Assistance Programs, by Race and Age: 1995

  AFDC, SSI, &
Food Stamps
AFDC &
Food Stamps
SSI only
All Persons 5.1 3.7 0.9
Racial Categories  
Non-Hispanic 2.3 1.6 0.5
Non-Hispanic 15.2 10.5 2.4
Hispanic 12.2 9.8 1.6
Age Categories  
Children Ages 0 - 5 10.6 10.4 0.5
Children Ages 6 - 10 11.6 8.9 0.5
Children Ages 11 - 15 9.1 6.9 0.8
 
Women Ages 16 - 64 5.2 3.5 1.1
Men Ages 16 - 64 2.3 1.1 0.7
Adults Age 65 and over 1.8 0.3 1.3

Note: While only affecting a small number of cases, general assistance income is included within AFDC income. Because full calendar year data for 1995 were not available for all SIPP respondents, 1995 estimates are based on a weighting adjustment to account for those who were not interviewed for the entire year.

Source: Unpublished data from the SIPP, 1993 panel.

The summary measure of dependence shown in Table SUM 1 focuses on the percentage of income received from means-tested assistance over a one-year time period. It also is important to look at dependency over a longer term perspective, as is done in Table SUM 3, which examines long-term recipiency and long-term dependency among AFDC recipients.

Half (50 percent) of all those who received welfare in 1982 did not receive more than 50 percent of their income from AFDC and food stamp benefits in any of the ten years between 1982 and 1991. About one-quarter (23 percent) were dependent for one to two years, 15 percent for three to five years, and 13 percent for six or more years.

Long-term dependence is rarer than long-term recipiency. Only 4 percent of those who were recipients in 1982, for example, received more than 50 percent of their income from AFDC and food stamps for nine to ten years. This is a smaller percentage than the proportion of recipients that received welfare of any amount for nine to ten years (11 percent). Child recipients have longer spells of welfare receipt and welfare dependence than do recipients in general, as shown in the table.

Table SUM 3. Percentage of AFDC Recipients with Multiple Years of Receipt and Dependency, by Years and Age: 1982–91

  All Recipients
(in 1982)
All Child Recipients
(0-5 in 1982)
Years of Recipiency, 1982–1991
(Any AFDC Receipt)
1 - 2 Years 47 34
3 - 5 Years 28 29
6 - 8 Years 15 17
9 - 10 Years 11 20
Years of Dependency, 1982–1991
(AFDC & Food Stamps, >50% of Income)
0 Years 50 34
1 - 2 Years 23 28
3 - 5 Years 15 16
6 - 8 Years 9 13
9 - 10 Years 4 8

Note: "Any AFDC Receipt" is defined as whether an individual has received any amount of AFDC at any time during the year. "AFDC & Food Stamps, >50% of Income" is defined as whether the sum of an individual's AFDC and food stamp benefits was more than 50% of their yearly income. "0 Years" means that while an individual received means-tested assistance, his or her benefits were not greater than 50 percent of his or her income for any years during the time period. Note that this table shows years of receipt and dependency between 1982 and 1991 and does not take into account years of receipt or dependency that may have occurred before 1982.

Source: Unpublished data from the PSID, 1983 – 1992.


2The earnings of those in unsubsidized employment would be correctly captured as income from work in national surveys. Any welfare benefits associated with work experience, community service programs or other work activities, however, would be counted as income from welfare in most national surveys, an incorrect classification according to the proposed definition.

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