Indicators of Welfare Dependence: Annual Report to Congress, 2001 . Chapter III: Predictors and Risk Factors Associated with Welfare Receipt

03/01/2001

The Welfare Indicators Act challenges the Department of Health and Human Services to identify and set forth not only indicators of welfare dependence and welfare duration, but also predictors and causes of welfare receipt.  Up to this point, welfare research has not established clear and definitive causes of welfare dependence.  However, research has identified a number of risk factors associated with welfare utilization.  For purposes of this report, the terms “predictors” and “risk factors” are used somewhat interchangeably.

Where the Advisory Board established under the Welfare Indicators Act recommended narrowing the focus of dependence indicators, it recommended an expansive view toward predictors and risk factors. The range of possible predictors is extremely wide, and until they are measured and analyzed over time as the PRWORA changes continue to be implemented, their value will not be fully known.  Some of the “predictors” included in this chapter may turn out to be simply correlates of welfare receipt, some may have a causal relationship, some may be consequences, and some may have predictive value.

For purposes of this report, the predictors/risk factors included in this chapter are grouped into three categories: economic security risk factors, employment-related risk factors, and risk factors associated with non-marital childbearing.

Economic Security Risk Factors (ECON).  The first group includes nine measures associated with economic security.  This group encompasses six 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.

Several aspects of poverty are examined in this chapter.  Those that can be updated annually using the Current Population Survey include: overall poverty rates (ECON 1); the percentage of individuals in deep poverty (ECON 2), and poverty rates using alternative definitions of income (ECON 3 and 4).  The chapter also includes data on the length of poverty episodes or spells (ECON 5); and the cumulative time spent in poverty over a decade (ECON 6).

This chapter also includes data on child support payments (ECON 7), which can play an important role in reducing dependence on government assistance and thus serve as a predictor of dependence.  Household food insecurity (ECON 8) 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 9) is both tied to the income level of the family, and may be a precursor to future health problems among both adults and children.

Employment and Work-Related Risk Factors (WORK). The second grouping, labeled with the WORK prefix, includes nine factors related to employment and barriers to employment.  These measures include data on overall labor force attachment and the employment and earnings for low-skilled workers, as well as data on barriers to work.  The latter category includes incidence of adult disabilities and children with chronic health conditions, adult substance abuse, levels of educational attainment and school drop-out rates, and child care costs. 

Employment and earnings provide many families with an escape from dependence.  It is important, therefore, to look both at overall labor force attachment (WORK 1), and at employment and earnings levels for those with low education levels (WORK 2 and WORK 3).  The economic condition of the low-skill labor market is a key predictor of the ability of young adult men and women to support families without receiving means-tested assistance.

The next two measures in this group (WORK 4 and WORK 5) focus on educational attainment.  Individuals with less than a high school education have the lowest amount of human capital and are at the greatest risk of becoming poor, despite their work effort.

Measures of barriers to employment provide indicators of potential work limitations, which may be predictors of greater dependence.  Substance abuse (WORK 6), disabling conditions (WORK 7), and chronic child health conditions (WORK 8) all have the potential of limiting the ability of the adults in the household to work.  In addition, debilitating health conditions and high medical expenditures can place a strain on a family’s economic resources.  High child care costs (WORK 9) are both a potential barrier to work and an additional strain on family finances.

Non-Marital Birth Risk Factors (BIRTH).  The final group of risk factors addresses out-of-wedlock childbearing. The tables and figures in this subsection are labeled with the BIRTH prefix.  This category includes long-term time trends in births to unmarried women (BIRTH 1), births to unmarried teens (BIRTH 2 and BIRTH 3), and children living in families with never-married parents (BIRTH 4).  Children living in families with never-married mothers are at high risk of dependence, and it is therefore important to track changes in the size of this vulnerable population.

As noted above, the predictors/risk factors included in this chapter do not represent an exhaustive list of measures.  They are merely a sampling of available data that address in some way the question of how a family is faring on the scale of deprivation and well-being.  Such questions are a necessary part of the dependence discussion as researchers assess the effects of the major changes that have occurred in the laws governing public assistance programs.

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