Indicators of Welfare Dependence: Annual Report to Congress, 2001 . Measuring Welfare Dependence

03/01/2001

As suggested by its title, this report focuses on welfare “dependency” as well as welfare “recipiency.”  While recipiency can be defined fairly easily, based on the presence of benefits from AFDC/TANF, SSI or food stamps, dependency is a more complex concept.

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 1999, the percentage of welfare recipients who were working (including employment, work experience, and community service) reached an all-time high of 28 percent, compared to the 7 percent recorded in 1992.(1)

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.

As shown in Figure SUM 1, 3.8 percent of the population would be considered “dependent” on welfare in 1998 under the above definition.  This is less than one-third of the percentage (13.5 percent) who lived in a family receiving at least some AFDC/TANF, food stamp or SSI benefits during the year.  Both dependency and recipiency rates have fallen since 1994: dependency rates fell from 5.8 to 3.8 percent, while recipiency rates fell from 17.2 to 13.5 percent.  The drop in recipiency rates is consistent with administrative data showing a peak in AFDC caseloads in 1993 and in food stamp caseloads in 1994 and a steady 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 also peaked in 1993, with particularly strong declines in dependency between 1996 and 1998.

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.

Dependency on assistance also varies depending upon which programs are counted as “welfare programs.”  Dependency would be lower — 2.1 percent — if only AFDC/TANF and food stamp benefits were counted (as shown in Appendix B).  In general, 70 to 75 percent of individuals who are dependent under the standard definition also are dependent under an alternative definition that considers AFDC and food stamps alone (as is done in some measures in this report).  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.

Another factor affecting dependency is the time period observed.  The summary measures shown in Figure and Table SUM 1 focus on recipiency and dependency rates over a one-year time period.  Long-term dependency is more rare, as shown in the longitudinal measures in the second half of Chapter II.  Indicator 9, for example, shows that only 4 percent of those who were AFDC recipients in 1982 were dependent (i.e., received more than 50 percent of their income from AFDC and food stamps) for nine or ten years.  This represents less than 0.5 percent of the total population.  Half of the 1982 recipients were not dependent in any year over the 1982-1991 time period.

Figure SUM 1. Recipiency and Dependency Rates: 1993-1998

Figure SUM 1. Recipiency and Dependency Rates: 1993-1998

Note:  Recipiency is defined as living in a family with receipt of any amount of AFDC/TANF, SSI, or food stamps during year.  Dependency is defined as having more than 50 percent of annual income from AFDC/TANF, SSI and/or food stamps.  Dependency rates would be lower if adjusted to exclude welfare assistance associated with working.

Source: March CPS data, analyzed using the TRIM3 microsimulation model.


Table SUM 1. Recipiency and Dependency Rates: 1993-1998

  1993 1994 1995 1996 1997 1998
Recipiency Rates (Rates of Any Amount of AFDC/TANF, Food Stamps, or SSI)
All Persons 16.6 17.2 16.9 16.0 14.8 13.5
Racial Categories            
Non-Hispanic White 10.3 10.9 10.0 9.9 9.7 8.6
Non-Hispanic Black 38.0 38.3 38.6 35.6 30.2 29.6
Hispanic 34.6 34.9 35.0 32.0 28.0 24.5
Age Categories            
Children Ages 0-5 30.5 31.5 31.6 28.2 25.1 22.4
Children Ages 6-10 24.9 26.8 26.5 24.2 21.2 20.0
Children Ages 11-15 22.1 23.6 21.7 21.1 19.4 17.0
Women Ages 16-64 16.4 16.9 16.6 16.0 14.7 13.6
Men Ages 16-64 11.5 11.9 11.8 11.7 11.1 10.0
Adults Age 65 and over 11.2 10.9 10.6 10.3 10.2 9.9
Dependency Rates (More than 50 Percent of Income from Means-Tested Assistance)
All Persons 5.9 5.8 5.3 5.2 4.5 3.8
Racial Categories            
Non-Hispanic White 3.0 2.9 2.3 2.6 2.5 2.1
Non-Hispanic Black 17.8 16.7 15.5 13.8 11.4 10.5
Hispanic 11.8 12.5 12.2 10.9 9.1 6.6
Age Categories            
Children Ages 0-5 13.9 13.7 12.9 11.2 9.3 7.8
Children Ages 6-10 11.2 11.2 10.5 9.5 8.4 6.7
Children Ages 11-15 9.3 9.2 7.6 8.1 7.4 5.7
Women Ages 16-64 5.9 5.7 5.2 5.2 4.6 3.9
Men Ages 16-64 2.7 2.7 2.5 2.7 2.5 2.1
Adults Age 65 and over 2.4 2.7 2.2 2.4 2.1 2.1

Note:  Recipiency is defined as living in a family with receipt of any amount of AFDC/TANF, SSI, or food stamps during year.  Dependency is defined as having more than 50 percent of annual family income from AFDC/TANF, SSI and/or food stamps.  Dependency rates would be lower if adjusted to exclude welfare assistance associated with working.

Source:  March CPS data, analyzed using the TRIM3 microsimulation model.


1 The 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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