The primary data sources for this report are the Current Population Survey (CPS), the Survey of Income and Program Participation (SIPP), the Panel Study on Income Dynamics (PSID), and administrative data for the AFDC/TANF, Food Stamp, and SSI programs. Beginning with the 2001 report on dependence, there was a shift to using CPS rather than SIPP data for several indicators and predictors of welfare recipiency and dependence. This change was necessary because the Census Bureau has been unable to update the SIPP data analyses beyond the 1995 data presented in prior reports.
If it were not for the lags in data availability, the SIPP would be considered the most useful national survey for measuring welfare dependency. It was used most extensively in the first three annual dependence reports. Its strengths are its longitudinal design, system of monthly accounting, and detail concerning employment, income and participation in federal income-support and related programs. These features make the SIPP particularly effective for capturing the complexities of program dynamics and it continues to be an important source of data in this report, particularly for measures related to AFDC spell duration and transitions in and out of AFDC recipiency, dependency and poverty. More recent SIPP data will be available for next year’s report, allowing examination of program dynamics under the TANF program.
For measures of receipt, dependency, and poverty at a single point in time, however, the report primarily uses the Annual March Demographic Supplement to the CPS, which measures income and poverty over an annual accounting period. The CPS data are available on a more timely basis than the SIPP, and have been widely used to measure trends since the welfare reform legislation of 1996. However, because the CPS does not collect income in the same detail as the SIPP, it has been subject to criticism for underreporting of income, particularly welfare income. To address this concern, some of the indicators in this report are based on CPS data that have been analyzed by the Transfer Income Model (TRIM3), a microsimulation model developed by the Urban Institute under contract to the Office of the Assistant Secretary for Planning and Evaluation. Although its primary purpose is to simulate program eligibility and the impact of policy proposals, the TRIM model has also been used to correct for underreporting of welfare receipt and benefits. Welfare caseloads in TRIM3 are based on CPS data, adjusted upward to ensure that total estimates of recipients equal the total counts from administrative data. Even with these adjustments, some measurement differences between the CPS/TRIM data and SIPP data remain.
As shown in Figure SUM 3, the overall measures of dependency and recipiency have not been greatly affected by the change in data sources. Both data sources show a decline in dependence between 1993 and 1995, from 5.9 to 5.1 percent under the SIPP data, and from 5.9 to 5.3 percent under the TRIM-adjusted CPS data. Still, readers are cautioned against comparing measures for 1987-1995 from the SIPP data in the first three annual reports with the measures for 1996-1999 from the TRIM-adjusted CPS data. In Chapter II, indicators using the CPS data have been analyzed for every year since 1993 (the first year for which TRIM-adjusted CPS data are available), providing a new time series of how the indicators are changing over time from a consistent data source.
Figure SUM 3. Recipiency and Dependency Rates from Two Data Sources: 1987-1999
Note: Recipiency is defined as 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.
The Panel Study of Income Dynamics (PSID) is another source of data used in this report. Like the SIPP it provides longitudinal data, but over a much longer time period than the approximate three-year time period of the SIPP. The PSID has collected annual income data, including transfer income, since 1968, providing vital data for indicators of long-term welfare receipt, dependence, and deprivation. As with the SIPP data, there have been lags in obtaining updated PSID data. This 2002 report provides the first updated analysis of PSID data since the initial Indicators of Welfare Dependence report issued several years ago. The PSID data are now reported for the ten-year time period ending in 1996, as well as for two earlier ten-year time periods.
Finally, the report also draws upon administrative data for the AFDC/TANF, Food Stamp and SSI programs. These data are largely reported in Appendix A. Like the CPS data, administrative data are generally available with little time lags; these data are generally available through fiscal year 2000 (or, for some aggregate caseload statistics, fiscal year 2001). To the extent possible, TANF administrative data are reported in a consistent manner with data from the earlier AFDC program, as noted in the footnotes to the tables in Appendix A. The fact remains that assistance under locally designed TANF programs encompasses a diverse set of cash and non-cash benefits designed to support families in making a transition to work, and so direct comparisons between AFDC receipt and TANF receipt must be made with caution. This issue also affects reported data on TANF receipt in national data sets such as the CPS and SIPP.
Most of the data sources allow analysis of the indicators and predictors of welfare dependence across several age and racial/ethnic categories. Where the data are available, statistics are shown for three racial/ethnic groups — non-Hispanic whites, non-Hispanic blacks, and Hispanics.3 In some instances, however, there are not sufficient data on individuals of Hispanic origin, and so the measures are shown for only two racial/ethnic categories.
Three other technical notes, and technical changes to two work-related predictors of dependence, concern the unit of analysis and the difference between annual and monthly measures. The individual, rather than the family or household, is the unit of analysis for most of the statistics in this report. The individual’s dependency status, however, is generally based on total family income, taking into account means-tested assistance, earnings and other sources of income for all individuals in the family. 4This chapter, for example, has reported the percentage of individuals that are dependent (in SUM 1) or poor (in SUM 2) according to annual total family income. Recipiency status is also based on total annual family income in some instances; in SUM 1, for example, recipients are individuals in families receiving assistance at some point in the year. In most other indicators, recipiency is measured as the direct receipt of a benefit by an individual in a month. The difference between an individual and a family measure of recipiency is largest in the SSI program, which provides benefits to individuals and couples, not to families.
There also are differences between monthly and annual observation of benefit receipt. For example, the measures of annual recipiency (that is, any receipt over the course of a year) shown in Figure and Table SUM 1 are higher than the more traditional measures of recipiency in an average month, as shown in several other indicators.
Finally, data sources for two work-related risk factors have been modified this year to allow for their annual update in future reports. The data source for WORK 6, dealing with alcohol and substance abuse among adults, is still the National Household Survey on Drug Abuse (NHSDA). However, as a result of a change in methodology in the NHSDA, the data from 1999 and 2000 are not comparable to earlier data. Thus, while the 2002 report includes only the 1999 and 2000 data, this risk factor can be updated in the future. In addition, past versions of work-related risk factor WORK 7, which deals with disability in adults and children, have used unpublished data from a 1994 disability supplement to the National Health Interview Survey (NHIS). As this was a one-time supplement, this risk factor has not been updated since the first indicators report in 1997. The 2002 report uses data from the annual NHIS, specifically the 2000 survey, to provide similar data that will be updated in future reports; however, these data should not be compared with disability risk factors from previous reports.
3Due to small sample size, American Indians/Alaska natives and Asian/Pacific Islanders are included in the totals but are not shown separately.
4Family is generally defined as following the broad Census Bureau definition of family — all persons residing together that are related by birth, marriage, or adoption.