Indicators of Welfare Dependence: Annual Report to Congress, 2002. Chapter II: Indicators of Dependence

03/01/2002

Following the format of the previous annual reports to Congress, Chapter II presents summary data related to indicators of dependence. These indicators differ from other welfare statistics because of their emphasis on welfare dependence, rather than simple welfare receipt. As discussed in Chapter I, the Advisory Board on Welfare Indicators suggested measuring dependence as the proportion of families with more than 50 percent of their total income in a one-year period coming from AFDC (now TANF), food stamps and/or SSI. Furthermore, this welfare income was not to be associated with work activities.

The indicators in Chapter II were selected to provide information about dependence, following, to the extent feasible, the definition of dependence proposed by the Advisory Board. Existing data from administrative records and national surveys, however, do not generally distinguish welfare benefits received in conjunction with work from benefits received without work. Thus, it was not possible to construct one single indicator of dependence; that is, one indicator that measures both percentage of income from means-tested assistance and presence of work activities.

Instead, this chapter includes some indicators that focus on the percentage of recipients’ income from means-tested assistance, while other indicators focus on presence of work activities at the same time as welfare receipt. Still other indicators present summary data and characteristics on all recipients, not limited to those with more than 50 percent of total income from welfare programs or those without work activities.

Overall, the indicators of dependency were selected to reflect both the range and depth of dependence. This chapter focuses on recipients of three major means-tested cash and nutritional assistance programs: cash assistance through the Aid to Families with Dependent Children (AFDC) and the Temporary Assistance for Needy Families (TANF) programs, Supplemental Security Income (SSI) for elderly and disabled recipients, and the Food Stamp Program.

Here is a brief summary of each of the eleven indicators:

Indicator 1: Degree of Dependence. This indicator focuses most closely on those individuals who meet the Advisory Board’s proposed definition of “dependence.” In addition to examining individuals with more than 50 percent of their annual family income from AFDC/TANF, food stamps and/or SSI, it shows various levels of dependence by examining those with more than 0 percent, 25 percent, and 75 percent of their income from these sources (Indicators 1a and 1b). This indicator also shows the average percentage of income from means-tested assistance and earnings received by families with various levels of income relative to the poverty level (Indicators 1c and 1d).

Indicator 2: Receipt of Means-Tested Assistance and Labor Force Attachment. This indicator looks further at the relationship between receipt of means-tested assistance and participation in the labor force. This is an important issue because of the significant number of low-income individuals who use a combination of means-tested assistance and earnings from the labor force to get by each month.

Indicator 3: Rates of Receipt of Means-Tested Assistance. This indicator paints yet another picture of dependence by measuring recipiency rates, that is, the percentage of the population that receives AFDC/TANF, food stamps, or SSI in an average month. Program administrative data make these figures readily available over time, allowing a better sense of historical trends than is available from the more specialized indicators of dependence.

Indicator 4: Rates of Participation in Means-Tested Assistance Programs. While means-tested public assistance programs are open to all that meet their requirements, not all eligible households participate in the programs. This indicator uses administrative data and microsimulation models to reflect “take up rates” — the number of families that actually participate in the programs as a percentage of those who are legally eligible.

Indicator 5: Multiple Program Receipt. Depending on their circumstances, individuals may choose a variety of different means-tested assistance “packages.” This indicator looks at the percentage of individuals receiving AFDC/TANF, food stamps, and SSI in a month, examining how many rely on just one of these programs, and how many rely on a combination of two programs.

Indicator 6: Dependence Transitions. This indicator uses data from the Survey of Income and Program Participation (SIPP) to look at the ability of individuals who are dependent on welfare in one year to make the transition out of dependence in the following year.

Indicator 7: Dependence Spell Duration. Like Indicator 6, this indicator is concerned with dynamics of welfare receipt and welfare dependence. It shows the proportion of individuals with short, medium, and long spells, or episodes, of AFDC receipt. The focus is on individuals in AFDC families with no labor force participants.

Indicator 8: Program Spell Duration. One critical aspect of dependence is how long individuals receive means-tested assistance. Like Indicator 7, this indicator provides information on short, medium, and long spells of welfare receipt. It differs from Indicator 7 in looking at all recipients, regardless of attachment to the labor force, and in analyzing recipients of each of the three major means-tested programs — AFDC, food stamps, and SSI.

Indicator 9: Long-Term Dependency. This indicator uses data from the Panel Study of Income Dynamics (PSID) to examine dependency over three separate ten-year time periods. It measures dependency as individuals with more than 50 percent of their income from AFDC and food stamps, not counting SSI.

Indicator 10: Long-Term Receipt. Many individuals who leave welfare programs cycle back on after an absence of several months. Thus it is important to look beyond individual program spells, measured in Indicator 8, to examine the cumulative amount of time individuals receive assistance over a period of several years. The issue of long-term receipt is particularly important in light of time limits that have been enacted under state TANF programs.

Indicator 11: Events Associated with the Beginning and Ending of Program Spells. To gain a better understanding of welfare dynamics, it is important to go beyond measures of spell duration and examine information regarding the major events in people’s lives that are correlated with the beginnings or endings of program spells. This measure focuses on receipt of AFDC.

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