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

03/01/2002

As suggested by its title, this report focuses on welfare “dependence” 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, dependence 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 dependence. 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 2000, the percentage of welfare recipients who were working (including employment, work experience, and community service) reached an all-time high of 33 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, dependence under this definition has declined as policy changes under welfare reform have moved more recipients into employment or work-related activities.

As shown in Figure SUM 1, 3.3 percent of the population would be considered “dependent” on welfare in 1999 under the above definition. This is about one-quarter of the percentage (13.3 percent) that lived in a family receiving at least some TANF, food stamp or SSI benefits during the year.

Figure SUM 1.Recipiency and Dependency Rates: 1996-1999

Figure SUM 1. Recipiency and Dependency Rates: 1996-1999

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.

Both dependency and recipiency rates fell between 1996 and 1999: dependence rates fell from 5.2 to 3.3 percent, while recipiency rates fell from 16.0 to 13.3 percent. The drop in recipiency rates is consistent with administrative data showing declining TANF and food stamp caseloads from 1996 to 1999. What is not apparent from administrative records, but is shown in these national survey data, is that the dependency rate also declined sharply between 1996 and 1999.

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/ethnic and age categories. Recipiency and dependence also are higher for young children than for adults. However, both recipiency and dependency rates decreased across all racial/ethnic and age categories between 1996 and 1999.

Dependency on assistance also varies depending upon which programs are counted as “welfare programs.” Dependency would be much lower — 1.7 percent — if only AFDC/TANF and food stamp benefits were counted (as shown in Appendix B and as is done in some measures in this report). Whereas the inclusion or exclusion of individuals receiving only SSI benefits had a relatively small effect on dependence indicators several years ago, in 1999 over one-third of dependent individuals are dependent on SSI income only.

Another factor affecting dependence 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 recipiency and dependency are more rare, as shown in the longitudinal measures in the second half of Chapter II. Indicator 9, for example, shows that among individuals receiving AFDC at some point over the ten years ending in 1996, 14 percent were dependent on AFDC and/or food stamps for six or more years (SSI income is excluded from this particular measure of dependency). This represents about 1.7 percent of the total population. Another 30 percent of recipients were dependent for one to five of the ten years, and 47 percent were not dependent in any year.

Table SUM 1. Recipiency and Dependency Rates: 1996-1999

  1996 1997 1998 1999
Recipiency Rates (Rates of Any Amount of AFDC/TANF, Food Stamps, or SSI)
All Persons 16.0 14.8 13.5 13.3
 
Racial/Ethnic Categories
Non-Hispanic White 9.9 9.7 8.6 8.4
Non-Hispanic Black 35.6 30.2 29.6 29.8
Hispanic 32.0 28.0 24.5 23.4
 
Age Categories
Children Ages 0-5 28.2 25.1 22.4 21.5
Children Ages 6-10 24.2 21.2 20.0 19.8
Children Ages 11-15 21.1 19.4 17.0 17.3
 
Women Ages 16-64 16.0 14.7 13.6 13.6
Men Ages 16-64 11.7 11.1 10.0 9.6
Adults Age 65 and over 10.3 10.2 9.9 10.0
         
Dependency Rates (More than 50 Percent of Income from Means-Tested Assistance)
All Persons 5.2 4.5 3.8 3.3
 
Racial/Ethnic Categories
Non-Hispanic White 2.6 2.5 2.1 1.8
Non-Hispanic Black 13.8 11.4 10.5 9.1
Hispanic 10.9 9.1 6.6 5.4
 
Age Categories
Children Ages 0-5 11.2 9.3 7.8 6.2
Children Ages 6-10 9.5 8.4 6.7 6.1
Children Ages 11-15 8.1 7.4 5.7 4.5
 
Women Ages 16-64 5.2 4.6 3.9 3.5
Men Ages 16-64 2.7 2.5 2.1 1.9
Adults Age 65 and over 2.4 2.1 2.1 2.0

Note:  Recipiency is defined as living in a family with receipt of any amount of AFDC/TANF, SSI, or food stamps during the 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, a classification incompatible with the proposed definition

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