Indicators of Welfare Dependence: Annual Report to Congress, 2005 . Measuring Economic Well-Being

08/30/2005

To assess the social impacts of any change in dependence, changes in the level of poverty should be considered. This chapter focuses on the official poverty rate, the most common poverty measure; additional measures of poverty and need are also included under the Economic Risk Factors found in Chapter III.

Poverty in 2003 remains much lower than in 1996, the year of passage of the Personal Responsibility and Work Opportunity Reconciliation Act. The official poverty rate for 2003 was 12.5 percent, compared to 13.7 percent in 1996. This difference in the poverty rate indicates that 668 thousand fewer people are in poverty and 1.6 million fewer children are in families with incomes below poverty than in 1996. There was an increase in the overall and child poverty rates between 2000 and 2003, but the poverty rate among adults over age 64 remained essentially unchanged (see Table ECON 1 in Chapter III).

Table SUM 1. Recipiency and Dependency Rates: 1996-2002

  1996 1997 1998 1999 2000 2001 2002
Recipiency Rates (Rates of Any Amount of AFDC/TANF, Food Stamps or SSI)
All Persons 16.0 14.8 13.5 13.3 12.5 12.6 13.2
Racial/Ethnic Categories
Non-Hispanic White 9.9 9.7 8.6 8.4 8.2 8.2 8.8
Non-Hispanic Black 35.6 30.2 29.6 29.8 27.0 26.3 27.7
Hispanic 32.0 28.0 24.5 23.4 21.0 21.6 21.7
Age Categories
Children Ages 0-5 28.2 25.1 22.4 21.5 19.8 20.8 21.4
Children Ages 6-10 24.2 21.2 20.0 19.8 18.0 18.4 18.8
Children Ages 11-15 21.1 19.4 17.0 17.3 16.3 16.1 16.8
Women Ages 16-64 16.0 14.7 13.6 13.6 12.5 12.5 13.4
Men Ages 16-64 11.7 11.1 10.0 9.6 9.2 9.6 10.3
Adults Ages 65 and over 10.3 10.2 9.9 10.0 10.4 9.6 9.7
Family Categories
Individuals in:
    Married-Couple Families 9.6 8.7 8.3 7.9 7.2 7.4 7.5
    Female-Headed Families 46.0 41.6 37.5 39.9 37.1 36.4 37.7
    Male-Headed Families 25.3 24.3 19.7 19.3 21.8 21.2 21.2
Unrelated Individuals 11.5 11.9 10.9 10.0 10.1 10.0 11.5
Dependency Rates (More than 50 Percent of Income from AFDC/TANF, Food Stamps or SSI)
All Persons 5.2 4.5 3.8 3.3 3.0 3.1 3.2
Racial/Ethnic Categories
Non-Hispanic White 2.6 2.5 2.1 1.8 1.9 1.8 1.8
Non-Hispanic Black 13.8 11.4 10.5 9.1 7.7 8.8 8.7
Hispanic 10.9 9.1 6.6 5.4 4.5 4.5 4.9
Age Categories
Children Ages 0-5 11.2 9.3 7.8 6.2 6.0 5.9 6.0
Children Ages 6-10 9.5 8.4 6.7 6.1 5.1 5.4 5.1
Children Ages 11-15 8.1 7.4 5.7 4.5 4.0 4.4 4.0
Women Ages 16-64 5.2 4.6 3.9 3.5 3.0 3.3 3.4
Men Ages 16-64 2.7 2.5 2.1 1.9 1.9 2.0 2.0
Adults Ages 65 and over 2.4 2.1 2.1 2.0 2.1 1.9 2.0
Family Categories
Individuals in:
    Married-Couple Families 1.7 1.4 1.1 1.0 0.9 1.0 1.0
    Female-Headed Families 21.1 18.4 15.0 13.6 11.4 11.9 11.7
    Male-Headed Families 5.4 5.6 4.2 3.0 4.4 4.0 3.8
Unrelated Individuals 4.2 4.2 4.2 3.4 3.8 3.8 4.1

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. Spouses are not present in the Male-Headed and Female-Headed family categories. Persons of Hispanic ethnicity may be of any race. Beginning in 2002, estimates for Whites and Blacks are for persons reporting a single race only. Persons who reported more than one race are included in the total for all persons but are not shown under any race category. Due to small sample size, American Indians/Alaska Natives, Asians and Native Hawaiians/Other Pacific Islanders are included in the total for all persons but are not shown separately.

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1997-2003, analyzed using the TRIM3 microsimulation model.

Figure SUM 2. Percentage of Total Population in Poverty with Various Means-Tested Benefits Added to Total Cash Income: 1979-2003

Figure SUM 2. Percentage of Total Population in Poverty with Various Means-Tested Benefits Added to Total Cash Income: 1979-2003

Source: Unpublished Congressional Budget Office tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1980-2004. Additional calculations by DHHS. See ECON 4 in Chapter III for underlying table and further notes.

Figure SUM 2 shows poverty estimates under both the official poverty rate and two other measures that adjust income to take into account cash benefits, non-cash benefits and taxes. The three measures in the graph are based on analyzing three different concepts of income against the poverty threshold:

The solid line with filled squares shows the official poverty rate, based on total cash income, including earned and unearned income. The official poverty rate was 12.5 percent in 2003.

The dotted line shows what poverty would be if means-tested cash assistance (primarily AFDC/TANF and SSI) were excluded from cash income. Income in this measure includes earnings and other private cash income, plus social security, workers’ compensation, and other social insurance programs, as income. Poverty under this measure would be higher than the official measure, or 13.2 percent in 2003.

The lowest line shows that poverty would be lower if the cash value of selected non-cash benefits (food and housing) and taxes, including refunds under the Earned Income Tax Credit (EITC), were counted as income.4 Under this definition, poverty rates in 2003 would be at least two percentage points lower than the official measure, or 10.4 percent.


4 The effects of selected non-cash benefits (food and housing) are shown separately from the effect of taxes in Figure ECON 4 in Chapter III. Prior to 1993, taxes increased poverty. Since 1993, taxes and tax credits (including refunds through the Earned Income Tax Credit) have had the net effect of reducing poverty rates.

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