Indicators of Welfare Dependence: Annual Report to Congress, 2006. Measuring Welfare Dependence

08/30/2006

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 individuals in families who are dependent on welfare.

This measure is not without its limitations. The Advisory Board recognized that no single measure could capture fully all aspects of dependence and that the proposed measure should be examined in concert with other indicators of well-being. 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 FY 2003, 30 percent of welfare recipients were working (including employment, work experience and community service), compared to only 7 percent in 1992.(2)

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 declined as policy changes under welfare reform moved more recipients into employment.

As shown in Figure SUM 1, 3.6 percent of the population would be considered “dependent” on welfare in 2003 under the above definition. This is one-quarter of the percentage (14.1 percent) that lived in a family receiving at least some TANF, food stamp or SSI benefits during the year. Although data are not yet available to show a clear trend in dependency rates through 2004, available data suggest the rate may remain the same between 2003 and 2004.(3)

Figure SUM 1.

Recipiency and Dependency Rates: 1993-2003

Figure SUM 1.  Recipiency and Dependency Rates: 1993-2003

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. 
The estimate for 2004 is preliminary.

Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1994-2005, 
analyzed using the TRIM3 microsimulation model.

Dependency and recipiency rates follow fairly similar trends, falling fairly dramatically during the 1990s to lows of 3.0 percent for dependency and 12.5 percent for recipiency in 2000. While rates have increased somewhat between 2000 and 2003, the 2003 dependency and recipiency rates remain significantly lower than the peak rates of 5.9 and 17.2 percent, occurring in 1993 and 1994, respectively. The overall drop in recipiency rates in this time period is consistent with administrative data showing declining TANF caseloads, especially after enactment of welfare reform in 1996. What is not apparent from administrative records, but is shown in the national survey data, is that dependency also declined after 1993, with the sharpest decline occurring after enactment of the 1996 welfare reform legislation. While 13.74 million individuals were dependent in 1996, only 10.35 million were dependent in 2003 — representing a decline of 3.39 million people.

Recipiency and dependency rates are higher for non-Hispanic blacks and Hispanics than for non-Hispanic whites, as shown in Table SUM 1. Recipiency and dependence also are higher for young children than for adults, and for individuals in female-headed families than for those in married-couple families. However, both recipiency and dependency rates are much lower for non-Hispanic blacks, Hispanics, children and individuals in female-headed families in 2003 compared to 1993.

Table SUM 1.
Recipiency and Dependency Rates:  Selected Years

 

  1993 1996 1999 2000 2001 2002 2003
Recipiency Rates (Rates of Any Amount of AFDC/TANF, Food Stamps, or SSI)
All Persons 16.6 16 13.3 12.5 12.6 13.2 14.1
Racial/Ethnic Categories
Non-Hispanic White 10.3 9.9 8.4 8.2 8.2 8.8 9.2
Non-Hispanic Black 38.0 35.6 29.8 27.0 26.3 27.7 31.3
Hispanic 34.6 32.0 23.4 21.0 21.6 21.7 22.5
Age Categories
Children Ages 0-5 30.5 28.2 21.5 19.8 20.8 21.4 24.2
Children Ages 6-10 24.9 24.2 19.8 18.0 18.4 18.8 20.5
Children Ages 11-15 22.1 21.1 17.3 16.3 16.1 16.8 19.7
Women Ages 16-64 16.4 16.0 13.6 12.5 12.5 13.4 14.0
Men Ages 16-64 11.5 11.7 9.6 9.2 9.6 10.3 10.6
Adults Ages 65 and over 11.2 10.3 10.0 10.4 9.6 9.7 9.9
Family Categories
Persons in:
   Married-Couple Families 10.5 9.6 7.9 7.2 7.4 7.5 8.2
   Female-Headed Families 47.8 46.0 39.9 37.1 36.4 37.7 39.9
   Male-Headed Families 27.6 25.3 19.3 21.8 21.2 21.2 22.2
Unrelated Individuals 9.7 11.5 10.0 10.1 10.0 11.5 11.6
Dependency Rates (More than 50 Percent of Income from AFDC/TANF, Food Stamps, or SSI)
All Persons 5.9 5.2 3.3 3.0 3.1 3.2 3.6
Racial/Ethnic Categories
Non-Hispanic White 3.0 2.6 1.8 1.9 1.8 1.8 2.1
Non-Hispanic Black 17.8 13.8 9.1 7.7 8.8 8.7 10.1
Hispanic 11.8 10.9 5.4 4.5 4.5 4.9 5.2
Age Categories
Children Ages 0-5 13.9 11.2 6.2 6.0 5.9 6.0 7.5
Children Ages 6-10 11.2 9.5 6.1 5.1 5.4 5.1 5.8
Children Ages 11-15 9.3 8.1 4.5 4.0 4.4 4.0 5.0
Women Ages 16-64 5.9 5.2 3.5 3.0 3.3 3.4 3.6
Men Ages 16-64 2.7 2.7 1.9 1.9 2.0 2.0 2.3
Adults Ages 65 and over 2.4 2.4 2.0 2.1 1.9 2.0 2.2
Family Categories
Persons in:
   Married-Couple Families 1.8 1.7 1.0 0.9 1.0 1.0 1.1
   Female-Headed Families 25.7 21.1 13.6 11.4 11.9 11.7 13.2
   Male-Headed Families 6.8 5.4 3.0 4.4 4.0 3.8 4.9
Unrelated Individuals 3.8 4.2 3.4 3.8 3.8 4.1 4.4

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, 1994-2004, analyzed using the TRIM3 microsimulation model.


Measures of welfare dependency also vary based upon which programs are counted as “welfare programs.” Dependency would be much lower — 1.9 percent — if only AFDC/TANF and food stamp benefits were counted (as shown inAppendix B and as is done in some measures in this report). Moreover, the drop in dependency is even larger under this alternative definition of dependence than usually reported. For example, between 1995 and 2003, dependency declined from 3.6 percent to 1.9 percent under the alternative definition.

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 measured on an annual, cross-sectional basis. Longitudinal measures of program receipt (both annual and monthly) show that program spells are typically short and long-term recipiency is more rare (see Chapter II). Indicator 9, for example, shows that among individuals receiving AFDC/TANF at some point over a ten-year period ending in 2000, 18 percent received some welfare during six or more years. Another 31 percent were recipients in three to five years, and more than half (51 percent) received welfare in only one or two years.

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