Indicators of Welfare Dependence: Annual Report to Congress, 2007. Chapter II. Indicators of Dependence

07/31/2007

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 that families be considered dependent if more than 50 percent of their total income in a one-year period comes from cash assistance through the Aid to Families with Dependent Children (AFDC) program (now Temporary Assistance for Needy Families (TANF) program), food stamps and Supplemental Security Income (SSI) benefits. Furthermore, this welfare income was not to be associated with work activities. 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 captured fully the Advisory Board’s recommendation; that is, one indicator based on the percentage of income from means-tested assistance only if this income is not associated with work activities. As discussed in Chapter I, we adopt the following definition of welfare dependence among individuals in families1 for use in this report:

Welfare dependence is the proportion of all individuals in families that receive more than half of their total family income in one year from TANF, food stamps and/or SSI.

The ten indicators in Chapter II were selected to provide information about the range and depth of dependence as proposed by the Advisory Board, including indicators that measure the presence of employment activities. This chapter focuses on recipients of three major meanstested cash and nutritional assistance programs: cash assistance through the AFDC and TANF programs, benefits under the Food Stamp Program, and SSI benefits for elderly and disabled recipients. For some indicators, summary data and characteristics are provided for all recipients, not just those defined as welfare-dependent. While a number of indicators focus on the percentage of recipients’ income from means-tested assistance, other indicators focus on presence of work activities at the same time as welfare receipt.

Here is a brief summary of each of the ten 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 cash assistance, food stamps and/or SSI benefits, 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 meanstested 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 that use a combination of means-tested assistance and earnings from the labor force.

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. Administrative data for the AFDC/TANF, Food Stamp and SSI programs 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 AFDC/TANF, Food Stamp and SSI 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 whether individuals dependent on welfare in one year make the transition out of dependence in the following year.

Indicator 7: Program Spell Duration. One critical aspect of dependence is how long individuals receive means-tested assistance. This indicator provides information on short, medium and long spells of welfare receipt for each of the three major means-tested programs – AFDC/TANF, the Food Stamp Program and SSI.

Indicator 8: Welfare Spell Duration with No Labor Force Attachment. This indicator is concerned with dynamics of welfare receipt among persons in families with no attachment to the labor market. It differs from Indicator 7 in providing information on spells of TANF receipt during months where no one in the family worked or was officially unemployed.

Indicator 9: 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 7, to examine the cumulative amount of time individuals receive assistance over a period of several years.

Indicator 10: 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 TANF.


1 Appendix D provides more information on the use of individuals, rather than families or households, as the unit of analysis for most of the statistics in this report.

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