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/TANF, food stamps and/or SSI, and this welfare income is not associated with work activities. In following the Board’s proposal, we adopt the following definition of welfare dependence among individuals in families2 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.
Any definition of welfare dependence is not without its limitations. The Advisory Board recognized that no single measure could capture fully all aspects of dependence and that their proposed measure should be examined in concert with other indicators of well-being. While the Board’s proposal 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 nonwork-related welfare benefits. As a result, the data shown in this report may overstate the incidence of dependence 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 2006, 30.1 percent of welfare recipients were working (including employment, work experience and community service), compared to 7 percent in 1992.3
Any definition also represents an arbitrary choice of a percentage of income from welfare beyond which families will be considered dependent. But using a single point – in this case 50 percent – yields a relatively straightforward measure that can be tracked easily over time, and is likely to be associated with any large changes in total dependence, however defined. For example, dependence under the definition used in this report declined as policy changes under welfare reform moved more recipients into employment.
As shown in Figure SUM 1, 3.8 percent of the population would be considered “dependent” on welfare in 2005 in that they received more than half of their family income in 2005 from TANF, food stamps and/or SSI. This is one-quarter of the percentage that lived in a family receiving at least some TANF, food stamps, or SSI benefits during the year.
Figure SUM 1.
Recipiency and Dependency Rates: 1993-2005
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 income from AFDC/TANF, SSI and/or food stamps. Dependency rates would be lower if adjusted to exclude welfare assistance associated with working.
Source: Unpublished tabulations from the Current Population Survey, Annual Social and Economic Supplement, 1994-2006, 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 2005, the 2005 dependency and recipiency rates remain substantially lower than the peak rates of 5.9 and 17.2 percent, occurring in 1993 and 1994, respectively. The overall drop in recipiency rates since the early 1990s is consistent with TANF 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 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 11.15 million were dependent in 2005 — representing a decline of 2.59 million people.
Table SUM 1.
Recipiency and Dependency Rates: Selected Years
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 2005 compared to 1993.
Measures of welfare dependency also vary based upon which programs are counted as “welfare programs.” Dependency would be much lower — 2.1 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). Moreover, the drop in dependency is even larger under this alternative definition of dependence than usually reported. For example, between 1995 and 2005, dependency declined from 3.6 percent to 2.1 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 2004, 10.0 percent received some welfare during six or more years. Another quarter (24.7 percent) were recipients in three to five years, and nearly two-thirds (65.3 percent) received welfare in only one or two years during this period.