Indicators of Welfare Dependence: Annual Report to Congress, 2009-2013. Executive Summary

04/01/2013

The Welfare Indicators Act of 1994 requires the Department of Health and Human Services to prepare annual reports to Congress on indicators and predictors of welfare dependence. The twelfth Indicators of Welfare Dependence report provides welfare dependence indicators through 2009 for most indicators, reflecting changes that have taken place since the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in August 1996. As directed by the Welfare Indicators Act, the report focuses on benefits under the Temporary Assistance for Needy Families (TANF) program, formerly the Aid to Families with Dependent Children (AFDC) program; the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps); and the Supplemental Security Income (SSI) program.

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 families depend on welfare might also be considered in assessing their degree of dependence. Although recognizing the difficulties inherent in defining and measuring dependence, a bipartisan Advisory Board on Welfare Indicators proposed that: A family is dependent on welfare if more than 50 percent of its total income in a one-year period comes from TANF (formerly AFDC), SNAP (formerly food stamps) and/or SSI, and this welfare income is not associated with work activities. Given data limitations, we are not able to identify which program benefits may be associated with recipient work activities. Thus, the definition of welfare dependence used in this report may characterize more individuals as welfare dependant than the Board had intended. We follow the Board’s proposal as closely as possible by adopting the following definition of welfare dependence among individuals in familiesfor 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, SNAP and/or SSI.

This report uses data from the Current Population Survey (CPS) and administrative data for the TANF (formerly AFDC), SNAP (formerly Food Stamps) and SSI programs to provide updated measures through 2009 for several dependence indicators. Other measures are based on the Survey of Income and Program Participation (SIPP), the Panel Study of Income Dynamics (PSID) and other data sources. Based on these data, this report provides a number of key indicators of welfare recipiency, dependence and labor force attachment. Highlights from the twelfth report include the following:

  • In 2009, 4.6 percent of the total population received more than half of their total family income from TANF, SNAP and/or SSI (see Indicator 1). While falling steadily between 1996 – 2000, the dependency rate increased between 2000 and 2009. The 2009 rate, which coincides with the deepest point of the economic recession, is the highest reported rate since 1996, the year that welfare reform was enacted. SNAP receipt constitutes a larger share of income among the welfare dependent population.
  • To a significant extent, this trend correlated with worsening economic conditions. The increase in SNAP recipiency between 2005 and 2009 reflects its intended responsiveness to economic changes, expanding to meet increased need when the economy is in recession. SNAP is an important support for working families—62 percent of SNAP recipients are in families with labor force participants. Furthermore, SNAP receipt does not necessarily imply long term dependency, as over 60 percent of SNAP entrants remain on the program for a year or less. As the economy continues to improve, SNAP is projected to respond as designed, with fewer people needing the program in the first place. In fact, the Congressional Budget Office’s latest projections show that once the economy fully recovers, SNAP is expected to return to pre-recession levels as a share of the gross domestic product.
  • Trends in recipiency rates are similar to the more well-known changes in TANF, SNAP, and SSI caseloads. For example, the percentage of individuals receiving TANF cash assistance fell from 5.4 percent to 1.4 percent between 1993 and 2009 (see Indicator 3). SNAP recipiency rates fell from 10.4 percent in 1993 and 1994 to 6.1 percent in 2000 and 2001. By 2009, the SNAP recipiency rate had increased to 10.7 percent, the highest rate in the history of the program. SSI recipiency rates, on the other hand, were relatively flat between 1993 and 2009, fluctuating between 2.3 and 2.5 percent.
  • Longitudinal measures show that program spells are typically short and long-term recipiency is rare. For example, approximately three-fourths of all TANF spells and 62 percent of all SNAP spells lasted one year or less (see Indicator 7). Among individuals receiving TANF at some point over a ten-year period ending in 2008, over 70 percent received AFDC/TANF in only one or two years during this period (see Indicator 9).

Since the causes of welfare receipt and dependence are not clearly known, the report also includes a larger set of traditional risk factors associated with welfare receipt. The risk factors are organized into three categories: economic security measures, measures related to employment and barriers to employment, and measures of nonmarital childbearing.

The economic security risk factors include measures of poverty and well-being that are important not only as potential predictors of dependence, but also as a supplement to the dependence indicators, ensuring that dependence measures are not assessed in isolation. As such, the report includes data on the official poverty rate, one of the most common measures of economic well-being:

  • Between 2000 and 2004, the poverty rate increased, but still remained lower than any year between 1980 and 1997. Between 2005 and 2009, the poverty rate increased from 12.6 percent to 14.3 percent of all individuals (see Economic Security Risk Factor 1).

The measures related to employment and barriers to employment are important because families must generally receive an adequate income from employment in order to avoid dependence without severe deprivation.

  • The majority of mothers in the U.S. are in the labor force. Of particular note is the sharp increase in labor force participation rates for never-married mothers (i.e., those historically at greatest risk of AFDC/TANF dependency), rising from 52.5 percent in 1992 to a peak of 75.3 percent in 2002, and then gradually falling to 72.0 percent in 2009 (see Employment and Work-Related Risk Factor 8).
  • In an average month in 2009, 56.7 percent of TANF recipients lived in families with at least one family member in the labor force. Comparable figures for SNAP and SSI recipients were 62.0 and 41.1 percent, respectively (see Indicator 2). Between 2005 and 2009 (see the 2008 Indicators of Welfare Dependence Report on line at http://aspe.hhs.gov/hsp/indicators08/index.shtml for the 2005 numbers) there has been an increase in the percentage of recipients in families having at least one person in the labor force. Between 2005 and 2009, the percentage of recipients in families with at least one person in the labor force increased from 52.3 to 56.7 percent for TANF recipients, from 55.4 to 62.0 percent for SNAP recipients, and from 38.9 to 41.1 percent for SSI recipients. In addition, the percentage of non-elderly adult recipients who lived in families with at least one worker increased from 2005-2009 for all three programs.

Data on nonmarital births is important since historically a high proportion of AFDC/TANF recipients first became parents outside of marriage.

  • In 1940, 3.8 percent of births were to unmarried women. Beginning in 1960, this percentage began to increase, reaching 32.6 percent by 1992. It remained steady for a few years, before rising to 41.0 percent in 2009 (see Nonmarital Birth Risk Factor 1).

Finally, the report has four appendices that provide additional data on major welfare programs, alternative measures of dependence and nonmarital births, as well as background information on several data and technical issues.


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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