Welfare Indicators and Risk Factors: Fourteenth Report to Congress. Executive Summary

09/22/2015

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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 2015 report on Welfare Indicators and Risk Factors provides indicators and risk factors through 2012 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.

  • Highlights

    • Dependence1 and Economic Well-Being

      • The dependency rate rises and falls with economic cycles.  The dependency rate fell during the economic expansions of the mid- to late-1990s to 3.0 percent in 2000.  After 2000 it began to increase.  With the onset of the Great Recession, which lasted from December 2007 to June 2009, the dependency rate increased to 5.3 percent in 2010.  In 2012, the dependency rate was 5.1 percent.    
      • Welfare dependency is beginning to come down.  In 2012, 5.1 percent of the total population received more than half of their total family income from TANF, SNAP and/or SSI, following a recent high of 5.3 percent in 2010 (see Indicator 1).    
      • SNAP benefits provided the most support.  The value of SNAP benefits received constitutes a larger share of program benefit income among the welfare dependent population than does cash benefits from the TANF or SSI programs.  SNAP is an important support for families, including working families, to help them weather economic distress.  The majority of SNAP recipients are in families with someone in the labor force (see Indicator 2). 
      • More people became independent.  Transitions out of dependence from one year to the next have improved since 2010 (see Indicator 6).  Of those defined as welfare dependent in 2011, 27.6 percent were no longer dependent in 2012.  This compares with 24.1 percent who transitioned out of dependency in 2010. Year-to-year transitions out of welfare dependence were lowest in 1994, when only 20.2 percent of those defined as dependent in 1993 were no longer dependent in 1994.
      • Poverty decreased, especially for children.  In 2013, 14.5 percent of the population was poor, down from 15.1 percent in 2010 (see Economic Security Risk Factor 1).  Poverty decreased for children even more prominently, from 22.0 percent in 2010 to 19.9 percent in 2013, and especially among younger children under age six who have experienced a 3.1 percentage point drop in poverty rates since 2010.  Prior to 2010, the poverty rate had increased for the full population and among children between 2000 and 2004, and again between 2006 and 2010, a period that included the Great Recession.
      • Program benefits reduced poverty.  Accounting for the value of a broader set of program benefits received by families would reduce the number of individuals counted as living in poverty according to the official poverty measure (see Economic Risk Factor 4).  In 2012, means-tested cash transfers reduced the poverty rate by 0.7 percentage points, and the combined effect of food and housing assistance, the EITC, and federal taxes would be to reduce the percentage of the population in official poverty by an additional 3.6 percentage points.

       

      Program Recipiency

      • Receipt of program benefits increased.  In 2012, 23.6 percent of the total population received or lived with a family member who received a benefit of any amount from TANF, SNAP, or SSI at some point during the year (see SUM 1).  While falling between 1994 and 2000, this annual recipiency rate across the three programs began to rise after 2000, and increased more rapidly during and in the immediate years following the Great Recession.  The 2012 rate is higher than pre-recession rates, reflecting increased participation in the SNAP and SSI programs since the Great Recession (see Indicator 3).
      • Program benefits are responsive to economic conditions. To a significant extent, the trends in dependency and annual program benefit receipt correlated with worsening economic conditions.  The increase in SNAP recipiency between 2005 and 2012 reflects its intended responsiveness to economic changes, expanding to meet increased need when the economy is in recession.  SNAP is an important support for families especially those with ties to the labor force – 64.7 percent of SNAP recipients are in families with labor force participants (see Indicator 2).  About half (53.7 percent)2 of recent SNAP entrants remain on the program for a year or less (see Indicator 7).  As the economy continues to improve, SNAP is projected to respond as designed, with fewer people needing to access the program.  In 2014, SNAP participation began to decrease (Table SNAP 1) and the Congressional Budget Office’s latest projections show that average monthly participation will decline steadily over the next ten years.3
      • Changes in program caseloads impact dependency rates.  Trends in the annual recipiency rate across all three programs presented in this report reflect well-documented changes in TANF, SNAP, and SSI caseloads over the past two decades (see Indicator 3).  For example, the percentage of individuals receiving TANF cash assistance in an average month fell from 5.4 percent in 1993 to 1.4 percent in 2007.  Between 2008 and 2012 the percentage of the total population receiving TANF fluctuated from 1.3 to 1.5 percent.  SNAP recipiency in an average month fell in the latter half of the 1990s from 10.4 percent in 1994 to 6.0 percent in 2000.  Since 2000, SNAP recipiency in an average month increased to 14.6 percent in 2012.  Conversely, SSI recipiency rates were relatively flat between 1993 and 2012, fluctuating between 2.3 and 2.6 percent.
      • Long-term recipiency is rare.  Longitudinal measures show that program spells typically are short (see Indicator 7).  For example, 79.6 percent of all TANF spells and 53.7 percent of all new SNAP spells lasted one year or less.

      Connections to Employment

      • The majority of mothers in the U.S. are in the labor force (see Employment and Work-Related Risk Factor 7).  Of particular note is the sharp increase in labor force participation rates for never-married mothers, rising from 52.5 percent in 1992 to a peak of 75.3 percent in 2002. In 2012 the rate was 71.5 percent. The report does not report the labor force participation of fathers.
      • Families who use TANF or SNAP benefits also tend to be in the labor force.  In an average month in 2012, 56.7 percent of TANF recipients lived in families with labor force connections and 64.7 percent of those receiving SNAP benefits lived in families with at least one family member in the labor force, including unemployed individuals looking for work.  The comparable figure for SSI recipients was 39.1 percent (see Indicator 2).  Between 2005 and 2012[4] there has been an increase in the percentage of recipients in families having at least one person in the labor force.  Between 2005 and 2012, 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 55.3 to 64.7 percent for SNAP recipients, and from 38.9 to 39.1 percent for SSI recipients.
      • Families who receive TANF don’t stay out of work for long. Most spells of TANF receipt with no family labor force connection are not long (see Indicator 8).  In the most recent time period (2008 to 2012), 56.4 percent of TANF spells where no one in the family was in the labor force lasted four months or less and 86.4 percent lasted 12 months or less.  These proportions have grown since the early 1990s (1993 to 1995) from 42.6 percent and 69.0 percent, respectively.

      Nonmarital Births and Never-Married Family Status as Risk Factors

      • Nonmarital births have risen since the 1940s (see Birth 1).  In 1940, 3.8 percent of births were to unmarried women.  Beginning in 1960, this percentage began to increase, reaching 32.6 percent by 1994.  Since 2008 the rate has remained steady at approximately 40.7 percent.  Nonmarital births to teens 15 – 19 years of age as a percentage of all births have declined from 9.7 percent in 1996 to 6.9 percent in 2012 (see Birth 2).
      • Many more children live with only their (single) mother than ever before.  The percentage of all children living in families with a never-married female head has grown over time (see Nonmarital Birth Risk Factor 4).  In 2012, 11.7 percent of all children lived in a never-married, single-mother family, up from 2.9 percent in 1980.


      1 Dependency is defined as living in a family having more than 50 percent of annual income from AFDC/TANF, SSI and/or SNAP (see Chapter 1). 

      2 These estimates differ from some USDA data because of methodological differences in the way that the data is tabulated.

      3 See Congressional Budget Office Supplemental Nutrition Assistance Program – January 2015 Baseline, https://www.cbo.gov/publication/44211.

      4 See the 2008 Indicators of Welfare Dependence Report online at: http://aspe.hhs.gov/hsp/indicators08/index.shtml for the 2005 numbers.

       

  • Measurment

    • Use of welfare programs, like poverty, is a continuum, with variations in degree and duration.  Families may be more or less reliant if larger or smaller shares of their total resources are derived from welfare programs.  The amount of time over which families receive benefits from welfare programs 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 defined as dependent on welfare if more than 50 percent of its total income in a one-year period comes from TANF (which replaced 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 dependent than the Board had intended.  We follow the Board’s proposal as closely as possible by adopting the following definition of possible welfare dependence among individuals in families5 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, SNAP and/or SSI.

      The report provides a number of key indicators of welfare dependence, recipiency, and labor force attachment.  Also included is a broader set of risk factors associated with welfare receipt and potential dependence organized into three categories:  1) economic security measures, 2) measures related to employment and barriers to employment, and 3) measures of nonmarital childbearing.  The key economic security risk factors include and supplement measures of poverty and well-being and are useful to ensure that predictors of receipt are not assessed in isolation.  Measures related to employment and barriers to employment also may be useful since families must generally receive an adequate income from employment in order to avoid welfare programs without severe deprivation.  Trends in nonmarital births are provided since the lower family incomes of single-parent families affects the need for and use of welfare programs.  Historically a large percentage of AFDC/TANF recipients first became parents outside of marriage.

      5Appendix 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.

       

  • Data Sources and Topics

    • This report uses data from the Current Population Survey (CPS) and administrative data for the TANF cash assistance program, SNAP, and the SSI program to provide updated measures through 2012 for the key dependence indicators in Chapter II.  Other measures in Chapters II and III are based on the Survey of Income and Program Participation (SIPP), the Panel Study of Income Dynamics (PSID) and other data sources.  To provide a greater program context, the report has five appendices that provide additional historical as well as subnational data on major welfare programs, alternative measures of dependence and nonmarital births, as well as background information on several data and technical issues.

      Unless otherwise noted, dollar values are reported in current dollars.

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