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Welfare Indicators and Risk Factors: Thirteenth Report to Congress

Publication Date
Feb 28, 2014

Thirteenth Report to Congress

U.S. Department of Health and Human Services


This report was written and compiled by Gilbert Crouse and Annette Waters of the Office of Human Services Policy, Office of the Assistant Secretary for Planning and Evaluation, with assistance from Susan Hauan, Suzanne Macartney and Kendall Swenson.


 
Office of Human Services Policy
Office of the Assistant Secretary for Planning and Evaluation
U.S. Department of Health and Human Services
Hubert H. Humphrey Building, Room 404E
200 Independence Ave., S.W.
Washington, D.C. 20201
 
The Welfare Indicators Act of 1994 requires the Secretary of Health and Human Services to prepare an annual report to Congress on indicators of welfare dependence.  The Indicators of Welfare Dependence report is prepared by ASPE’s Office of Human Services Policy.  As mandated under the Congressional act, the report addresses the rate of welfare dependence, the degree and duration of welfare recipiency and dependence, and predictors of welfare dependence.  Analyses of meant-tested assistance in the report include benefits under the Temporary Assistance for Needy Families (TANF) program; the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program), and the Supplemental Security Income (SSI) program.  The report also includes risk factors related to economic security, employment, and nonmarital births, as well as an appendix with data related to the above programs.  Data for most indicators are updated through 2011.
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Executive Summary

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 thirteenth report on Welfare Indicators and Risk Factors provides indicators and risk factors through 2011 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.

Use of welfare programs, like poverty, is a continuum, with variations in degree and in 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 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 dependant 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 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, SNAP and/or SSI.

This report uses data from the Current Population Survey (CPS) and administrative data for the TANF (which replaced AFDC), SNAP (formerly Food Stamps) and SSI programs to provide updated measures through 2011 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 thirteenth report include the following:

  • In 2011, 5.2 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 1993 – 2000, the dependency rate began to increase after 2000, and increased more rapidly since 2007 with the beginning of the “Great Recession.” The rate peaked at 5.3 percent in 2010 in the immediate aftermath of the “Great Recession” and has declined slightly since. SNAP receipt constitutes a larger share of income among the welfare dependent population than does TANF or SSI.
  • In 2011, 23.1 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 Table SUM 1). While falling steadily between 1993 – 2000, this annual recipiency rate began to increase after 2000, and increased more rapidly during and in the immediate aftermath of the “Great Recession.” The 2011 rate is slightly higher than the 2010 rate, reflecting increased participation in the SNAP and SSI programs.
  • To a significant extent, these trends correlated with worsening economic conditions. The increase in SNAP recipiency between 2005 and 2011 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 – 63 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 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.2
  • Trends in the annual recipiency rate across all three programs presented in this report 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 dramatically and consistently over time from 5.4 percent to 1.5 percent between 1993 and 2011 (see Indicator 3). SNAP recipiency rates fell in the latter half of the 1990s from 10.4 percent in 1994 to 6.0 percent in 2000. By 2011, the SNAP recipiency rate had increased to 14.1 percent. Conversely, SSI recipiency rates were relatively flat between 1993 and 2011, fluctuating between 2.3 and 2.6 percent.
  • Longitudinal measures show that program spells typically are short and long-term recipiency is rare. For example, approximately three-fourths of all TANF spells and over half 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 assistance in only one or two years during this period (see Indicator 9).

The report also includes data on a larger set of traditional risk factors associated with welfare receipt. They are organized into three categories: economic security measures, measures related to employment and barriers to employment, and measures of nonmarital childbearing.

The key economic security risk factors include and supplement measures of poverty and well-being that are useful to ensure that predictors of receipt 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:

  • Since 2000 the poverty rate has increased to 15.0 percent of all individuals (see Economic Security Risk Factor 1).

The measures related to employment and barriers to employment may be useful since families must generally receive an adequate income from employment in order to avoid welfare programs 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, rising from 52.5 percent in 1992 to a peak of 75.3 percent in 2002, and then gradually falling to 70.0 percent in 2011 (see Employment and Work-Related Risk Factor 8).
  • In an average month in 2011, 59.0 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 63.1 and 39.2 percent, respectively (see Indicator 2). Between 2005 and 20113 there has been an increase in the percentage of recipients in families having at least one person in the labor force. Between 2005 and 2011, the percentage of recipients in families with at least one person in the labor force increased from 52.3 to 59.0 percent for TANF recipients, from 55.4 to 63.1 percent for SNAP recipients, and from 38.9 to 39.2 percent for SSI recipients.

Data on nonmarital births is provided since the lower family incomes of single parent families affects the need for and use of welfare programs. Historically a high percentage 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 40.7 percent in 2011 (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.

2 See Congressional Budget Office Supplemental Nutrition Assistance Program – May 2013 Baseline, May14, 2013.

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

Chapter I. Introduction and Overview

The Welfare Indicators Act of 1994 (Public Law 103-432) directed the Secretary of Health and Human Services (HHS) to publish an annual report on welfare dependency. This 2014 report provides data on measures of welfare recipiency, dependence, and predictors of welfare dependence.

The purpose of this report is to address questions concerning the extent to which American families depend on income from welfare programs. Under the Welfare Indicators Act, HHS was directed to address the rate of welfare dependence, the degree and duration of welfare recipiency and dependence, and predictors of welfare dependence. The Act further specified that analyses of means-tested assistance should include benefits under the Temporary Assistance for Needy Families (TANF) program (which replaced the Aid to Families with Dependent Children (AFDC) program),4 the Supplemental Security Income (SSI) program, and the Supplemental Nutrition Assistance Program (SNAP) (formerly the Food Stamp Program).5 In this report we include information on cash assistance under the TANF and SSI programs and the cash value of food assistance benefits under SNAP. The American Recovery and Reinvestment Act (ARRA) of 2009 included provisions that would change (in most cases temporarily) some aspects of these three programs; these changes are discussed below.

This 2014 report, the thirteenth in the series, provides updated measures through 2011 for dependency measures based on the Current Population Survey (CPS), Annual Social and Economic Supplement. Data are available through 2011 for the Panel Study of Income Dynamics (PSID) measures, and through 2008 for several of the Survey of Income and Program Participation (SIPP) measures.


4 The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) repealed the Aid to Families with Dependent Children (AFDC) program and created a block grant program of Temporary Assistance for Needy Families (TANF) in its place. The mandatory start date for TANF was July 1, 1997, but most states made the transition from AFDC before that date. Throughout the report we use AFDC/TANF to refer to cash assistance benefits received under these two programs.

5 The Food, Conservation and Energy Act of 2008 (P.L. 110-246) re-named the Food Stamp Program as the Supplemental Nutrition Assistance Program (SNAP) as of October 1, 2008. The name change had no effect on the type of benefits or how they are made available to eligible households.

Organization of Report

This introductory chapter provides an overview of the specific summary measure of welfare dependence proposed by a bipartisan Advisory Board6 and how this measure was adopted for use in this report series. It also discusses summary measures of poverty, following the Advisory Board’s recommendation that dependence measures not be assessed in isolation from other measures of economic well-being. The introduction concludes with a discussion of data sources used for the report.

Chapter II of this report, Indicators of Dependence, presents ten indicators of welfare dependence and recipiency. These indicators include dependence measures based on total income from all three programs – AFDC/TANF, SNAP, and SSI – as well as measures of recipiency for each of the three programs considered separately. Labor force participation among families receiving welfare and benefit receipt across multiple programs also are shown. The second half of the chapter includes longitudinal data on transitions on and off welfare programs and spells of program recipiency, including spells of TANF receipt among persons in families that have no attachment to the labor market. Also, this section includes a measure of long-term program receipt of up to 10 years, and a measure of events associated with the beginning and ending of program spells.

Chapter III, Predictors and Risk Factors Associated with Welfare Receipt, focuses on predictors of welfare dependence – risk factors believed to be associated with welfare receipt. These predictors are shown in three different groups:

(1) Economic security – including various measures of poverty, the effect of receipt of child support on poverty rates, and food insecurity – is important in predicting dependence because families with fewer economic resources are more likely to rely on welfare programs for their support.

(2) Measures of the work status and potential barriers to employment of adult family members also are critical, because families must generally receive an adequate income from employment in order to avoid dependence without severe deprivation.

(3) Finally, data on nonmarital births are important since historically a high proportion of welfare recipients first became parents outside of marriage.

Additional data and technical notes are presented in four appendices. Appendix A provides basic program data on each of the main welfare programs and their recipients. Appendix B shows how dependence is affected by the inclusion of benefits from the SSI program; Appendix C includes additional data on non-marital childbearing; and Appendix D provides background information on several data and technical issues. The main welfare programs in Appendix A include the following:

  • The Temporary Assistance for Needy Families (TANF) program provides monthly cash benefits and services to eligible families with children and is run directly by the states. Prior to 1996 welfare cash benefits were provided through the Aid to Families with Dependent Children (AFDC) program. Data on cash benefits under the TANF and AFDC programs are provided in Appendix A, with AFDC data provided from 1962 through June 1997, and TANF data from July 1997 through 2011.
  • The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to individuals living in families or alone, provided their income and assets are below limits set in federal law. It reaches more poor people over the course of a year than any other means-tested public assistance program. Prior to October 1, 2008, these food assistance benefits were provided through the Food Stamp Program. Appendix A provides historical data on food stamp benefits from 1962 to 2011.
  • The Supplemental Security Income (SSI) program provides monthly cash payments to elderly, blind or disabled individuals or couples whose income and assets are below levels set in federal law. Though the majority of recipients are adults, disabled children also are eligible. Historical data from 1974 through 2011 are provided in Appendix A.

6 The first annual report was produced under the oversight of a bipartisan Advisory Board on Welfare Indicators, which assisted the Secretary in defining welfare dependence, developing indicators of welfare dependence, and choosing appropriate data. Under the terms of the original authorizing legislation, the Advisory Board was terminated in October 1997, prior to the submission of the first annual report.

Measuring Welfare Dependence

As suggested by its title, this report focuses on welfare “dependence” as well as welfare “recipiency.” While recipiency can be defined based on the presence of benefits from AFDC/TANF, SNAP, or SSI during a given time period, 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 (which was replace by TANF), the Food Stamp Program (now SNAP), 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 families7 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.

No definition of welfare dependence is 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 non-work-related welfare benefits. As a result, the data shown in this report may overstate the incidence of dependence as conceptualized by the Advisory Board. In fiscal year 2011, work participation was mandatory for three of every five TANF adult recipients. Overall, 43.6 percent of all TANF adult recipients in 2011 participated in some type of work activity during the reporting month compared with 7 percent in 1992.8

Also, any definition of dependence 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.

Figure SUM 1 and Table SUM 1 show the trend for the welfare dependency rate adopted for this report. Also, for comparison purposes, we include an annual “recipiency” measure that shows the proportion of all individuals in families that receive any benefits at any point during the year from TANF, SNAP, and/or SSI. Note that this measure of annual recipiency differs from average monthly recipiency rates presented elsewhere in this report (for example in Indicator 3 and Appendix A), where annual rates tend to be higher given the broader time period for observing benefit receipt than rates for one particular month or for an “average” month. See Appendix D for further discussion of annual and monthly measures in this report.

Annual dependency and recipiency rates follow fairly similar trends and even before the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 was passed, welfare recipiency and dependency were both in decline. The overall drop in the recipiency rates during the 1990s is consistent with low unemployment and lower poverty rates. The subsequent rise in the welfare program recipiency rate after 2000 however is associated more with increases in SSI and SNAP receipt than TANF, where caseloads continue a downward trend (see Indicator 3 for further information on trends in average monthly recipiency rates for each of the three programs).

Figure SUM 1. Recipiency and Dependency Rates: 1993-2011

Program
Temporary Assistance for Needy Families (TANF) | Supplemental Security Income (SSI) | Supplemental Nutrition Assistance Program (SNAP)