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Press Release · February 11, 1997

One Quarter Of California Families Receive Welfare Benefits

"Highly Dependent" Families and Legal Immigrants Most Vulnerable to Change, But Many Can Weather Welfare Reform

SAN FRANCISCO, California, February 11, 1997–About one third of all California families–nearly 4.5 million–receive some form of public assistance, and one quarter participate in a major welfare program, according to a report released today by the Public Policy Institute of California (PPIC). Nearly half a million of these families could be hit hard by welfare reform.

The study, headed by economists Thomas MaCurdy and Margaret O’Brien-Strain, develops a comprehensive profile of families receiving aid in the state and identifies those groups who stand to be the most seriously affected by welfare reform. The results focus on two groups: “highly dependent” families who participate in Aid to Families with Dependent Children (AFDC) and derive nearly all their income from welfare, and recent legal immigrants barred from receiving assistance under federal welfare reform legislation.

“How long a family is on welfare is not nearly as important as how dependent they are on the system,” says MaCurdy, Professor of Economics at Stanford University and Senior Fellow at the Hoover Institute. “There is a chronic group of welfare families who have virtually no source of income other than public assistance.”

The study finds that welfare is not a way of life for most participating families. The typical recipient family receives only six percent of its annual income from welfare programs, defined to include AFDC, Food Stamps, Supplemental Security Income (SSI), and Medi-Cal (Medicaid). Nearly one fourth of all participants receive only Medi-Cal, no cash benefits. Less than one third of all welfare families take part in AFDC and two-thirds of these AFDC families had additional sources of income, including earnings from work.

The study’s results challenge some popular perceptions about welfare families. Most of these families, even those on AFDC, do not include a woman who was ever a teenage mother. Nearly sixty percent of the heads of welfare families completed high school and many had some college education. Finally, the welfare population is ethnically mixed, with non-Hispanic whites comprising the largest group in all major programs except Food Stamps, where Hispanic families represent the largest share.

How will reform affect most recipients in the state? Because the vast majority of these families are not highly dependent on the welfare assistance they receive, they should be able to handle the transition, according to MaCurdy and O’Brien-Strain. However, forty-five percent of all families receiving AFDC–432,000–are highly dependent on welfare programs; 262,000 of those families have no income other than public assistance.

“While federal welfare reform permits a state to exempt up to twenty percent of its caseload from the two-year time limit, our study shows that there are twice that number of highly dependent families in California,” says O’Brien-Strain, Dissertation Fellow at PPIC. “The sheer size of this group–and the uncertainty about how they will respond to time limits–presents the most crucial challenge for policy makers in the effort to reform state programs.”

In addition to the highly dependent, the study found that of the half million immigrants who receive welfare benefits, 281,000 families could be affected by reform. Recent immigrants have high rates of welfare participation, nearly twice that of citizen families. The study’s results reveal that 20,000 of these families are likely to suffer a fifty to eighty percent reduction in their income.

The study–Who will be Affected by Welfare Reform in California?–analyzes data from the Survey of Income and Program Participation (SIPP), collected by the U.S. Bureau of the Census. The researchers examined monthly data during 1993 and 1994 on a sample of over 5,000 California families. The survey collected data on families both on and off welfare, including information on income for each month from different welfare programs, as well as from employment and non-welfare sources.

The Public Policy Institute of California is an independent, nonprofit organization dedicated to nonpartisan research on economic, social, and political issues that affect California. David W. Lyon is President and CEO of PPIC.