Time Limits and Welfare Reform: New Estimates of the Number and Characteristics of Affected Families

The 1996 welfare reform legislation stipulates a 60-month time limit on total receipt as well as work requirements after 24 months of receipt. Using Panel Study of Income Dynamics (PSID) data on the monthly patterns of AFDC receipt during the 1980s and early 1990s, we estimate the number and characteristics of recipient families likely to be affected by the 60-month time limit, as well as how quickly families will reach the limits. We present estimates separately for new recipients and for the existing AFDC caseload. We also estimate the fraction of recipients likely to be subjected to work requirements after 24 months of receipt. We find that very large numbers of low-income families may be affected by penalties and benefit cutoffs as a result of reaching time limits. Unless behavior changes in response to the provisions of the 1996 legislation, around 40% of the current caseloadÑsome two million families and 3.8 million childrenÑwill hit the 60-month imit on total receipt. Only a little more than half of the recipients meeting the limits do so right away. Characteristics most predictive of reaching the time limit are youth, never-married status, lacking a high school diploma, and the presence of preschool children at the time of welfare entry. A "risk index" based on these traits is highly predictive of reaching time limits and can be used by states to target cases most likely to reach them. In the case of work requirements, we estimate that a little more than half of the current caseload will be subject to work requirements in that they will accumulate 24 months of receipt and will not be working around the time of the 24th month.