Relationship between Public Program Participation and Income Instability Among Low-Income Families

Background and Purpose

About 70% of low-income families experience negative income instability during at least one month over a two-year time period. Income instability is associated with short and long-term adverse outcomes (i.e., food insecurity, limited access to health care, adverse child developmental outcomes) and can exacerbate the adverse effects of poverty. Various public transfer programs, such as TANF, SNAP, Supplemental Security Income (SSI), Social Security, and Medicaid, may reduce income instability, but almost no research has investigated whether this is the case or whether participation in multiple programs is more advantageous. Thus, the present study examines the extent to which public transfer programs affect patterns of income instability and the relative importance of public transfer program, individually or collectively, in reducing income instability for low-income families.

Methods

Our study uses nationally representative data on 2,568 low-income families from the first six waves (24 months) of the 2008 panel of the Survey of Income and Program Participation (SIPP). We focus on household participation in TANF, SNAP, Social Security, SSI, and Unemployment Insurance (UI) programs – all of which are intended to help with families’ monthly expenses. Taking advantage of the detailed information available in the SIPP, we construct monthly measures of pre-transfer income (monthly earning, property income, and income from other sources) and post-public transfer income (pre-transfer income plus monthly transfer income from TANF, SNAP, Social Security, SSI, and UI). Building on previous research, for each month, we identify a family as having experienced either pre- or post-transfer instability if their income was 25% or more below the average of the previous three months. To explore the collective impact of program participation on instability, we then use sequence and cluster analysis to identify multiple longitudinal patterns of pre- and post-transfer income instability and compare the nature and proportion of the sample that falls into particular patterns. Second, we pool monthly data across available waves, and use multivariate logistic regression analyses (including sociodemographic controls) to assess whether participation in programs (singly and in combination) is associated with reductions in the odds of experiencing post-transfer instability.

Results

Preliminary results indicate that the average monthly pre-transfer income of the sample families is about $1,900, with about 27% of families reporting zero earning. SNAP benefits are most common, received by about 32% of families, followed by Social Security (10%), SSI (5%), TANF (6%) and UI (2%).  Initial sequence and cluster analyses indicate meaningful and distinct patterns of income instability. For example, we find five distinct patterns of post-transfer income instability among low-income families over the 24-month period: no instability (26%), limited instability (16%), persistent income instability (15%), increasing income instability (25%), and decreasing income instability (17%).

Conclusion and Implications

Income instability is harmful to families. Participation in public programs may reduce instability and thus mitigate its negative effects. If so, matching program design to accommodate the varying dynamics of income instability could be explored as modification way to modify policies.