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Do Welfare Benefits Lower Risk of Youth Crime?

Welfare benefits may reduce the likelihood that disadvantaged youth will become involved with the justice system, according to a study by two economists from the University of Chicago and the University of Michigan.

The study examined the impact of cutting federal financial support from one cohort of the vulnerable youth population—disabled young adults—and found a 20 percent increase in the number of criminal charges faced by that cohort over a 20-year period.

The authors stopped short of drawing a direct cause-and-effect relationship between federal welfare payments and an overall reduction in criminality, indicating other factors such as the economic recession that began in 2008 could have played a role.

But they said their findings built on “substantial” earlier research examining the effect of public assistance on criminal justice involvement.

In an analysis published in the June 2022 Quarterly Journal of Economics, acknowledged that research provided an ambiguous picture.

“On the one hand, cash assistance could provide a basic level of income and well-being to youth who face barriers to employment and thereby reduce their criminal justice involvement,” the authors wrote.

“On the other hand, welfare benefits could discourage work at a formative time and discourage the development of skills, good habits, or attachment to the labor force, potentially even increasing criminal justice involvement.”

The study, using data from the Social Security Administration and from the Criminal Justice Administrative Records System created in part by one of the report’s co-authors, Michael Mueller-Smith of the University of Michigan, looked at the life outcomes of disabled young adults who had their benefits revoked under new policy guidelines enacted in 1996.

They found that members of this cohort were much more likely to end up facing “income-generating” charges like burglary/theft, fraud, forgery, or prostitution, than young adults who were able to keep their social benefits.

The number of criminal charges filed against those who had Supplemental Security Income benefits removed as young adults in 1996 increased by a “significant” 20 percent over the next 20 years, the study said.

Supplemental Security Income (SSI) is a federal program that provides monthly payments to people who are 65 or older, to blind individuals and others who have a disability preventing them from working.

SSI for children helps low income families support their disabled children financially as they grow up.

In 1996, passage of the Personal Responsibility and Work Opportunity Act (PRWOA) increased the scrutiny, reviews and discontinuations faced by disabled 18-year-olds who received SSI as children who turned 18 after Aug. 22, 1996 (the Act’s effective date).

Under SSI, the disability definitions for children are different from the standards for disabilities for people over 18, allowing many children to age out of SSI after review.

Children who had their 18th birthdays before PRWOA’s effective date, study authors write, were nearly all transitioned into the adult program, while many since then have had their SSI removed after their 18th birthday, leaving them and their families without the income they had received as children.

Additionally, comparison with a prior analysis of post-SSI employment data for disabled youth by Manasi Deshpande of the University of Chicago showed that, after being removed from SSI at 18, young people are twice as likely to be charged with an “income generating” illegal activity than they are to report maintaining steady employment at or above minimum wage.

“The age 18 redetermination process disproportionately removes children with mental and behavioral conditions such as ADHD,” Deshpande and Mueller-Smith write, disqualifying them from receiving adult SSI benefits.

People with disabilities are also over-represented in U.S. prisons. A June report from the Prison Policy Initiative found that 40 percent of people in state prisons have a disability compared to 15 percent of U.S. adults.

While some young people removed from SSI at 18 may find employment, 86 percent do not earn enough to support themselves, and most experience a significant loss when SSI income is revoked, creating a pressure and incentive to find other means of self-support.

The annual risk of incarceration between 18- and 38-year-olds increased by 60 percent over two decades, increasing the likelihood of detention for disabled young women and Black youth in particular.

From an economic perspective, Deshpande and Mueller-Smith predicted that each individual removed from SSI saved the government some $49,100 in SSI, Medicaid, and tax revenue savings over the 20 years after they turned 18.

But based on their findings, each removal is also paired with at least $41,000 in police, court, and incarceration costs for disabled youth post-SSI. Including victim costs brings that number even higher.

“The costs to taxpayers of enforcement and incarceration [after] SSI removal are so high that they nearly eliminate the savings to taxpayers from reduced SSI benefits,” the authors concluded.

The analysis can be downloaded here.

Co-author Deshpande has previously analyzed the impact of this same post-1996 SSI data on low-income young people with disabilities to analyze future income and earnings and their likelihood of home sale, bankruptcy or foreclosure comparing the outcomes of disabled children who are kicked off SSI at 18-years-old and those who are not.

Audrey Nielsen is a TCR Justice reporting intern.

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