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Just how cyclical are welfare caseloads? The answer seems to be, "somewhat, but not very."

During the 1990s, both welfare caseloads and unemployment rates plummeted to historic lows. But the current downturn has prompted dire predictions from some quarters that caseloads will inevitably surge upwards. Historically, however, the correlation between caseloads and unemployment rates is far less pronounced (chart 1).

Moreover, research indicates that general economic conditions have less effect on welfare caseloads than other factors. Of nine major studies surveyed by the Urban Institute, eight concluded that the economy accounted for 36 percent or less of the caseload decline during the 1990s. Welfare reform and other factors played a bigger role.

History also bears out the contention that good times don't necessarily mean smaller caseloads. During the Reagan-era boom of the 1980s, for example, the percentage of American families receiving assistance remained steady between about 4.5 and 4.7 percent, more than double the percentage today (chart 2).

Chart 1

Chart 2