Transitions to adulthood are notoriously difficult, with many young people intimidated by the prospect of adulthood. Research from the University of Chicago highlights how removing cash welfare from children when they reach 18 can exacerbate challenges transitioning to adulthood so much that the chances of people facing criminal justice charges in subsequent years greatly increase.
The researchers focus on Supplemental Security Income, which is a US program that provides people with disabilities on low incomes with regular payments. Children qualify for the program based on both their parents’ income and their own disability status. Up until 1996 qualifying children would automatically be moved onto the adult program when they reached 18 unless their income situation changed.
That changed in 1996 when the Social Security Administration reevaluated the support children received when they turned 18. These changes resulted in support being removed from around 40% of recipients when they turned 18. This process particularly affected children with various mental and behavioral conditions, such as ADHD.
Lost support
The researchers estimate that the impact of losing this support has a significant impact on not only employment outcomes but also the likelihood of falling foul of the criminal justice system. They compared young people who turned 18 before the welfare reform was enacted on August 22, 1996, with those born afterward and found that the change increased the number of criminal charges by around 20% over the next two decades.
These crimes were disproportionately focused on “income-generating crimes”, such as burglary, theft, fraud, and prostitution. They resulted in the chances of incarceration rising by 60%. This appeared to be a widespread change, as while some people reacted to the change by working more in the formal labor market, many more resorted to crime to try and replace the lost income. Indeed, young people were twice as likely to turn to crime than they were to maintain steady employment.
As a result, while the removal of an individual from the program saved the government a degree of income in terms of things like Medicaid and SSI, it also significantly increased costs in terms of policing, courts, and incarceration. These costs were such that the removal of people from the program didn’t end up saving the government anything at all.
“Traditionally, economists talk about the income effects of welfare programs in the context of the formal labor market—that welfare discourages work,” the researchers conclude. “What we find is that the income effect of welfare benefits can also manifest as reductions in criminal activity. In fact, in the SSI context, cash welfare has a much larger discouragement effect on criminal activity than it does on formal work.”
