HHS Secretary Tommy G. Thompson today released a new study showing that a sharp reduction in the poverty rate coincided closely with the historic drop in the number of people dependent on welfare in the years immediately following the landmark 1996 welfare reform law.

The annual Indicators of Welfare Dependence Report to Congress concluded that 4.7 million fewer Americans were dependent on welfare just three years after welfare reform was enacted, and 5.4 million fewer Americans were in poverty four years after the 1996 law.

"These findings underscore the President's goal of reemphasizing the importance of work as we take the next step in welfare reform," Secretary Thompson said. "It is increasingly clear that the only way for families to break the cycle of dependency and escape poverty is through work."

Among the study's findings:

· In 1999, 3.3 percent of the total U.S. population was dependent on welfare - meaning they received more than half of total family income from the Temporary Assistance for Needy Families (TANF) program, food stamps, and/or Supplemental Security Income (SSI) - down from 5.2 percent in 1996. In short, 4.7 million fewer Americans were dependent on welfare.

· As the rate of welfare dependency declined, the overall poverty rate in America fell. In the four years following 1996, 5.4 million fewer Americans were in poverty. Within these four years, the poverty rate for all individuals fell from 13.7 percent to 11.3 percent - the lowest rate since 1979.

· The drop in dependence parallels the drop in AFDC/TANF and food stamp caseloads. The percentage of individuals receiving AFDC/TANF, for example, fell from 4.7 percent to 2.1 percent between 1996 and 2000. Food stamp recipiency rates dropped from 9.6 percent to 6.2 percent over the same time period.

· In an average month in 1999, 59 percent of TANF recipients lived in families with at least one family member in the labor force. Comparable figures for food stamp and SSI recipients were 58 and 38 percent, respectively. Labor force participation, particularly full-time employment, increased considerably among AFDC/TANF families in the last several years.

Secretary Thompson noted that the study clearly shows that work must be at the center of meaningful welfare reform as Congress works to reauthorize the TANF program. President Bush has proposed requiring a 40-hour work week for welfare recipients that includes 24 hours of actual work and up to 16 hours of education, training or other state-approved activities - or three days of work and two days of education and training.

"The President's plan raises the bar and renews our commitment to work," Secretary Thompson said. "At the same time, we are helping low-income people become self-sufficient in the workforce by giving them the education, training and other assistance they need to climb the career ladder."

"This study shows that welfare reform has brought unprecedented success as millions of Americans now know the value and reward of hard work. Now, we have an obligation to families across the country to finish the job and take the next bold step in welfare reform," Secretary Thompson said.

The Welfare Indicators Act of 1994 requires HHS to prepare annual reports to Congress on indicators of welfare dependence. The 2002 report is the fifth annual report and is available at http://aspe.hhs.gov/hsp/indicators02.