Puzzling Rise in Food Stamp Use as Economy Improves
Life + Money

Puzzling Rise in Food Stamp Use as Economy Improves

Getty Images/The Fiscal Times

The stock market is soaring, joblessness has tapered off,  housing sales are up and the worst financial crisis in modern times is now in the nation’s rear-view mirror – and yet demand for federal food stamps is greater than ever. So what gives?

Enrollment in the Supplemental Nutrition Assistance Program, the official name for food stamps, has increased by a staggering 70 percent since 2008, with a record 47.8 million people relying on the subsidy to help put food on their tables.

The government spent about $81 billion on SNAP in fiscal 2012, making it one of the costliest programs in the government’s social safety net. And the Congressional Budget Office and other analysts say food stamp spending will likely rise again this year.

RELATED: Food Stamps Can Now Be Used to Buy Starbucks and Muffins

This extraordinary mounting demand for food stamps amid unmistakable signs of recovery underscores the schizophrenic nature of the U.S. economy today. While the unemployment rate has dipped from a recession high of 10 percent to 7.7 percent and other leading indicators including housing, manufacturing and consumer spending have improved considerably, economic growth nonetheless remains relatively sluggish. Nearly 50 million Americans – more than 16 percent of the total population – are mired in poverty.

Figures released last November by the U.S. Census Bureau showed the number of people in poverty inched up from 49 million in 2010 to 49.7 million in 2011. The national poverty rate was 20.9 percent for 2011, up from 20.1 percent in 2010. By comparison, 39.8 million Americans—10 million fewer than now—lived below the poverty line in 2008.

The SNAP benefit formula is based on need, but the formula changed over the years to ease the eligibility requirements. In 2009, the Obama administration encouraged states to disregard savings and higher incomes as criteria to disqualify applicants. This was done to avoid stripping people of their lifetime savings. According to The Wall Street Journal, in 2006, 18.7 percent of SNAP households qualified through an easier screening process. By 2011, that number ballooned to 65.8 percent.  

SNAP affords extremely poor households larger benefits than those closer to the poverty line. Nearly 75 percent of SNAP participants are in families with children; more than one-quarter of participants are in households with seniors or people with disabilities. The average SNAP recipient received about $133.41 a month in fiscal year 2012.

“I would say the economy is improving by some measures, but that has not translated into lower poverty rates. And it’s those high poverty rates that are the direct driver for why and how people qualify for and need the food stamps,” Judy Bartfeld, a professor in the consumer science department at the University of Wisconsin-Madison, told The Fiscal Times on Tuesday. “And until we see a change in those indicators, I don’t think there’s a reason to think that the food stamp rates will come down – because the objective need has not come down.”
“The criterion for food stamps isn’t that you’re unemployed, it’s that you’re poor enough to qualify,” she added.

SNAP’s role in the social safety net has grown over the past few decades, and it has filled in where the Temporary Assistance for Needy Families (TANF) and other welfare programs have fallen short. Without it, the problem of poverty in the U.S. would be even greater than it is.  SNAP benefits led to an average annual drop of 4.4 percent in the prevalence of poverty from 2000 to 2009 and reduced the child poverty rate by about 5.6 percent over the same period, according to the Urban Institute.

But the dichotomy of mounting food stamp costs while the housing, manufacturing and employment picture  seems to be getting better may help fuel the push on Capitol Hill to cut spending on food stamps and crack down on fraud and abuse.

The House last month approved a fiscal 2014 budget drafted by Budget Committee Chairman Paul Ryan, R-Wis., that would slash spending by turning the food stamp program into a block-grant program for states. It also would encourage states to limit the amount of time that the unemployed can access food stamps and limit food stamp eligibility mostly to workers. 

Government spending on food stamps and other “social safety net” programs for the poor, elderly and disabled generated considerable election year heat in 2012. Former Republican House Speaker Newt Gingrich dubbed President Obama the “food-stamp president” because the number of recipients had increased by 14.2 million during the past three years. Yet even more people were added to the program during the administration of Republican President George W. Bush.

While the biggest factor behind the surge in demand for federal food stamps is a sluggish job market and the rising poverty rate, many states have pushed to get more people to apply for SNAP – a program in which the federal government picks up the tab.

Enrollment was already climbing before the Great Recession because of looser eligibility requirements. The new rules encourage people to take advantage of the program before they became destitute. But by expanding the pool of potential applicants, the Journal reported, SNAP evolved from a program that rose and fell with the unemployment rate to a more permanent feature of the landscape.

The Congressional Budget Office projects that unemployment will drop to 5.6 permanent by 2017 but that SNAP enrollment will drop slightly to 43.3 million people, down 4.5 million from the current level. Kevin Concannon, undersecretary for food, nutrition and consumer services at the Department of Agriculture, told the Journal that SNAP is working as designed, expanding to extend benefits to more Americans as poverty levels increase. He said USDA officials expect the program to begin contracting soon as the economy improves.