Feed the hungry, create jobs

Food-stamp study finds impact especially strong during Great Recession in rural communities

Increased government spending on food stamps has a strong impact on local businesses, especially in rural areas. (Shutterstock)

Increased government spending on food stamps has a strong impact on local businesses, especially in rural areas. (Shutterstock)

By Ted Cox

Increased government spending on food stamps creates jobs, especially in rural areas during economic down times, according to a new federal study.

The study, released last month by the U.S. Department of Agriculture’s Economic Research Service, traced the impact of an increase in benefits during the Great Recession a decade ago.

According to the study, it was already predicted that “a large increase” in spending for the Supplemental Nutrition Assistance Program — previously known as food stamps — would “have the largest impacts on gross domestic product per dollar spent of any of the spending authorized by (the American Recovery and Reinvestment Act of 2009), mainly because SNAP benefits are targeted to low-income people, who have a high propensity to spend rather than save.”

The study found the impact was pronounced in rural counties, especially contrasted with metropolitan areas. Over all, from 2001 through 2014, it found that for every $10,000 spent on SNAP benefits in a rural county, 0.4 jobs were created, while in metropolitan counties the impact on jobs was “statistically insignificant.”

But during the Great Recession, from 2008 through 2010, when increased benefits were specifically targeted to prevent the economy from falling into a depression, a job was created for every $10,000 spent on SNAP benefits in rural counties, and even metro counties saw 0.4 jobs created for each additional $10,000 in spending.

The study found that increased spending on SNAP had a more direct impact on the local economy than money spent on any other federal program, “including Social Security, Medicare, Medicaid, unemployment insurance, veterans’ benefits, and other government transfer payments to individuals.” Those programs typically created an estimated 0.2 jobs per $10,000 in spending.

SNAP is the largest program administered by the USDA.

The 15-year period was illustrative, according to the study, because “SNAP redemptions per capita grew rapidly between 2001 and 2011, more than tripling in inflation-adjusted terms, then declined by about 12 percent between 2011 and 2014.” Combined with job data, that produced concrete findings on how SNAP spending affected the economy, especially on a local, county level.

According to the study, “although the stimulus impacts of SNAP payments have been predicted using national economic simulation models, no published studies have investigated the actual impacts of these payments after the fact using statistical methods.”

The findings should influence government policy on food stamps, as well as programs like the Earned Income Tax Credit. Proponents of the EITC say it has a similar impact on the economy, as the tax refunds go to low-income families who are highly likely to spend it on critical items they might not have been able to afford otherwise.

“What we’ve heard in the community is that families in need want cash more than anything,” said Harish Patel, director of Economic Security for Illinois. “They know how to manage their needs, but simply don’t have the resources to make ends meet. The EITC is a great tool, and that is why we support the expansion of the EITC to put more cash in people's pockets along with any other measures we can deploy to help families survive.”

A Chicago study on a proposed Universal Basic Income pilot program released this year also urged expansion of the EITC in Illinois.

The Trump administration is considering changes to SNAP in which food might be directly delivered to recipients, perhaps from farmers hurt by President Trump’s trade war, but that obviously would have an adverse impact on jobs and small businesses at the local level.