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Ask the Economist: Food Stamps and Low Unemployment

calculator and pencil.jpgQ: It looks to me like there is a big disconnect between the unemployment rate and the number of Americans on food stamps.  Does anybody have any fairly simple explanations for this disconnect?

The Supplemental Nutrition Assistance Program (SNAP, previously known as food stamps) has about 45 million participants, near historical highs. But unemployment rates have dropped sharply since recession highs in 2009 and 2010. Over a million fewer people received benefits in 2014 and 2015 than in the previous two years, but as a percentage that decrease is much slower than in unemployment. Why don’t these numbers move more closely together?

The biggest reason the relationship between these factors is not that strong because most SNAP recipients are not in the prime-age labor market. Almost two-thirds of SNAP recipients are minors, seniors or disabled, and almost two-thirds of those not in one of these categories live in a household with at least one dependent. However, there are many working age adults who receive SNAP assistance, and for this group the  question was right on point: We are now approaching a point at which market conditions are changing how these benefits will be allocated.

In the next few days, around one million Americans’ SNAP waivers will expire. SNAP benefits have always required able-bodied adults without dependents to work or be in school or training to receive more than three months of benefits in a three-year period. But the important exception is that the government waives this requirement in areas with high unemployment.  Much of the country became eligible for these waivers during the Great Recession and has remained eligible ever since.

But conditions are finally reaching the point where these protections no longer apply. At the beginning of 2016, 22 states did not renew these waivers, in almost all cases because local unemployment rates have recovered to the point where they no longer meet legal requirements.

While recoveries are uneven and incremental, regulations are often tied to a single threshold. In the long run, the recovery should lead to job opportunities for SNAP recipients, but in the short run the waivers are likely to cause a significant decline in the number of such people receiving benefits across the country. In response, 10 states, including AIER’s home state of Massachusetts, are participating in an initiative to expand job training opportunities for these individuals, which should help smooth out benefits and help these adults increase their skills.

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