The Economic Fallout of Food Stamp Cuts Has Begun
In 2009, the federal government increased the Supplemental Nutrition Assistance Program (SNAP) amount as part of the economic stimulus plan. The increase was temporary and expired in November 2013, removing more than $5 billion in food assistance for millions of Americans. This year, the new Farm Bill cut an additional $8.5 billion from the program.
For those that don’t live paycheck to paycheck, the idea of losing $10 or $20 from their monthly income may not make a big difference in their lives. However, for the millions of people receiving SNAP assistance, it can mean missing a meal…or five. A parent may have to skip a meal so their children can eat. It can mean making choices between foods that are healthy and those that exacerbate existing problems.
For those that live in areas where fresh fruits and vegetables aren’t easy to come by, a reduction of as little as $10 can mean skipping a week’s worth of fruit, or having to resort to less healthy packaged foods as a substitute. Packaged foods are often high in sodium and sugar, which can exacerbate health issues like diabetes or obesity. Anyone with a strict diet due to health issues, like food allergies, have very little room in their budget to find suitable alternatives.
Drought, extreme weather and livestock problems have led to a dramatic increase in food prices this year. This means that staples like rice and meat are more expensive. Food prices are expected to rise as much as four percent, just as benefits decrease by as much as twice that for many. All of this was exacerbated for millions when extended unemployment benefits ended.
It means that buying habits for basic needs are changing.
While the political rhetoric about food stamps and other safety net programs rages on, the reality of the economic impact is hitting communities nationwide. The local grocery stores are just as dependent on their customers’ spending. When they can no longer afford to buy as much food, it affects the stores’ bottom line. Stores in communities where a large percentage of customers rely on food stamps are seeing a severe decrease in sales, with some fearing layoffs. Families will also have less to spend on other items, having to cut back on other things to make up for the loss in their food budget.
It’s not just affecting the local grocer, either, but also huge retailers.
Wal-Mart has generally been the go-to option for those on a limited budget. However, even they are being affected by the change in their customer’s buying habits. Customers are forgoing the “low price leader” and heading to the dollar store to get things like shampoo and toilet paper. They are also not spending as much in their grocery department.
After all, 20 percent of Wal-Mart customers rely on food stamps.
Almost half of all food stamps are spent at big box retailers like Wal-Mart and Target. Both entities are feeling the shock of fewer customers spending less. The fourth quarter 2013 earnings report for Wal-Mart was one of its worse in years. And it can all be traced back to cuts in food stamps.
As the numbers of people needing assistance are increasing – more of who are middle class, educated and have never been on assistance before – the amount of need available is decreasing. Now that both SNAP and long term unemployment benefits have been cut, the economy is feeling the pinch. This is in addition to cuts in Temporary Assistance for Needy Families (TANF), WIC and housing assistance. Food banks are unable to keep up the pace with the increased demand.
While those who advocate austerity in times of economic crisis, the data shows that increasing safety net programs does more to help the economy. There is little doubt that the increase in SNAP assistance in 2009 and the extension of long-term unemployment benefits in 2009 significantly contributed to the economic recovery. It’s not because those on assistance (many of whom were working) were buying big ticket items like cars or houses. They were putting money back into the economy immediately at grocery stores, the gas station and, yes, Wal-Mart.
The so-called recovery from the recession has largely benefited those in the top of the financial brackets. Most are still trying to get their footing and haven’t even begun to rebuild what was lost. As policy makers continue to limit the options for those that most need it, it’s possible the recovery will continue to bypass the majority of people. This can end up destroying whatever progress that has been made.
Let’s hope it’s not too late for policy makers to realize that from the local grocer to Wal-Mart, economic benefits don’t trickle down – they trickle up.