Revised July
12, 2006
THE FOOD STAMP PROGRAM IS GROWING TO MEET NEED
By
Dorothy Rosenbaum
The Food Stamp
Program is the cornerstone of the nation’s nutrition assistance programs. This
year the program is providing over 25 million participants in more than 11
million low-income households with debit cards they can use to purchase food
each month. Because eligibility is not restricted to specific subgroups of
people, the Food Stamp Program serves a wide range of low-income households,
including families with children, elderly people, and people with disabilities.
About 80 percent of food stamp recipients live in households with children.
Nearly one-third of recipients are seniors or people with disabilities.
The number of people
in households that receive food stamps has grown from 17.2 million in 2000 to
25.7 million in 2005, and is projected to increase to almost 27 million in 2006.[1]
Some have asked why food stamp participation has risen since 2000 and has
continued to rise in recent years when the economy is relatively strong overall
and the unemployment rate has held at around 5 percent.
As discussed below,
the reasons reflect both the failure of the economic recovery to extend to the
poorest Americans and improvement in the ability of the Food Stamp Program to
meet the need that is there.
The Food Stamp
Program Responds to Swings in the Economy
After unemployment
insurance, the Food Stamp Program is the federal benefit program most responsive
to the economy. As the above chart shows, when poverty and unemployment rise,
food stamp participation tends to increase. Conversely, when the economy
improves, food stamp participation falls. Thus, much of the increase in food
stamp participation and costs since 2000 has occurred because of the economic
slowdown that turned into a recession in 2001. This growth followed six years
of continuous declines in food stamp participation and costs, related in part to
the strong economy of the late 1990s.
The Economic
Recovery Has Not Extended to Low-income Americans
Food stamp
participation continued to rise after the overall unemployment numbers began to
improve in 2004, in part because the gains from the economic recovery have not
been strong among low-income working families.[2]
During the current economic recovery, the number and percentage of
Americans living in poverty has remained high; in fact, poverty has risen now
for four straight years (2001-2004). In 2004, the
most recent year for which Census data on income and poverty are available, 37
million people were poor,
an increase of 17 percent since 2000. The number of Americans living in deep
poverty — with family income below half of the poverty line — rose even faster,
by 24 percent from 2000 to 2004. In no other economic recovery of the past 45
years did poverty increase between the second and third full years of the
recovery.
Poverty has
persisted during this recovery in part because the recovery has not increased
real earnings at the lower end of the income distribution. During the current
recovery, real wages and salaries have grown at less than half their average
annual rate in other recoveries since the end of World War II. Real median
wages for the bottom one-fifth of full-time workers fell in 2003, 2004, and
2005. This also is the only recovery in the past 45 years in which the income
of the typical household did not grow between the second and third years of the
recovery.
Food insecurity, as
well, has continued to grow in recent years. According to USDA, some 38 million
Americans lived in households that were “food insecure” in 2004, meaning they
had difficulty affording food.[3]
The number of individuals facing food insecurity increased by almost two million
people between 2003 and 2004 and has increased by more than 6 million people
since 1999. In 2004, more than one in ten American adults — and nearly one in
five American children — lived in food-insecure households.
Thus, despite
relatively low overall unemployment in recent years, the need for food stamps
has continued to rise.
The Food Stamp
Program is Reaching More People; But Many who are Eligible Still do not
Participate
USDA’s most recent
studies find that the Food Stamp Program is reaching more low-income
households. First, more low-income households are eligible for food stamps
because of the increases in the number of poor people discussed above, the
provisions of the 2002 farm bill that restored food stamp eligibility for some
legal immigrants,[4]
and new state options that have allowed states to provide food stamps to
households that own a reliable car.
[5] In the past, restrictive rules about
car ownership were a barrier for food stamp participation among working-poor
families.
Average Food Stamp Benefit
Levels Also Reflect Increased Need |
This paper
discusses trends over the last ten years in the number of low-income
households that participate in the Food Stamp Program. A similar and
related story occurred over the same period in the average amount of food
stamp benefits that participating households receive.
In 2005,
the average food stamp benefit was about $93 a month per person. In real
terms, (i.e., after adjusting for food-price inflation as measured by the
Consumer Price Index for food), food stamp benefits have grown by 13
percent since 2000. This increase, however, follows a period when the
real value of food stamp average benefits (in 2005 dollars) fell by almost
10 percent, from $91 per person per month in 1996 to $82 in 2000. Thus,
despite the recent increase in the real value of food stamp benefits, the
level in 2005 is essentially the same as it was in 1996.
The primary
reasons for these trends in average benefits mirror the reasons for the
trends in participation. To target food stamp benefits to the neediest
households, the food stamp benefit formula is structured so that
households with less income available to purchase food receive higher food
stamp benefits, and vice versa. To determine the food stamp benefit level
for which an eligible household qualifies, a household’s available (or
net) income is computed; a household’s “net income” reflects its income
after deductions for certain expenses such as high shelter, medical, and
child care costs.
-
Income:
In the strong economy of the late 1990s, the gross income of food stamp
recipients grew faster than inflation, which contributed to a decline in
average food stamp benefits. In contrast, between 2000 and 2004 (the
most recent year for which detailed data are available), the average
real gross income of food stamp households fell 6 percent, which
contributed to an increase in food stamp average benefits (since
participating households had less money available to purchase food).
-
Expenses:
The food stamp benefit formula allows deductions from income for
certain expenses, such as high shelter, medical, and child care costs
that result in households having less income available to purchase
food. A household with higher deductions receives a higher food stamp
benefit. Benefit cuts enacted as part of the 1996 welfare law
contributed in the late 1990s to decreases in the amounts that
households could deduct from their income. In legislation enacted late
in 2000, Congress partially reversed the 1996 cut in the food stamp
shelter deduction. In addition, in recent years, many households have
faced rapidly rising housing and utility expenses. As a result, the
real cost of shelter incurred by food stamp households has increased
sharply, by over 15 percent since 2000. These increased expenses are
reflected in higher shelter deductions, which, in turn, have led to
modestly higher average food stamp benefits.
In
conclusion, average monthly food stamp benefits have not increased
significantly over the past ten years. Over this period, the food stamp
benefit formula has appropriately taken into account both increases and
decreases in the income and expenses that food stamp households
experience. |
In addition, the share of eligible low-income
households that participate in food stamps has increased modestly in recent
years, in part because of improvements and simplifications in the program
enacted in 2002 that retooled the program to serve low-wage working families
more effectively.
It is important to note that the increase in food
stamp participation represents a recovery from the partial collapse in food
stamp participation in the late-1990s, when the number of people receiving food
stamps plummeted from 26.6 million in 1995 to 17.3 million in 2001 (see the
chart on page 2). USDA studies have shown that the decline in participation
rates during this time occurred in part as a result of serious initial problems
in adapting the Food Stamp Program to the sweeping changes being made in the
welfare system after the 1996 welfare law.
Despite recent gains in the number of people who
receive food stamps, USDA’s most recent estimates find that only 61 percent of
people who are eligible for the Food Stamp Program actually participate. The
Food Stamp Program serves only about half (51 percent) of eligible people who
live in working families and only about a quarter (28 percent) of eligible
seniors.[6]
USDA,
Congress, and States Are Committed to Serving all Eligible Households
The USDA, Congress, and states have made it a
priority to improve participation in the Food Stamp Program among eligible
households. USDA annually awards performance bonuses to states with the highest
and most improved program access rates. A key performance goal for the Food and
Nutrition Service (FNS), the USDA agency that administers the program, is to
raise food stamp participation rates from 56 percent to 63 percent by 2007.
In recent testimony before the House
Appropriations Committee, Eric Bost, the USDA Under Secretary for Food,
Nutrition, and Consumer Services, reiterated the agency’s commitment to
encourage all who are eligible and in need to participate in the program,” and,
“to aggressively promote the message that Food Stamps Make America Stronger, in
the sense that the program puts healthy food on the tables of low-income
families and has a positive effect on local economies.”
The Food Stamp Program Fills a Critical Need
after Disasters
Using the Food Stamp Program’s flexible disaster
authority, USDA was able to quickly and efficiently provide over $900 million of
food stamps to about 4 million individuals in 2 million households in the
aftermath of hurricanes Katrina, Rita and Wilma. The number of individuals
receiving food stamps went from 25.8 million in August 2005 to 29.6 million in November,
following the hurricanes. Then by February 2006, participation fell back almost
to pre-hurricane levels (26.0 million).
The Food Stamp Program Delivers Benefits
Accurately and Efficiently
Because the Food Stamp Program has a rigorous
Quality Control system, it is clear that erroneous eligibility decisions
resulting in payment to ineligible people are not a cause of rising
participation. To the contrary, efforts by USDA and the states have
greatly reduced food stamp payment errors. USDA reports that fewer than
two percent of food stamp benefits are issued to households that do not meet all
of the program’s eligibility requirements. Rates of both erroneous
“overpayments” and “underpayments” have plummeted for seven years, setting record lows.
The national food stamp error rate is now below 6
percent, a level that until recently automatically qualified states for enhanced
funding due to exemplary performance. Moreover, this is a combined error rate
and represents the sum of the overpayment error rate (4.5 percent) and the
underpayment error rate (1.3 percent). The underpayment error rate measures
errors in which eligible, participating households received fewer benefits than
the program’s rules direct. Some have mistakenly spoken of the combined error
rate as if it were a reflection of the level of excess federal expenditures that
occurred due to errors. This is incorrect because the combined error rate
includes underpayments that save the federal government money.
The net loss to the federal government (i.e., the
benefits lost through overpayments minus those saved by underpayments) is three
percent. The food stamp error rate compares quite favorably to error rates for
most other government programs for which data are available. For example, the
Internal Revenue Service estimates that federal taxes were underpaid by 16
percent in 2001.[7]
Conclusion
The number of people who receive food stamps has
increased dramatically since 2000. This increase is not cause for alarm, but
rather is due to:
- growth in the number of poor people in the
United States;
- modest bipartisan expansions in the number of
people who are eligible for food stamps;
- an increase in the share of eligible
households that participate in the Food Stamp Program; and
- the Food Stamp Program’s success in providing
disaster assistance after hurricanes.
Despite the increase in food stamp participation,
the program reaches only 60 percent of eligible individuals. States,
advocacy groups, and USDA remain committed to reaching out to eligible
non-participants to help them become aware of food assistance benefits that
could help them afford a nutritionally adequate diet.
End Notes:
[1] Both USDA and the Congressional
Budget Office project that 26.9 million people will participate in the Food
Stamp Program in an average month in fiscal year 2006.
[2] For more information see, CBPP, How
Does This Recovery Measure Up, revised April 10, 2006, at
https://www.cbpp.org/8-9-05bud.htm, and CBPP, Economic Recovery Failed to
Benefit Much of the Population in 2004, August 30, 2005, at
https://www.cbpp.org/8-30-05pov.htm.
[3] More technically, “food insecure”
households are households that at times are uncertain of having, or unable to
acquire, enough food for all household members because they have insufficient
money and other resources for food. Household Food Security in the United
States, 2004, by Mark Nord, Margaret Andrews, and Steven Carlson, Economic
Research Report No. (ERR11), October 2005, available at
http://www.ers.usda.gov/Publications/err11/.
[4] Undocumented immigrants are not
eligible for food stamps. The Congressional Budget Office (CBO) estimated in
2002 that the farm bill’s restoration of food stamp benefits to some legal
immigrants would increase food stamp participation by a little less than 400,000
people in an average month.
[5]
USDA estimated that legislation enacted in 2000 that provided states an option
to ease outdated asset rules relating to vehicles would increase food stamp
participation by about 240,000 people in an average month.
[6]
U.S. Department of Agriculture, Food and Nutrition Service, Food Stamp Program
Participation Rates: 2004, June 2006, available at
http://www.fns.usda.gov/oane/menu/Published/FSP/FSPPartNational.htm.
[7]
Internal Revenue Service, IRS Updates Tax Gap Estimates (IR-2006-28, February
14, 2006), available at:
http://www.irs.gov/newsroom/article/0,,id=154496,00.html. |