A brand new Gallup poll suggests that U.S. job creation is the best it has been in five years.
While we are still in full recovery mode, the job market has slowly improved since the height of the “Great Recession,” with the unemployment rate currently at an improved but still unacceptable 7.5%.
Gallup's U.S. Job Creation index is currently at the highest score for any month since April of 2008 with 37% of American workers reporting that “their employer is hiring new people and expanding the size of its workforce,” while only 15% report their company “is letting people go and reducing the size of its workforce.”
Workers are also making more money hourly than ever before. The Bureau of Labor Statistics reported that 2013 has seen an all-time high in the average hourly wages for American employees.
This raises a peculiar question: if the job market and economy is improving, albeit very slowly, why are more Americans using food stamps than ever before?
This year has seen a surge in the use of food stamps which are now at historical records. Currently, a record 47.8 million Americans are enrolled in the Supplemental Nutrition Assistance Program (SNAP). Enrollment in SNAP has increased 70% since 2008 and currently, an unbelievable 15 out of every 100 Americans are on food stamps.
Consequently, the U.S. spent a record $74.6 billion (slightly less than the combined budgets of the Department of Homeland Security and the Justice Department) on the SNAP program in 2012 alone. That expense has more than doubled since the start of the “Great Recession,” increasing $40 billion dollars since 2008 ($34.6 billion).
While it is logical that a greater number of people required assistance during the recession, if job creation is the best it has been in five years and if hourly wages are at an all time high, why are a record number of Americans still on food stamps?
First, let’s trace food stamp enrollment and the unemployment rate through the past 35 years.
In 1979, before the severe recession in the early 1980s, 17.6 million Americans (7.7% of all Americans) required food stamps. During that time the unemployment rate ranged from 5.6%-6.0%. By 1982, the unemployment rate hit 10.8% and 22.4 million Americans required food stamps. After the recession unemployment rate dropped as did the number of Americans on food stamps and 1985 saw a 7.0% unemployment rate and 19.9 million Americans (8.4% of the population) on food stamps.
The recession of the early 1990’s saw a similar pattern when the unemployment rate rose from 5.0% in 1989 — with 18.8 million (7.6%) Americans on food stamps — to 7.8% in 1992 – 25.5 million (10%) Americans on food stamps — before falling again by the mid-90’s.
By 2000, the unemployment rate was 3.8% and the number of Americans on food stamps reached a 25+ year low with 17.1 million participants (6.1%) in the program. In 1975 there were also 17.1 million Americans on food stamps, however, as a percentage of the population, there was a greater 8.2% of all Americans on food stamps.
In March of this year, the Wall Street Journal identified several reasons for the sharp increase in food stamp participants and expenditures despite the fact the financial crisis and recession ended in 2009.
One component has been a move by states to have more people apply for the federally funded SNAP, allowing them to avoid additional welfare costs during the slow economic recovery after 2009.
Another factor in the increased cost of SNAP was the 2009 stimulus package. The Congressional Budget Office attributed one fifth of all SNAP spending to the stimulus which temporarily (expires October 31) increased benefits for welfare recipients.
The main contributor to the increase, however, can be traced to initiatives of the Clinton Bush and Obama administrations.
Starting with Clinton’s 1996 reform of the welfare system, states were gradually allowed the ability to lessen standards for citizens to qualify for welfare benefits.
Six states approved policies in 2001 and 2002 that relaxed “income and asset requirements” for applicants for the SNAP program. The intention was to encourage residents to take advantage of SNAP before they became wholly impoverished. This initiative began the gradual increase in SNAP recipients which has not stopped growing since 2000, almost tripling the number of Americans dependent on federal aid for food.
The danger, however, in allowing individual states to make the screening process easier lies in the ability for states to push the responsibility for its destitute citizens, and the economic burden that comes along with it, onto the Federal government.
Eligibility for food stamps was once again expanded with the 2002 Farm Bill (signed by President Bush) and the 2008 Farm Bill (vetoed by President Bush but still passed).
State’s easing of eligibility has expanded under the Obama administration.
In 2009, Jessica Shahin, a top USDA official, wrote to federal program overseers, “We believe that increasing the number of states that implement [eased] eligibility will benefit families hurt by the economic crisis … Please encourage your States to adopt [the looser rules] to improve SNAP operations in your States.”
With the support of Obama administration officials, 17 U.S. states and territories eased their eligibility requirements with eleven more doing so in 2010. Currently, 43 U.S. states and territories have these relaxed policies.
The Wall Street Journal indicates “In 2006, 18.7% of SNAP households qualified through an easier screening process. In 2011, that number reached 65.8%.”
The Wall Street Journal summarizes, “By expanding the pool of potential applicants, they are redrawing the landscape of government assistance. It is one reason why SNAP appears to have evolved from a program that rose and fell with unemployment rate to a more permanent feature of the landscape.”
While the CBO predicts average monthly participation in SNAP to drop by almost 30% by 2020 (which still remains high by historical standards), it only expects a 7.5% decrease in expenditures on the program.
This fall, Congress will be forced to reevaluate SNAP when legislation approving the United States Department of Agriculture will expire. Republicans have promised reform, proposing raised eligibility standards and limiting the states ability to soften requirements for the program.
While SNAP is an important program that provides food for Americans who need it most, as a country, we need to focus on raising living standards and reducing unemployment for all Americans so they do not need our assistance at all. The current historic size of SNAP is expensive and we need to ensure that only people who truly require assistance are eligible and receive these benefits. While the states control the program, the Federal government pays for the benefits, so SNAP eligibility should be uniform and restricted by legislation that applies to all states and ensures they play by the same rules.