Feeding the Economy | The Perryman Group

Feeding the Economy

By: Dr. M. Ray Perryman
Published in syndication December 11, 2019

New rules restricting access to the Supplemental Nutrition Assistance Program (SNAP) are going to cause hundreds of thousands of Americans to lose benefits. Even beyond the obvious physical and mental costs of food insecurity and the incalculable toll on the stability and dignity of families around the country, there is also a significant economic cost. Our analysis found that it will lead to losses of billions of dollars and tens of thousands of jobs.

The current SNAP statute limits participation by adults ages 18-49 who do not have a dependent or a disability to three months of benefits in a 36-month period unless the certain conditions are met. States can waive these limits in areas where there aren't enough jobs and exempt a percentage of individuals who are not work-capable. The new changes tighten the requirements for waivers, and the US Department of Agriculture estimates that the result will be that 688,000 persons lose their benefits. The revised regulations do not match the reality of the job market situation and ignore the social costs of inadequate nutrition. It is a complex issue.

The economic costs of hunger are multifaceted. Health care needs of people who are food insecure are higher due to increased incidence and severity of disease; health outcomes are also worse, reducing productivity and lifetime earnings. In addition, education expenses are higher, with a greater need for intervention. Achievement levels (and, hence, lifetime earnings) are negatively affected. These costs multiply as they work their way through the business complex and are largely borne by the whole of society.

We estimate that removing 688,000 persons from SNAP eligibility will cost the US economy (on a net basis) nearly $7.0 billion in total expenditures and $3.3 billion in gross product each year, as well as nearly 35,000 jobs on an ongoing basis.

An analysis by the Urban Institute indicates that over 3.7 million individuals would lose benefits and others would face reductions if all three regulations currently set to go into effect during the next year are implemented. Under these conditions, costs to the economy would rise substantially. The Perryman Group estimates that if all proposed SNAP regulations actually happen, the costs to the economy would include $37.7 billion in total expenditures and $18.1 billion in gross product each year as well as the loss of more than 189,000 jobs on an ongoing basis.

Further restricting access to SNAP will increase food insecurity for hundreds of thousands of Americans. Not only is this rule going to lead to a very high human cost for the affected individuals and those around them, it's also going to generate economic dislocations which permeate the entire country. More consideration is warranted.