Tighter Food Assistance Restrictions Cost the US Economy Billions

Released on December 06, 2019

New rules restricting access to the Supplemental Nutrition Assistance Program (SNAP) will cost the economy billions of dollars and tens of thousands of jobs. 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 sufficient jobs are not available and exempt a percentage of individuals who are not work-capable. Recent changes have tightened the requirements for exemption, and the US Department of Agriculture estimates that the result will be that 688,000 persons lose their SNAP benefits.

"Even beyond the obvious physical and mental costs of food insecurity and the incalculable toll on the stability and dignity of families across the United States, there is also a significant economic cost," said Dr. Ray Perryman, President and CEO of The Perryman Group.

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 such as special education. 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.

The Perryman Group estimates that when multiplier effects are considered, removing 688,000 persons from SNAP eligibility will cost the US economy 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.

If all three of the proposed regulations are implemented, an analysis by the Urban Institute indicates 3,721,500 individuals would lose benefits and others would face reductions. Under these conditions, costs to the economy would rise substantially. The Perryman Group estimates that if all three proposed SNAP regulations are put in place, the costs to the US 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 (including multiplier effects).

"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 families, it's also going to lead to substantial economic dislocations which permeate the entire country," said Dr. Perryman.