May 21, 2013 at 9:09 pm
So I’m driving into work the other day, and since 8-10 hours of this stuff isn’t enough for me, I’m listening to wonk radio where this guy is going on about the SNAP, or Food Stamps, program. He’s a knowledgeable guy making a lot of sense, until he goes off and says something to the effect of: unemployment’s coming down, so the SNAP rolls should be coming down too.
It’s not an unreasonable thought, and it probably resonated with lots of listeners (or at least with the three other people in the world listening to this sort of thing at 8am in the morning). The notion that the SNAP rolls are “too high” has also become a bit of a conservative meme.
But it’s wrong in at least two ways. First, because the labor force participation rate has been dropping, in part due to people dropping of out the labor force due to lack of opportunity, the unemployment rate is a less reliable measure of labor slack right now (it’s artificially low because of the dropouts). A better indicator of the weakness of the recovery and the continued need for nutritional support for low-income households is the employment rate—the share of the population employed. And that’s been flat-lining for a while, meaning that job growth has just kept up with population growth. Under those conditions, you’d expect elevated SNAP rolls.
The figure makes the case. It shows SNAP recipients as a share of the population compared to the unemployment rate and the employment rate (it’s on the right axis). As you can see, unemployment drifts down but the employment rate stays flat. I’d argue that right now, it’s the latter—employment rates—that captures the weakness in labor demand more so than unemployment.*
Source: USDA/FNS, BLS
Second, while SNAP rolls increased sharply in the recession, as you’d expect—along with UI, SNAP was and is highly elastic to increased need—they’ve decelerated of late as the economy has slowly improved, though here again, it’s not improved as fast for those more exposed to food insecurity. I found a careful academic paper by Hoynes and Bitler (new so no link yet) that tests whether the response of the SNAP program to the increase in unemployment was uniquely large in the great recession, a finding that would support the conservative meme of SNAP over-correcting for the downturn (providing more assistance than historical relations would predict). It finds this not to be the case—the increase in SNAP rolls over the downturn, at least through 2011 (their last data point) was not significantly out-of-line with the historical record.**
So here’s the thing. Too many people have trained their eyes to look at a trend like the one of the SNAP rolls in the figure, note the sustained increase, and sharpen their fingers with a tut-tut-tut. Other less knee-jerkers see the trend and ask whether it’s justified given underlying weakness in the part of the economy faced by the eligible population. Do that, and this SNAP trend is as it should be.
*Extra wonky section for extra-wonky credit: I regressed monthly changes in the SNAP rolls/per capita on a constant, trends, a few dummies for monthly spikes due to disasters, and changes in both labor market variables: employment and unemployment rates, letting them fight it out to see which had more explanatory power. The winner, by a knockout, was the employment rate…see output table below (note the change in the unemp rate is insignificant and one-third the size of the emp rate change).
**Bitler/Hoynes: The More Things Change, the More They Stay the Same: The Safety Net, Living Arrangements, and Poverty in the Great Recession, Table 4.
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