Wednesday, May 9, 2012

Food Stamps and Unemployment Insurance

Copyright, The New York Times Company

The Department of Agriculture’s food-stamp program, now known as the Supplemental Nutrition Assistance Program, or SNAP, was originally intended as a program for the poor. But it has transformed itself into an important source of support for the unemployed.

Traditionally, food-stamp program participants were subject to an asset test – households with a total of more than a few thousand dollars of assets in their bank accounts, automobiles and other assets were not eligible even if income was zero. In this way, food stamps had a lot in common with Medicaid and other antipoverty programs.

The welfare reform of the 1990s also required able-bodied adult food-stamp recipients, without children, to be working or enrolled in a job-training program, or their eligibility would be limited to a few months.

For these two reasons, the food-stamp program had little in common with unemployment insurance, which offers weekly cash benefits to people who have lost their jobs and have been unable to find and start a new job.

Unemployment insurance has no asset test; even people with money in the bank can receive benefits from the program, as long as they have been laid off from a job and continue to look for a new one. Unemployment insurance also has no work requirement. Indeed, it has just the opposite – a person going back to work has his or her unemployment benefits terminated.

As a result of the very different eligibility rules for the two programs, a vast majority of people receiving unemployment insurance were not receiving food stamps. By my estimates, only about one-quarter of households with a head or spouse unemployed were receiving food stamps in the early 2000s.

But the food-stamp eligibility rules have changed markedly in the last several years, bringing the program closer to unemployment insurance. Food stamps effectively no longer have an asset test. States have also received waivers from work requirements during the recession (for a while, the requirements were waived nationwide by the 2009 stimulus law).

As a result, food-stamp participation is now more common among the unemployed. I constructed the chart below from Department of Agriculture quality-control data on the activities of non-elderly food-stamp recipients back to 2000 and from Census Bureau data on the prevalence of unemployment among the non-elderly population.

Sources: Department of Agriculture, Census Bureau

The former source gives me the number of non-elderly household heads and spouses who are both unemployed and receiving food stamps for their households, and the chart shows their number as a share of the total unemployment among non-elderly household heads and spouses.

The ratio was about one to four in the early 2000s and actually fell during the 2001 recession as unemployment increased more than food stamp participation did. The ratio rose in the mid-2000s as states relaxed their eligibility rules and again in 2008 as the federal government relaxed its rules.

By the 2010 fiscal year, half of non-elderly households with an unemployed head or spouse were receiving food stamps.

Meanwhile, the eligibility rules for unemployment insurance are scheduled to tighten this year, as the federal government puts shorter limits on the length of time that people can receive benefits. Thanks to the waivers cited above, food-stamp participation effectively has no time limit.

I expect that soon the food-stamp program will support more unemployed households than unemployment insurance does.

6 comments:

admin said...

An unemployment insurance is certainly a type of coverage that every working person should invest in. You may resent having to pay a monthly premium but if you do find yourself out of work, you're sure glad it is there.

Regards,
David from incomeprotectionquotes.co.za

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