Wednesday, December 11, 2019

Is Strengthening Food Stamp Work Requirements for Able-Bodied Adults Without Dependents a SNAP Decision?

This past week, the Trump Administration's Department of Agriculture (USDA) finalized rules for the Supplemental Nutrition Assistance Program (SNAP), more colloquially known as food stamps. When initially proposed last February, USDA had proposed reforms on three aspects of SNAP. The rule the USDA passed last week only covered one aspect: able-bodied adults without dependents (ABAWD). Those who are ABAWD are those who are of working age (18-49 years), who are physically and mentally able to work, and are without dependents.

As part of the Personal Responsibility and Work Opportunity Reconciliation Act, which is the major welfare reform act from 1996, federal law requires ABAWDs to work, train, or participate in volunteer programs for at least 20 hours a week for those who were receiving more than three months of SNAP benefits within a three-year period. While this has been the law for over twenty years, there has also been allowance for waivers for areas when certain economic conditions were met, most notably when unemployment for a given area had 20 percent higher unemployment than the national average for a two-year period.

When the Great Recession hit, every jurisdiction received a waiver to deal with the difficult times. However, as the American Enterprise Institute brings up, there were those districts used various tactics to maintain their waivers post-recession. Illinois and California are two such states that have done so to its maximum effect. Those two states account for over two-thirds of the waivers in this country, in spite of accounting for 16 percent of the overall U.S. population.

This waivers exist in spite of the fact that the average unemployment rate for these waived jurisdictions was at 4.5 percent as of this past August. As of 2018, nearly fifty percent of ABAWDs lived in districts that allowed for these waivers (USDA). On top of that, about a third of ABAWDs already have income (USDA, Table 3.2). These facts illustrate that the usage of the waivers in their current form undermine the intent of the waivers.

What the new USDA rules intend to do to restrict the waivers by requiring that the unemployment rate for a given area is to be 6 percent. How would that play out?

What Will Be the Effects of the USDA Rule?
According the USDA statistics, 2.99 million out of 20.60 million households on SNAP are ABAWD (Table 3.2). While 14.5 percent of SNAP recipients are ABAWD, this does not mean that 14.5 percent of SNAP recipients are affected because it only affects those who will no longer be exempted from the waiver. The Left-of-center Urban Institute estimated earlier this year that such a rule would affect 588,000 households (3 percent), which about to 716,000 fewer people (1.8 percent reduction of SNAP recipients). These estimates are close to what the USDA calculated, which was 688,000 individuals off the benefits that are to save $5.48 billion over five years.

Other studies have measured the impact of stricter work requirements for SNAP. The Foundation for Government Accountability (FGA) preliminarily found that work requirements in ArkansasFlorida, and Mississippi have been successful. The Upjohn Institute for Employment Research had more modest findings: for every five individuals who stop receiving SNAP benefits due to work requirements, only one individual receives a job (Harris, 2019). Taking the Upjohn findings at face value, it comes off as a 5:1 ratio in terms of individuals being affected. At the same time, losing SNAP benefits does not have the same magnitude as being able to have a job and better support your household.

If you want to read more about SNAP and work requirements, you can read my 2016 analysis on the topic.

Where Do We Go From Here?
One of the underlying bases of economics is that we live in a world of scarcity. It is not realistic to think we can provide everything for everyone, and that goes for SNAP benefits. As such, there is a line that needs to be drawn for eligibility, which means not everyone can qualify or receive SNAP benefits.

SNAP beneficiaries are at 36.4 million [as of 9-2019], which is about the same as the 36.9 million in September 2009 during the height of the Great Recession (USDA). We're not in a recession anymore. If SNAP is supposed to a welfare benefit that meets counter-cycical demand, then the number of beneficiaries should have, at the very least, dropped to pre-recession levels.

I don't want to get into a debate about whether long-term usage of food stamps creates an unwanted dependency because that it is another discussion for another time. I will, however, conclude here. The United States has reached over $22 trillion in federal debt. Looking at the Congressional Budget Office's projections on debt, things are only going to get worse from here. When taken into consideration with everything I have mentioned so far, any reasoned argument would ask about tradeoffs or how to rank priorities. Who is greatest need of SNAP benefits? Are those who are ABAWD really in need of them in comparison to other recipients? And if they are not, should they still be SNAP beneficiaries?

I have been saying for years that we need to reform the SNAP program. It would be nice to have that discussion, but given how polarized this country is, it would be nigh impossible to do so, certainly on the national level. Politicians such as Alexandria Ocasio-Cortez have already played the emotional card by saying how Trump's reform could have affected a younger version of herself. If we cannot even have a debate about a $5.5 billion cut over a five-year period because it is easier to accuse those with whom you disagree politically of being callous towards the poor, then I have little hope for the fiscal future of this country.

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