Thursday, June 07, 2012

Symptom of the Economic Crash: One in Seven Americans Now Receiving Food Aid

The number of Americans receiving food aid stood at 46.5 million as of December. This means that more than one out of seven Americans is currently getting food stamps. That figure is a historic high, though the U.S. population of 313 million is substantially larger today than in past decades.

The surge in food stamp recipients has largely been a consequence of the Great Recession, which technically began in December 2007. That year, 1.4 million people were added to the ranks of food stamp recipients, while 4.4 million were added in 2008, triple the 2007 figure.

During George W. Bush's presidency, the number of recipients rose by nearly 14.7 million. And during the Obama years, an additional 14.2 million have been added. Yes, the Great Recession and its lingering after effects have been quite brutal to millions upon millions of Americans.

It should come as little surprise, then, that the number of Americans receiving food aid is essentially identical to the number living in poverty. An Indiana University study finds that 46 million Americans are living below the poverty line – up 27 percent since start of recession. Most worrisome, the report warns that the ranks of the impoverished will continue to rise.

It is very telling that so many of our fellow citizens require assistance to meet some of their most fundamental needs. The U.S. is the richest country on the planet after all. This is supposed to be a nation of equal opportunity, but clearly that isn't so. It's tough for people to pull themselves up by their boot straps when they can't even afford boots.

Food aid exemplifies the classic "safety net" program. Generally, those with incomes at or below 130% of the official poverty level, and savings of $2,000 or less, may receive food aid. The income level is currently just under $29,000 a year for a family of four.

Typically, able-bodied adults without dependents can collect food stamps for only three months out of any three-year period. However, according to USDA, 46 states have been able to continue the longer benefit period under special waivers granted because of high unemployment.

Another reason for the rise in food stamp recipients has been the public outreach efforts of the states. According to the USDA, only 54 percent of those whose income was low enough to qualify actually signed up in 2002. But by fiscal 2009 the number had risen to 72 percent.

That's because states increased outreach to low-income households, simplified the program and streamlined the application process, making it easier for eligible individuals to apply for and receive food stamp benefits. It's worth noting that more than a quarter of those who are in fact eligible for the program still aren't enrolled, meaning the numbers could still rise further.

Much of the former stigma associated with food assistance has been removed since the program discontinued the use of paper food stamps. Instead, plastic debit cards, known as "Electronic Benefit Transfer" or EBT cards, are now in use. These cards look pretty much like an ordinary credit card when used in a supermarket checkout line.

The change from paper to plastic has also caused the fraud rate in the program to plunge to just 1%, says the Government Accountability Office. Critically, food stamp dollars can only be used to buy food — not cigarettes, alcohol or even cleaning supplies, for example.

The demographics of those in the food program are quite revealing.

According to the USDA, as of 2010, nearly half (47%) of beneficiaries were children under age 18, and 8% were age 60 or older. Interestingly, 41% of recipients lived in a household with earnings from a job — the so-called "working poor." In fact, working families actually outnumber unemployed families in the program.

Among recipients, 36% were white (non-Hispanic), 22% were African American (non-Hispanic) and 10% were Hispanic. Because participants are not required to state their race or ethnic background, 18.9% are listed as "race unknown."

The average household received a monthly benefit of $287 in 2010, or an average of $9.25 per day. Clearly, these folks aren't eating steak.

To qualify, a single person needs to earn less than $14,000 annually. For a family of four, it's less than $29,000 annually. That's just above the threshold for two single persons.

Last year, 85% of the households receiving food stamps lived below the federal standard for poverty. So, the food stamp program, now officially known as SNAP (Supplemental Nutrition Assistance Program), is doing what is was designed to; providing assistance to the poor.

The problem is that the ranks of the poor have been exploding.

The federal poverty level has a very conservative definition and is set according to the number of persons in a family. The government's official 2012 designations for poverty are as follows:

1 person: $11,170
2 persons: $15,130
3 persons: $19,090
4 persons; $23,050

For a family of four, $23K doesn't go very far. Clearly, millions of additional American families are just above that threshold and are also living in poverty, though they are not officially recognized as such by the government.

Though the program has become increasingly politicized, large numbers of "red state" residents are also beneficiaries. Mississippi (red) reported the largest share of its population relying on food stamps, more than 21%. One in five residents in New Mexico (blue), Oregon (blue), and Tennessee (red) were also food-stamp recipients.

As of 2011, the ten states with the highest percentage of population using food stamps were (in ascending order): South Carolina (red), Maine (blue), West Virginia (purple), Kentucky (red), Louisiana (red), Michigan (blue), New Mexico, Tennessee, Oregon and Mississippi.

As a recent New York Times piece detailed, even Americans who vigorously oppose the whole idea of government “handouts” receive benefits of one kind or another.

Over the past four years, food stamp spending has doubled to $106 billion. That equals 0.028% of the $3.796 trillion federal budget for fiscal 2012. Clearly, spending on the food aid program amounts to a miniscule portion of the overall budget. Food stamps are not a budget buster and they are not tipping the fiscal balance.

What is putting the budget in the red is a lack of jobs — especially good, full-time jobs — that allow people to substantively contribute to the federal income tax base.

Remarkably, the latest census data shows that nearly one in two of the U.S.'s 313 million citizens are now officially classified as having a low income or living in poverty. One in five families earns less than $15,000 a year.

The growth of the poor can be traced to a lack of jobs and, more specifically, a lack of well-paying jobs. Even before the Great Recession took hold, the American middle class had already been in long-term decline. Worker's paychecks have been stagnant for decades.

According to Census figures, the $47,715 median annual income earned by a male, full-time, year-round worker in 2010 was less than the $49,065 a male earned in 1973, adjusted for inflation.

This means that median incomes have actually gone backward over the previous four decades. That's simply stunning.

The median paycheck (half made more, half less) fell again in 2010, down 1.2 percent to $26,364. That works out to $507 a week, the lowest level, after adjusting for inflation, since 1999.

Meanwhile, inflation was 27% from 2000 to 2010. That's a hidden tax on all Americans, young and old, and it impacts the poor most acutely.

Given all these factors, it's easy to reconcile Indiana University's projection that the ranks of the impoverished will continue to rise.

The rising number of impoverished Americans, as well as those needing food assistance, are signs of an economy that is very sick and very weak. The evidence is all around us.

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