Putting The Rise in Food Stamp Usage in Perspective

I’ve seen a common theme in the comments section from the “America is falling into an abyss” crowd – the recent rise in food stamp usage.  Without getting political, I figured I’d take a look at the raw data and see what we could conclude.  Here goes nothing.

First of all, food stamp usage ALWAYS rises in a recession so the recent surge is not remotely surprising.  As you can see in Figure 1 below, every recession since the 1970′s (when this data is first available) has seen a sharp increase in food stamp usage.  I used a year over year rate of change in order to compare the current environment on an apples to apples basis with past events.  It’s too easy to look at the “record high” or the headline figure in food stamps and simply conclude that things are worse than they’ve ever been.  The reality is that food stamps rose at about a 20% year over year rate at the worst point in the current recession and has since declined to a 4.25% year over year pace.   So, the rate of change is still positive, but it’s come way down from its worst levels.

I’ve also provided the per capita food stamp usage in figure 2.  Obviously, the picture looks far more bleak than the figure 1 image.  Per capita food stamp usage is at its all-time high.  But the rate of change is clearly slowing so it does help to keep things in perspective there.

It’s interesting to note a few things from this data and the program itself:

  • I was surprised to discover that 55% of all participants are children (under 18) or elderly (over 65).
  • Food stamp usage has been on the rise since 2001 with the exception of a meager year over year decline in 2007.
  • The recent recession was comparable to both surges in the 70′s, but was much larger than more recent recessions.
  • The annual rate of change has averaged 8% since inception.
  • The 2012 rate of change (4.25%) was substantially lower than the average rate of change.
  • BUT, the rate of change is still positive which means that food stamp usage is still on the rise even if there is a modest recovery occurring.
Overall, I think this data is not as alarming as some might have us believe.  But it also shows the depth of the recession that we’ve just been through.  Clearly, the average and lower class American isn’t feeling like this is a recovery.   The lasting impact of the balance sheet recession is a recovery that still feels very much like a recession to a huge portion of the US population.

(Figure 1)

(Figure 2)

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • HankB

    Food stamp usage has risen sharply since 2000 in a near relentless line. This can’t be economic problems because the economy was doing okay from 2003-2007. That means it has to be some sort of problem in the way the program is structured and how it qualifies participants.

  • SS

    Republicans are always using this data to claim that Obama is the cause of the welfare state. But it’s clear from this data that the surge in food stamps started during the Bush campaign and continued right on for his entire 8 years in office.

  • Sagesse

    Can you expand on the age-related data by relating the growth to the growth in the relevant population cohorts? I presume the US is seeing the same increase in over-65s as the rest of the West (albeit life expectancy is on the low side) and I would guess also has rather more children. A disaggregation of the demographic from the economic components would add to the quality of the discussion.

  • Greg

    Your comment doesnt compute Hank

    Just because the economy was “doing okay” in 2003 -2007 doesnt mean that poverty wasnt growing. Headline GDP can grow while more people fall into poverty. In fact I would argue that in fact that is usually what happens in our “new economy” since the 80′s. Wealth gains go almost strictly to the top side while the rest tread water or take on water. As long as credit can be cheap and plentiful you wont see all the warts in our system.

    Credit is still cheap but too many people still cant afford it.

  • Nils

    I think it’s also worth looking at people who go on Social Security Disability.

  • Sagesse

    Looking at the US Census Data, from 2000-2010 the number of those age 65 and over increased from 35m to 40m; & of under 18s from 72.4m to 74.2m. I couldn’t find the data broken down by age since 2010 but there’s no reason to think trends have changed. Seems like demographics is helping drive the increase in aggregate usage- but over that time the two groups together declined from 25.7% to 24% of the population so it doesn’t help explain the percentage incidence.

  • Boston Larry

    Cullen, I think it would also be helpful to show the average monthly dollar amount per person that is being disbursed via food stamps. I have an adult friend who was on food stamps while he was out of work and I believe he was getting less than $35 per month from the program, but he said it was worth it to him to get the extra $35. Of course it is income-based, so his unemployment income may have been higher than for the average recipient.

  • Cowpoke

    Let’s be honest, with respect to Parkinson’s Law, It’s not in the USDA’s best interest for Food Stamp Usage to decrease.

  • Tim

    The per-capita chart is really the alarming one and that simply cannot be downplayed. Even though it’s “only” 15% of the population (which is still far too high) and the rate of increase is clearly slowing, we’ll be very hard-pressed to actually see the rate of change go negative anytime soon. This is something to continue to monitor.

    Also, are legislative/regulatory reforms factored into this data in any way?

  • MrV

    +1

  • Johnny Evers

    THe ‘balance sheet recession’ aggravated but did not cause the problem. Basically, the working class is cooked and sinking into a barbaric state (see Chicago’s streets, for example.)

  • Andrea Malagoli

    I you add the doubling of people on disability, you need to be one hell of an optimist to think this is ‘not bad’.

  • MTM

    My son, a college Junior, Poly-Sci major and scholarship athlete has many times remarked about the abuse of food stamps he observes by college students who are somehow able to qualify since they are out of work, yet are full-time students. It is almost a joke in the college world. Clearly abuse abounds in the current qualification criteria.

  • Pierce Inverarity

    I live in Chicago, I’m not sure what you’re referring to.

  • EconFan

    My daughter told me the same thing last year; I was skeptical figuring the stigma would dissuade college students but maybe students just see it as a easy way to make money

  • Alex

    Thank you for the detailed un biased look at the numbers.

    GREAT WORK CULLEN!

    I think this shows that its not as alarming as it seems, but it still is pretty bad.

  • Pierce Inverarity

    Yes, but think about what kind of debt loads those students are being forced to undertake in order to get an education. “Abuse” of food stamps in this regard seems paltry in comparison to the abuse heaped upon the students by creditors.

  • ilya

    if it ever get close to 100% the rate of change YoY will come to almost zero! great goal in my opinion in he world obsessed with exponents. I think the absolute level is alarming. This is a bread part of bread and circus I guess.

  • http://www.orcamgroup.com Cullen Roche

    I think that’s a fair assessment. And the per capita rise also highlights potential flaws in the actual program itself. Perhaps we need to consider whether this is the optimal form of welfare? I don’t have the answers. I am not against govt spending to help the needy (especially our children and elderly), but the growth in this program per capita is obviously alarming and represents some sort of structural flaw….

  • john

    Won’t the rate of change slow toward zero once everyone is on food stamps. Has everyone flunked math, or the concepts of exponential math. Articles like this make me think of the movie idiocracy.

  • http://www.orcamgroup.com Cullen Roche

    Yes, but we’re at 15% so we have a long way to go. We can get there if we all just get a little lazier. :-)

  • http://www.nowandfutures.com bart
  • http://www.nowandfutures.com bart
  • The Undergrad

    +1 Pierce

  • AWF

    Increases in the Minimum Wage =
    Increases in Unemployment =
    Increase in Food stamp usage

    http://www.youtube.com/watch?v=ca8Z__o52sk

    Milton Friedman

  • http://breedinginstability.com Mountaineer

    No. Just no. The real minimum wage is approximately the same as it was throughout the 90s. Is unemployment? Is food stamp usage?

  • Ingrid Isaksen

    I recommend reading the insights of Bill Gross in PIMCO.
    This article is brilliant IMHO:
    http://www.pimco.com/EN/Insights/Pages/SixPackin.aspx
    The last 2 sentences in the essay are worth remembering!

  • Ingrid Isaksen

    I’d recommend this article too:
    http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx
    “The U.S. is untrained, underinvested and overindebted compared to our global competitors”. IMHO, that goes for many European countries too.

  • hangemhi

    Sure, overall the US economy is doing just fine, but unequally. The rich have been getting richer for decades, and poverty keeps growing. We’ve been playing monopoly, and if one group ends up owning all of the hotels and railroads, the game just ends. Or, the rich fund programs like SNAP because – well – they have all the money, and they fight policies that benefit anyone but themselves.

  • Pierce Inverarity

    I’m not convinced that the blame resides solely in the Food Stamp Program. It seems to me the bigger structural flaw likely resides somewhere in the reasons driving people to the program in the first place. Maybe that’s what you’re hinting at, but I wanted to clarify.

    FSP could probably benefit from reform, but ultimately, I’d guess it was a symptom of the bigger problems that unaddressed increases in income inequality and unaddressed real-wage stagnation.

  • Pierce Inverarity

    You said it better than I.

  • TiberWulf

    The entire government, left and right, is the cause of the welfare state. Pointing to only the republicans or democrats does nothing but promote the great divide in America. That per capita chart is downright scary.

  • Pierce Inverarity

    *bigger problems caused by

  • William Bedloe

    I know many who live in Chicago who know exactly what Johnny is talking about…506 murders in 2012, and 40+ and counting in January of 2013. While still not near the peaks of the early 90s, the trend is disturbing; this is occurring even with the most advanced crime fighting tactics.

  • Ted

    It might also reflect the impact of globalization on the working class, as seen in the decline of unions, offshoring, increased debt, reduced tax rates on wealthy and corporations, and stagnation of wages for the lower percentiles.

  • William Bedloe

    I would say that income inequality/real wage stagnation are by themselves merely symptoms. Add poor/lagging achievement in public schools by US children, particularly among blacks/hispanics (which lag white students in the US) and you have more layers to the onion. There are other factors I believe contribute to this overall condition, but I believe those discussions are more appropriate in religious or philosophical forums, and won’t discuss those here.

  • Pierce Inverarity

    it’s obviously a complicated issue, but I’d put the primary cause on socioeconomic inequality. Being at the extreme bottom of the pecking order, with little hope for advancement, has been proven to have a traumatic effect on people’s psychological and physical health. I’m talking controlled studies. Anyhow, agree to disagree.

  • derrida derider

    “This can’t be economic problems because the economy was doing okay from 2003-2007″

    Err, no – not for those at risk of needing food stamps. Overall GDP increased (though not terrifically), but the increase pretty well all went to the holders of capital (exactly what you would expect in a bubble, BTW) – not necessarily to just the very rich, but certainly to the more prosperous and secure part of the population. Bottom quartile wages went backward, and the employment/population ratio never regained the heights of the Clinton era.