SNAP Judgments: Benefits That Feed the Economy

Jul 6, 2017

Welfare programs are often criticized as expensive and unnecessary, a drain on the national budget and potentially the economy. Adults who meet certain low-income criteria receive benefits such as money for food, today known as the Supplemental Nutrition Assistance Program or SNAP program, might not want to look for paid work, since they reap a benefit without effort, critics say.

Putting aside the issues of ethics and human decency, the critics may be missing key economic points. Welfare benefits have a demonstrably positive impact on the larger economy, locally and nationally, at the macro and micro levels.

In a piece for the Center for American Progress, policy analyst Sara Ayres lays out some of the big-picture implications of SNAP and other welfare benefits for the nation as a whole. A rising tide lifts all boats, and the same works for some economic theories — help lift the lower and working classes, and everyone benefits.

“A significant body of evidence supports the view that, far from creating a so-called poverty trap, the safety net actually reduces poverty, increases economic mobility, and strengthens our national economy,” she writes. “Moreover, studies have shown that many antipoverty programs, especially those that target children, offer an excellent return on investment to taxpayers.”

Welfare programs that support mothers, for example, help them better care for their children, which in turn imbues the children with more potential to excel. That’s the general take-away from a study by a handful of Northwestern University researchers, who found that education, childcare and other support for mothers helped their children do better in school, for example.

But the impacts can be more local, and more specific, when we’re talking about welfare’s larger economic impact.

People are more likely to take a chance on opening their own businesses if they have a safety net, research shows. Ensuring that creative risk-takers know they can still eat should they take a chance on their dream is one way we as a society can encourage more American bootstrapping.

“It seems that expanding the availability of food stamps increased business formation by making it less risky for entrepreneurs to strike out on their own,” notes an article from The Atlantic. “Simply knowing that they could fall back on food stamps if their venture failed was enough to make them more likely to take risks.”

It’s also helpful to remember that when benefits such as SNAP are spent, they’re spent locally. Bread, milk, cereal, burgers and juice come from a local grocer. During recessions and other times of struggle, these government-backed benefits act as an economic stimulus, former U.S. Agriculture Secretary Tom Vilsack told MSNBC: “Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs.”

Mutually beneficial programs also include farmers’ markets, where sponsorships might increase SNAP spending power — spend $5 on fresh produce, and you’ll get an extra $2 to spend. Meant to help support fresh, healthy eating, such programs also broaden a farmer’s customer base.

It’s not always easy to trace the impact of a dollar, especially when it’s the government — and tax dollars — being spent. For example, some took issue with Vilsack’s comments, with columnists attacking his assertions as unfounded, saying that someone on welfare who found full-time employment would also benefit the economy.

But tying together people, money, spending, and support often necessitates a big-picture approach. And it’s safe to say that a family subsisting near the poverty level who lost welfare support would suffer — and so would their communities.