http://www2.hickoryrecord.com/content/2009/jun/20/experts-say-food-stamp-use-helps-stimulate-economy/By Dee Henry | Hickory Daily Record
Published: June 20, 2009
HICKORY - What is the answer for a struggling economy?
Some experts think the best way to stimulate the economy is through food assistance money, formerly called food stamps. A recent study by the N.C. Budget and Tax Center supports that theory, estimating the $1.6 billion in food assistance money distributed in North Carolina has resulted in $2.8 billion in economic activity.
"When a person spends food assistance money at a local grocery store, that is a sale the store may not have had otherwise," said John Quinterno, research associate at the center. "Then, that money gets turned over several times, generating economic activity."
Quinterno is describing what economists call the "ripple effect" — where money spent at the store helps to pay the store employees, the trucker who delivers food to the store and the farmer who grows the crops.
"Food stamps are an ideal economic stimulus tool because they are always spent locally and have a widespread ripple effect," said Louisa Warren, policy advocate for the North Carolina Justice Center, which houses the Budget and Tax Center.
"Families use food stamps at local grocery stores, and that money is passed on to employees, who spend it in other stores, and suppliers, who use it to pay their workers," she said.
While local dollar estimates may not match the center's exactly, Jo Sloan, with the Catawba County Department of Social Services, said the same theory was used in a recent presentation to the Chamber of Commerce.
"Harvard economist Martin Feldstein, who heads the National Bureau of Economic Research, recently gave his thoughts on the best way to stimulate the national economy," Sloan said. "In findings echoed by other economists and studies, he said the studies show the fastest way to infuse money into the economy is through expanding the 'food-stamp' program. That's how we began the presentation."
In an effort to increase economic demand and stimulate the economy, the American Recovery and Reinvestment Act will provide $4 billion nationally in added benefits over the next six months.
The Agriculture Department estimates every dollar in food stamps expands the economy by $1.84.
For the center's study, Quinterno said they used a more conservative $1.73 for every dollar, with a result of $2.8 billion in economic activity since the beginning of the recession.
Sloan said since the downturn began in 2000, the food assistance program has seen a sharp increase.
"We have seen a 300 percent increase in food assistance requests since the recession began in fall of 2000," she said.
A different face
In addition to that increase, the department has seen a change in the people who are requesting assistance.
"Initially, we primarily dealt with families who lived in a fragile economy," Sloan said.
She defined that group as people who were dealing with a mark against them in a job search — a high school-level education, no transportation and no real job skills.
"Now what we're seeing are people who were solid middle class or upper middle class who lost their savings, their 401K, and are desperately looking for a job."
According to recent statistics released by the Western Piedmont Workforce Development Board through the Wester Piedmont Council of Governments, more than 27,000 people are looking for employment in the Hickory-Morganton-Lenoir area.
The Greater Hickory Cooperative Christian Ministry has seen the same change in clients. Executive Director Roger Baker says the ministry has served 10,000 people over the last year.
"And there are 300 homeless people in this area, so that tells you something," Baker said.
More clients have homes, but they can't afford things like utility payments, health care and food.
The ministry offers three types of food assistance. If someone comes in and is in need of something to eat right then, "pop tops," or food ready to eat, is available.
If people qualify for food assistance through the county, they automatically qualify for the ministry's emergency food program, where they can use the organization's pantry, and TEFAP, a separate food program through Second Harvest of Metrolina.
Currently Baker said the ministry is seeing a leveling off in its food assistance program. However, he attributes that to people managing those "food dollars" well.
"People are asking for a little less than normal and I think they're managing it better," he said. "They've made lifestyle adjustments. It's a product of the economy."
More, please
With more people requesting and receiving assistance in general, and the amount of assistance per client increasing, the total amount of assistance money being distributed has increased almost threefold locally.
"Catawba County used to belong to a small group called the '$5 million club,' which included the counties who distributed $5 million in benefits," Sloan said. "Now we're looking at distributing $26 million in benefits."
According to the Budget and Tax Center, the enrollment in food assistance programs increased nationally by more than 4 million people, or about 15 percent, between December 2007 and December 2008. About nine in 10 households receiving these benefits have incomes below the poverty level.
More than 1 million North Carolinians received food assistance money as of December, a 16 percent increase since the year before.
Sloan said qualification for food assistance is determined by looking at a family's basic living expenses and income.
According to the Budget and Tax Center, a household must have a monthly income at or below 130 percent of the poverty level to qualify. For example, a family of four, in 2008, would have to make approximately $2,445 each month to receive assistance.
Benefits are determined by a sliding scale and can only be used to purchase food items.
According to the center, half of all participating households nationwide have received less than $176 in recent months.
However, that relatively small amount of money has had big results, particularly in rural areas. In Catawba County, the $29 million in assistance dollars paid out since December 2007 has resulted in an estimated $50.8 million in economic impact.
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