Restructuring Food Stamps for Working Families

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Contents

Restructuring Food Stamps for Working Families
Background of the Food Stamp Program
Conflicts in Combining Basic Support with Income Supplementation
Prior Studies on Utilization of Food Stamps
New Evidence on Food Stamp Participation Patterns
Food Stamp Operations and the Working Poor
Policy Options
References

Restructuring Food Stamps for Working Families

The Food Stamp Program (FSP) is the nation's most nearly universal anti-poverty initiative, providing nutrition support for a broad range of low-income households. In a typical month in 2001, 17.3 million people in 7.5 million households received food stamps. Half of these households included children. FSP outlays in fiscal year 2000 amounted to $20.4 billion, which may be compared to $14.6 billion in state and federal outlays for cash benefits and administrative costs for Temporary Assistance for Needy Families (TANF), $25.8 billion in federal Earned Income Credit (EIC) payments, and $35.0 billion in administrative costs and benefit outlays for Supplemental Security Income (SSI) payments to the poor disabled and elderly.

One out of every six American children lives in a household that receives food stamps. For families with children, the Food Stamp Program in a sense creates a bridge between TANF and the Earned Income Credit (EIC). On the one side, TANF provides the general income floor, a safety net for needy families that often lack other means of support. On the other, the EIC provides a subsidy that bolsters the income of those who have jobs but work at low wages. In contrast to TANF and the EIC, the FSP works across the board, supplementing both TANF benefits and the incomes of the working poor and near-poor while assuring access to a necessity: food. In the 38 states lacking general assistance programs for poor adults who are not elderly, not disabled, and do not have children, the FSP is the only publicly provided safety net.

Yet, with the movement of millions of families from welfare to work, renewed concern has surfaced over the ability of the Food Stamp Program to play its role in supplementing the incomes of working low-income families and helping them move out of poverty (Greenstein and Guyer, 2001; Wiseman, 2002). Participation data show declines in food stamp use outpacing declines in poverty and low incidence of food stamp us e among eligible low-income working families. The low rates at which eligible working families actually obtain food stamp benefits have limited the success of the program since its inception.

The purpose of this essay is to examine how the Food Stamp Program interacts with household circumstances and to propose new policy options to promote higher participation of eligible, low-income working families. The next section begins with an historical overview and then examines evidence from the literature on participation. The third section develops new estimates of participation, with a special focus on the relationship between food stamp use and the experience of food hardships, such as missing meals for lack of money. In section four, we present case study evidence about how the administration of the Food Stamp Program in three sites affects welfare recipients and working families who are not on other income assistance programs. We conclude in the final section with policy recommendations aimed at improving food stamp operation in the context of the program's dual safety net and income supplement roles. Of central importance are recommendations relating to improving access to benefits among working, low-income families.

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Acknowledgments

This report was prepared for the Economics Research Service, U. S. Department of Agriculture, under Grant Number 43-3AEM-9-80107. The views expressed are those of the authors and should not be attributed to the U.S. Department of Agriculture or to the Urban Institute, its trustees, or its funders. The authors thank our project officer, Robert Gibbs, and Parke Wilde for useful comments and Stephanie Riegg, Carolina Krawiec, and Tracy Roberts for excellent research assistance.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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