Conditions in the general economy affect the need for food and nutrition assistance. There is a strong historical relationship between food stamp caseloads and the unemployment rate (figure 1). The relationship between the general economy and the FSP is stronger than it is between the other food assistance programs because the FSP is treated as an entitlement program for eligible households. Jobs are lost during economic downturns, and those who lose their jobs lose income. For some, the change in economic conditions, represented by a rising unemployment rate, leads to food stamp eligibility (figure 2). Those who are eligible and who apply to participate receive benefits appropriate to their income and household size. Participation in the other programs is less sensitive to the unemployment rate or other macroeconomic factors, even though household income is a factor in program eligibility. Participation tends to be constrained by program budget or other institutional circumstances.

The relationship between the unemployment rate and FSP caseload has not been constant over time. Table 1 illustrates the relationship between changes in the unemployment rate and changes in FSP caseload over different phases of the business cycle since 1974. The rate of change has increased over time. Change in program policy and administrative practice, as well as other macroeconomic factors, such as inflation and employment growth rate, also influence FSP caseload over time. Several studies have examined the relationship between the FSP caseload and the unemployment rate while taking these factors into account. Results suggest that the current period (1-year) effect of a 1-percentage-point change in the unemployment rate is about 700,000 more food stamp recipients. In the longer run, a 1-percentage-point increase in the unemployment rate leads to about 1.3 million more food stamp recipients due to lags in the caseload response to a change in the unemployment rate.

For the periods not in table 1 (1976, 1979, 1982, 1989, 1993-94), the relationship between the FSP caseload and the unemployment rate is reversed to that which is expected. These transition periods occur around the turning points of the business cycle when lags in the caseload response to a change in the unemployment rate can create the reversed relationship.

Sociodemographic factors also influence the relationship between the unemployment rate and the FSP caseload (figure 3). One study finds that a 1-percentage-point increase in the unemployment rate leads to an 11-percent increase in the number of food stamp recipients in families with multiple adults and children and with adults living separately, but only a 1-percent increase in families with single adults with children. Recent evidence, however, suggests that, while employment for single adults with children is rising, employment for others, such as the elderly and disabled, remains low. Therefore, they are less influenced by changes to the unemployment rate.

for more information, contact: Kenneth Hanson
web administration: webadmin@ers.usda.gov
page updated: January 3, 2002