Hunger and Mutual Self-Interest

Thinking in economic terms about hunger and poverty relief is something we need to do more frequently and more comprehensively. The results could be surprising, as well as beneficial to all of us.

Consider the economics of food stamps.

A Department of Agriculture initiative, the Food Stamp program from its inception was intended to provide a safety net of protection under our poorest citizens while also extending an economic and dietary supplement to working Americans who earned up to 130% of the national poverty level ($22,945 annually for a family of 4).

Consider the example sketched out by Robert I. Lerman and Michael Wiseman in their report prepared for the Economics Research Service, U. S. Department of Agriculture (“Restructuring Food Stamps for Working Families,” page 4). As of 2001, a mother with two children working 35 hours per week at minimum wage ($5.15 per hour) and paying $400 monthly in rent would “enjoy” an after-tax income level 4 percent above the poverty line, assuming the Earned Income Tax Credit and food stamps supplemented her family’s income. By not participating in the Food Stamp program, the family income would fall to 16 percent below the federal poverty line.

Since the advent of comprehensive welfare reform in 1996, the number of Dallas County residents eligible to receive food stamps has risen, while the number of actual recipients has declined sharply.

The number of residents receiving food stamps dropped from 250,000 in 1990 to 80,000 in 2000. Between 1994 and 2000 the number of persons receiving food stamps fell by 68% in Dallas County.

A survey conducted in 1998 by a coalition of groups working to reduce poverty in Dallas reported that in 1995 there were approximately 65,000 persons in the county who were eligible, but not receiving the food supplement benefit. By 1999, that number had risen to 171,000 persons, an increase of 163 per cent! By 2001, the numbers reflected the continuing trend with 84,338 receiving food stamps out of a pool of 317,748 eligible residents or a total of 233,410 who could benefit from the program, but for some reason were not.

Public policy initiatives since 2001 have done nothing to improve the participation numbers. In fact, a number of determined efforts by the state have worked to drive the numbers even further in the wrong direction. Clearly the Food Stamp program is failing thousands of our neighbors whose lives could be enriched by participation.

What normally escapes us in such analysis is the fact that the working poor are not the only losers in our state and county’s failure to aggressively support these working families.

Our local economy loses as well. As a result, business loses, employers lose, labor loses, and government loses.

Consider the economic impact of our embarrassing performance. According to the Texas Department of Human Services, the average monthly food stamp benefit per person in Dallas County is approximately $80.00, or $960.00 annually, a real benefit to working people who support the service and construction industries locally.

What is lost to our entire community in the process due to our failure to enroll all of those eligible is startling. By enrolling all those who qualify for the program and assuming an average benefit of $80 per month to each participant, our county would benefit from the annual injection of an additional $224,073,600 in purchasing power to the local economy.

Assume for the sake of argument that the benefit, if extended to every eligible resident of the county, would decline to an average of $50 per month. Using this more conservative metric, the loss to the county’s economy would be $140,046,000 annually.

Since, with only a few exceptions, food products are not subject to sales tax, the benefit to our sagging tax base would be indirect, but the benefit would remain real. Grocers, those who work in the retail food industry and practically every other sector of the local economy would benefit from the participation of working families in a program designed to undergird those who work but who do not earn enough to make a life for themselves and their families.

The simple fact is Dallas County and the State of Texas leave hundreds of millions of dollars of federal funds on the table annually due to poor performance in delivering a vital economic benefit to low-income, working residents that in turn benefits us all. The federal government funds 100% of the Food Stamp benefit, 50% of the associated administrative costs and 50% of any investigative expenses incurred. Our state government picks up the other half of both administrative and investigative costs—a small price to pay for such huge economic impact.

The dollars lost to our local economy are dollars we sent to Washington—our dollars. Bringing these funds back into circulation in Dallas County makes good sense both economically and from a public policy standpoint.

Since the early 1980s, our economy has depended on “trickle down” policies to stimulate growth. Maybe we need to more seriously consider the impact of “bubble up” strategies to enhance sustained economic opportunity for everyone.

Whether we realize it our not, we are all bound together in terms of mutual self-interest. We should act together today to insure that every resident of our county eligible to receive food stamps does so. The benefit will touch us all.