USDA: SNAP Benefits Boost Rural Economies, Save Jobs
More than just providing rural families with food during financially tough times, Supplemental Nutrition Assistance Program funds save rural jobs and boost rural economies, a new study from the U.S. Department of Agriculture’s Economic Research Service found.
And those benefits help rural economies almost three times as much as they help urban economies, the study said.
The “Impact of USDA’s Supplemental Nutrition Assistance Program (SNAP) on Rural and Urban Economies in the Aftermath of the Great Recession” looked at household expenditures of SNAP benefits between 2009 and 2014. Then, using simulation modeling, researchers determined the impact those benefits had on industry outputs, household income, and employment in both rural and urban economies.
SNAP is the largest anti-hunger program in the United States and provides nutrition assistance payments to low-income Americans for food purchases. Prior to the Great Recession, SNAP benefits totaled $34.7 billion. But after the recession, SNAP benefits, as part of the American Recovery and Reinvestment Act of 2009, were increased to an average of $71 billion.
The SNAP benefits can only be spent on food-at-home items – so farm produce and processed foods. Researchers said that providing low-income residents with food assistance freed up families’ grocery money for other purposes. For every dollar of SNAP benefits, researchers said, there was a dual benefit – about a dollar of food purchasing, plus spending on other goods and services with money freed up from the family food budget. Those extra dollars amounted to an estimated $44.3 billion in nonfood purchases.
When you add the food purchases and non-food purchases made because of SNAP funds, researchers estimate SNAP benefits created a $48.8 billion increase in annual spending by rural households, which sustained nearly 300,000 rural jobs.
Researchers said the role of farm and food processing in rural areas is the main factor in SNAP benefits having such a large impact on rural economies. Farm and food processing accounts for about 14.2% of total rural economic output, the study said.
Without the SNAP benefits, rural farm and food processing businesses would have fallen even further behind during the aftermath of the Great Recession.
“Rural farm and food processing output would have fallen by 2.5% and 2.7%, respectively,” the study found. “Employment in these regions’ farm and food processing sectors would have also fallen in similar proportions during this six-year period.”
Kathleen Ralston, one of the study’s authors, said the increased economic demand created by more food purchases and extra money to buy other non-food items created jobs.
“It is also worth noting that the rural economy benefits from SNAP benefits received by urban residents, because of rural jobs supported by demand for food and other goods,” Ralston said.
Urban SNAP spending accounts for an estimated $30 billion in economic output by rural industries each year.
The impact SNAP benefits have on rural economies is more than twice as great as the impact it has on urban economies, the research found.
SNAP benefits increased rural employment by 1.18%, compared to 0.5% in urban economies. Rural output increased by 1.25%, compared to 0.53% in urban economies.
“As a safety net for low-income households, SNAP alleviates food insecurity by increasing household expenditures on food items,” the study found. “In addition, SNAP serves as an automatic stabilizer by increasing program outlays during economic downturns, as more households become eligible for program benefits due to unemployment, involuntary underemployment, or loss of business income. As one type of fiscal stimulus, household SNAP expenditures increase aggregate demand and help offset the contractionary forces induced by a recession.”
While the research looked at food assistance benefits, Ralston said, there wasn’t any way to draw conclusions about the economic benefits of other types of assistance, like stimulus funds provided during the Covid-19 pandemic.
“Further research is needed to understand differences in rural and urban impacts of CARES and other Covic-19 legislation, since stimulus payments other than SNAP may not have the same impact on food demand,” she said.