Business & Economy

Woolf: Despite improving economy, many Vermonters receive food stamps

Approximately 68,000 Vermonters live in households receiving food stamps, about 10.9% of the state’s population. Creative Commons photo

Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont. 

The Trump administration recently announced plans to reduce the number of people receiving food stamps by tightening up eligibility requirements. It’s not clear how many of the 39,000 households receiving Supplemental Nutritional Assistance Program benefits, as the food stamp program is now called, will be affected.   The Department of Children and Families estimated 5,200 Vermont households could lose benefits and Attorney General TJ Donovan has stated it could be as many as 26,000.

Approximately 68,000 Vermonters live in households receiving food stamps, about 10.9% of the state’s population.  That is virtually identical to the national percentage, which is somewhat puzzling. Vermont’s 11% poverty rate is well below the 13.1% U.S. rate and is one of the lowest in the nation, so it seems odd that the percentage of Vermonters receiving SNAP benefits is the same as the national average. One would think that with a lower poverty rate, fewer people would be receiving SNAP benefits.

One explanation could be that Vermont makes it easier for people to receive those benefits.  Although the eligibility requirements are set nationally, states have some flexibility in interpreting them and Vermont interprets the requirements more liberally than other states.

To qualify, a household must earn less than 130% of the federal poverty level of income, which means less than $33,500 for a family of four, in addition to other asset and employment requirements.

The second reason is that both the state social welfare agencies and Vermont’s large number of nonprofit social service organizations make a greater effort than their counterparts in other states to make sure that anyone who qualifies for SNAP benefits receives them. 

That also means that people who are very close to the income and asset limits receive a relatively low amount of monthly SNAP benefits; in other states they would not bother to apply for SNAP benefits that might only be worth $20 or $30 per month.  With lots of Vermonters getting small amounts of SNAP benefits, the statewide average is pulled down, which is why Vermont’s average benefit is so much lower than the nation.

The average Vermonter receiving SNAP benefits gets $123 per month, half the average amount nationally.  That is consistent with the theory that a lot of Vermonters receiving SNAP benefits get a very small monthly allotment, which happens when beneficiaries are close to the income limits for the program.

The number of Vermonters receiving SNAP benefits has been falling as the economy has improved.  At the height of the Great Recession in 2009, 72,000 Vermonters got SNAP benefits. Despite an improving economy — or perhaps because the improvement was so slow — by 2013 enrollment had risen to 100,541.  Nearly one in six Vermonters were receiving food assistance. 

Over the past six years that number has fallen by one-third. With an unemployment rate of just over 2% and employers leaving no stone unturned looking for workers, that’s not an unexpected decline.  What is somewhat surprising, however, is that despite record-low unemployment, there are far more Vermonters receiving SNAP benefits today than there were in the early 2000s, when the unemployment rate was higher than it is today. 

That’s also the case for the U.S., where unemployment is at a 50-year low, but the number of SNAP recipients is 30% higher than it was in the early 2000s. 

The larger number of SNAP beneficiaries is probably due more to expanded eligibility limits than to an increase in poverty.  The SNAP program is one of the federal government’s largest anti-poverty programs, costing the federal government about $70 billion per year.  It’s interesting that this anti-poverty program is run out of the U.S. Department of Agriculture, not where anyone would expect to find an anti-poverty program.  That’s because it was originally set up in 1964 for two purposes: to help poor people and to provide a boost to farmers’ incomes. 

Putting anti-poverty programs in unusual parts of the federal government is not that rare.  The Earned Income Tax Credit is also a large anti-poverty program that gives about $68 billion in wage subsidies to low income workers.  That program is run by the IRS, part of the Treasury Department. 

There is nothing wrong per se with putting anti-poverty programs in different parts of the federal bureaucracy. That’s the nature of politics.  But one problem is that every program has its own, and different, eligibility requirements and paperwork. And they can often work at cross purposes and lead to unforeseen consequences. 

To take but one example, if a poor family’s income increases as members work longer hours or get a raise, they lose some or all of a variety of federal benefits.  A low-income family trying to improve its market income can lose so much in benefits that it can face implicit marginal tax rates of more than 50%. Tax rates that high are enough to discourage low- or high-income workers from working hard and earning more. 

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Art Woolf

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