How Can Expanding Food Stamps/SNAP Help the Economy?

The idea behind the stimulus plan is simple -- people who get extra money will spend it; the increased spending will bolster the economy. As part of the stimulus, the federal government is spending $20 billion to expand the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, an increase of about 13 percent.

This funding increases SNAP benefits for all families. For example, a four-person household will receive an $80 increase in SNAP benefits. This comes at a time when enrollment is increasing nationwide. Just in Pennsylvania, the amount of people receiving food stamps has risen 11.6% in one year (NPR has a map showing food stamp enrollment state by state). According to the Self-Sufficiency Standard, a Pennsylvania household with one adult and two children should spend just under $500 a month on food.

Increased SNAP funding leads to spending beyond the $20 billion expansion. The injection of funds leads to families spending more money on food, which creates a multiplier effect by causing a demand for more grocery workers, more people to transport food, and more people to grow or make food. Additionally, it is estimated that every $5 in new SNAP benefits will generate $9.20 in total economic activity thus “multiplying” the effect of the federal funds. Also, SNAP dollars are injected to the economy shortly after they are issued: 80% of all benefits are redeemed within two weeks of receipt, and 97% are spent within a month.

This influx of money could then have a double bottom line effect – healthier individuals due to a healthier diet and higher employment for those working with food.


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