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Increased food-assistance spending that was part of the 2009 economic stimulus package helped increase employment at the peak of the Great Recession, especially in rural areas, a first-of-its-kind study says.
During the peak and immediate aftermath of the Great Recession, nonmetropolitan counties gained one job for every $10,000 in increased snapped redemptions, said the study, which was conducted by USDA Economic Research Service.
The economic impact in metropolitan areas was measurable but not as great. Metropolitan counties saw an increase of 0.4 jobs for every $10,000 in additional SNAP redemptions during the height of the recession, according to the study.
The American Recovery and Reinvestment Act of 2009 allotted an additional $40 billion in total SNAP benefits for low-income Americans from 2009 to 2013. The increase was enough to give each recipient an extra 13% in benefits. Part of the rationale for including increased SNAP benefits in the stimulus package was that the program would help both SNAP families and the greater economy, which would benefit from an infusion of cash-like benefits.
Previous studies have predicted that’s what happens with increased SNAP benefits. The ERS study is the first to confirm that prediction using historical economic data after the fact.
The study is also the first to look at the county-level impact of SNAP expenditures, giving economists a way to compare the economic impact in metropolitan vs. nonmetropolitan areas.
As expected, the economic impact was greater in rural areas, because the poverty rate is higher and a greater percentage of families participate in SNAP in nonmetropolitan counties.
The study controlled for other federal transfer payments, meaning the increase in employment is related to SNAP payments exclusively, not to other forms of government funding that went to individuals during the study period.
As expected, the economic impact of SNAP redemptions was less before and after the Great Recession of 2018.
The study examined three time periods – before the recession (2001-07), the recession and its immediate aftermath (2008-10), and post-recession (2011-14). Both metropolitan and nonmetropolitan counties saw statistically significant numbers of jobs created during the recession and its aftermath.
Surprisingly, while pre-recession SNAP reimbursement correlated with job-creation in nonmetro counties, in metro counties before the recession, SNAP had the opposite impact. Metro counties had a 0.2 job reduction for every $10,000 in SNAP redemptions. Researchers said that finding “is not robust” and needs further investigation.
“The main findings … — that SNAP redemptions have a positive and statistically significant impact on county-level employment, that these impacts were larger during the Great Recession than before or after it, and that the impacts were larger in nonmetro than metro counties – are robust across the models estimated,” the study stated.
The study also found that SNAP spending has a “spill over” effect. Increased SNAP reimbursements in one county were linked to job creation in adjoining counties, as well.