How Economic Conditions Affect Participation in USDA Nutrition Assistance Programs
by Kenneth Hanson and Victor Oliveira
Economic Information Bulletin No. (EIB-100) 62 pp, September 2012
What Is the Issue?
The U.S. Department of Agriculture (USDA) administers 15
domestic nutrition assistance programs. The five largest
programs-Supplemental Nutrition Assistance Program (SNAP, formerly
the Food Stamp Program), Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC), National School Lunch Program
(NSLP), School Breakfast Program (SBP), and Child and Adult Care
Food Program (CACFP)-accounted for 96 percent of USDA's
expenditures for nutrition assistance in fiscal 2010. These
programs form a nutritional safety net for millions of children and
low-income adults, a role that is especially important when the
economy falters and many Americans lose jobs and income.
SNAP's reputation as one of the Nation's primary countercyclical
assistance programs-expanding during economic downturns and
contracting during periods of economic growth-is well established.
However, there has been little analysis of the effect of the
economy on the other programs. This is the first study to
investigate the relationship between economic conditions and
participation at the national level across USDA's five largest
nutrition assistance programs. The report also provides a detailed
description of how changes in program policies and other factors
such as demographics affected participation, augmenting or
offsetting business cycle effects.
What Did the Study Find?
The results of this study suggest that, to varying degrees,
economic conditions, as measured by the unemployment rate,
influence participation in all the major nutrition assistance
programs, not just in SNAP.
Key findings include the following:
• The increase in SNAP participation during the 2008-10 period of
economic decline (which included the recent recession) was
consistent with the increase during previous periods of economic
decline, at 2 to 3 million participants per 1-percentage-point
increase in the unemployment rate.
• Policy changes pertaining to eligibility rules, benefit levels,
outreach, and the application-certification process tended to
augment the increase in SNAP participation due to economic
conditions in each period of economic decline.
• Before being fully funded in the late 1990s, WIC participation
was rationed by the program's budgetary limits and expanded as the
budget grew. The introduction of infant formula rebates in the late
1980s lowered the cost of the WIC food package, enabling more
people to participate within the program's budget and fueling an
increase in the annual average growth in participation.
• After reaching full funding in the late 1990s, WIC caseloads
became more sensitive to economic conditions, increasing
(decreasing) by nearly 2.5 percent (200,000 participants) per
1-percentage-point increase (decrease) in the unemployment rate.
The number of births also had a strong influence on the number of
participants; for instance, during the recession of 2008-09, the
low number of births tended to counter the growth in participation
prompted by economic conditions.
• The percentage of participants receiving free and reduced-price
meals in the child nutrition programs (NSLP, SBP, and CACFP)
appears related to economic conditions, rising with the
unemployment rate during periods of economic decline.
• Total participation in the child nutrition programs has steadily
increased during periods of both economic growth and decline. These
programs serve both low- and high-income children.
• NSLP participation appears to be linked to school enrollment,
while availability of the program in schools has been a key to the
growth of SBP participation.
How Was the Study Conducted?
The study used national-level administrative data on program
participation collected by USDA's Food and Nutrition Service (FNS)
and data on unemployment rates published by the Bureau of Labor
Statistics. The study period-fiscal year 1976 to fiscal year
2010-encompassed four complete business cycles, each consisting of
a period of economic growth characterized by a falling unemployment
rate and a period of economic decline characterized by a rising
unemployment rate. For each period of growth and decline, the
authors examined the relationship between the fluctuation in
program participation and the unemployment rate. They also examined
various publications and regulations to determine how program
policy and other factors (such as demographics) may have influenced
the relationship between program participation and the unemployment