Food Stamp Usage Up 11.6%

by: Zacks Investment Research

By Dirk van Dijk

As of February, there were 39.589 million Americans on Food Stamps. That is up 11.6% from a year ago. It works out to be about one in seven citizens, or more than the combined populations of Louisiana, Connecticut, Iowa, Mississippi, Arkansas, Kansas, Utah, Nevada, New Mexico, West Virginia, Nebraska, Idaho, Hawaii, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont and Wyoming. In case you were not counting, that is 23 states. The increase over the last year is almost equal to the population of Colorado.

When people point to the increase in Federal Spending, food stamps are one of the primary causes. Even though unemployment has been falling, it is still extremely high at 8.8%. While the number of people getting unemployment benefits is down 2.3 million over the last year (as of last week’s initial claims data), we have created less than 1.3 million new jobs over the last year (as of the March payroll report).

That means that over one million people have simply run out of benefits, and have no legal income left. These people then turn to food stamps. Food stamps have been one of the fastest growing line items in the Federal Budget.

The highest percentage of people on food stamps are in Mississippi, Oregon, Tennessee, New Mexico, Michigan and Louisiana, all with over 19% of their citizens on Food Stamps. Only eight states are in the single digits on Food Stamp usage, led by Wyoming and New Jersey. New Jersey, though, had the largest percentage increase in usage over the last year, with the rolls growing by 23.1%.

Four other states -- Delaware, Nevada, Maryland and Florida -- had increases of over 20%. Every state had an increase, but four states, Arkansas, North Dakota, West Virginia and Arizona managed to keep the increase to under 5%.

It would be nice to see the need for food stamps come down. To do that, the economy needs to create more jobs, and jobs that provide a high enough income that food stamps are not needed. That would bring in higher tax revenue since people with jobs have income and thus pay income taxes, and they also spend more, and thus pay sales taxes.

It would also, however, bring down spending. The focus in Washington these days seems to be on just cutting spending, regardless of what it does to the economy or on the prospects for job creation. The same thing is happening in the state houses. Somehow the cuts are not being made in programs that benefit those who do not need help, but at those who do.

The budget recently passed in the House makes major cuts to the food stamp program, but does not touch agricultural subsidies, which mostly go to corporations and very large farm operations. Just since last summer, farm proprietors incomes have risen by 27% on the back of higher commodity prices. Those farm subsidies would seem to be a much better place to make cuts, rather than literally taking food out of the mouths of children, but poor kids don’t have a lot of clout on Capitol Hill.

Food stamps allow families to continue to buy their food at Kroger’s (NYSE:KR) and Wal-Mart (NYSE:WMT), rather than having to depend on food banks, may of which are already very strained. Over the long term they help the economy by making sure that kids have proper nutrition. Malnourished kids tend to be very poor students, and thus very unproductive workers in the future. They also tend to develop many more medical problems, which can be extremely expensive to the tax payer via Medicaid.

It is a good thing that the food stamp program is in place, but it would be an even better thing if we didn’t need it quite so much. Better job creation would be the best way to bring food stamp costs down.

There is a very interesting interactive map that shows the state-by-state data.