Issue: The Food Stamp Program is a means-tested entitlement program that automatically responds to changes

in the need for assistance. During economic expansions,

caseloads tend to fall as unemployment rates fall and

incomes rise. During economic downturns, the program

stabilizes the well-being of those adversely affected by

changing macroeconomic conditions such as a rise in the

unemployment rate. The importance of this relationship is

confirmed by the increases in food stamp caseloads and

outlays during the last half of 2001, when unemployment

rates were rising again. This issues brief examines the

historic link between unemployment and food stamps, to

improve understanding of the potential magnitude of

economic and policy changes on food stamp caseloads.

Background: Most households are eligible for the

Food Stamp Program if their gross monthly income is

less than 130 percent of the poverty line and they have

less than the defined asset levels. Benefit levels depend

on household income and size. As a household’s income

increases, food stamp benefits decline. The maximum

benefit for a family of four in 2002 is $452 per month

and the minimum is $10. Households make decisions

about participating in the Food Stamp Program (or any

assistance program) based on perceived benefits and costs

associated with participation. The Food Stamp Program’s

benefits are straightforward—with food stamps, families

are able to purchase more food and existing household

funds can then be used to purchase nonfood items. The

costs include the possible stigma attached to receiving

and using food stamps and the costs incurred in certifying

and recertifying a household’s eligibility for the program.

When the benefits exceed the costs, a household is more

likely to participate in the program. Accurate information

about household members’ eligibility and benefit levels is

especially important for households making this costbenefit calculation.

General economic conditions influence the number of

people receiving food stamps in three main ways. In each

way, the influence works in both directions, though we

describe them in the context of an increase in income

during an economic expansion:

(1) As household income increases, fewer households

are eligible. 

(2) As household income increases, the benefit levels

for still-eligible households decline. Income and food

stamp benefits are inversely related. When benefits are

lower, the costs of participating in the program exceed

the benefits for more households (fig. 1). 

(3) The general state of the economy influences individuals’ expectations about their prospects regarding

employment and income and will, therefore, influence

their decisions to participate in the program. An expanding economy creates expectations of increases in

income. Eligible households may be less likely to participate in the Food Stamp Program because they expect

future benefits to be less than the costs.

An economic downturn increases food stamp caseloads

because it creates reduced work opportunities, fewer

hours of available work, and unemployment. Less available work means lower household income. Lower

incomes mean that new households become eligible to

participate in the Food Stamp Program and families

already participating in the program will receive more

benefits. The economy, however, has a less direct effect

on households whose members have a limited attachment

United States

Department of

Agriculture

Economic 

Research

Service

How Unemployment Affects the Food

Stamp Program

Kenneth Hanson and Craig Gundersen

Food Assistance and Nutrition Research Report Number 26-7 September 2002

IN FOOD ASSISTANCE
How Unemployment Affects the Food Stamp Program / FANRR-26-7

2

to the labor force, such as the elderly, disabled, and

single women with young children.

For some people who lose their jobs during an economic

downturn, unemployment insurance benefits offset a

portion of the lost earnings. As a consequence, many

remain ineligible for food stamps. However, the Food

Stamp Program is particularly important for the many

workers not covered by unemployment insurance, particularly those in low-wage, low-skill jobs. 

Figure 2 illustrates the relationship between the unemployment rate and food stamp caseloads for all persons

from 1969 through 2001. During economic expansions,

the number of people receiving food stamps falls, and

during recessions (the shaded areas), the number of recipients increases. The relationship is often muted or

obscured by changes in policy, administrative practices,

and other unobserved factors. For example, although the

unemployment rate increased in 1982, the number of

recipients fell, and despite the falling unemployment rate

in 1993 and 1994, food stamp caseloads increased.

During the transition between the expansion and recession phases of the business cycle, the delayed responses

of the food stamp caseload to a change in the unemployment rate resulted in continuing increases in caseloads. 

During the recessions since 1969, the caseload change

per 1-percentage-point (unit) change in the unemployment rate increased from 1.4 million persons in 1973-75

to 2.7 million persons in 1980-81 and to 3 million

persons in 1990-91 (table 1). Over this time period,

changes in policy and administrative practices were also

affecting the caseload size, obscuring the effects of the

economy. For example, during the early part of the 1980-

81 recession, elimination of the purchase requirement

(i.e., households no longer had to pay for food stamps) in

1979 increased the caseload, while the tighter eligibility

criteria established in 1981-82 contributed to the decrease

in caseload during 1982.

Table 1—Historical patterns in unemployment rate and food stamp caseload change

Time Change in Change in Ratio of 

periods unemployment food stamp caseload change to

rate caseload unemployment rate change

Percentage points Millions of persons

Rising unemployment

and rising food stamp

caseloads:

1974-75 3.6 4.9 1.4

1980-81 1.8 4.8 2.7

1990-92 2.2 6.6 3.0

Falling unemployment

and falling food stamp

caseloads:

1977-78 -1.6 -2.5 1.6

1983-88 -4.2 -3.1 0.7

1995-2000 -2.1 -10.3 4.9

Note: The historical relationship has not been adjusted for the influence of policy or other factors.

Lowest 2nd 3rd 4th Highest

0

10

20

30

40

50

60

70

Figure 1—Food stamp participation rates among 

eligible households by income quintile

Percent

Source: Authors' calculations from the 1991 and 1992 panels of the 

Survey of Income and Program Participation (SIPP).

Income quintile
How Unemployment Affects the Food Stamp Program / FANRR-26-7

3

During the growth phase of 1983-88, the caseload fell by

only 700,000 people for each percentage-point decrease

in the unemployment rate. The total caseload reduction 

(3 million) is less than expected for a 4.2-percentagepoint fall in the unemployment rate. One possible explanation is that the Food Security Act of 1985 eased

eligibility. An additional factor is that while the overall

unemployment rate fell, there were areas of the United

States where unemployment rates increased, and, hence,

there was diversity in State food stamp caseloads (fig. 3). 

During the growth phase of 1995-2000, the caseload fell

by 5 million persons per unit change in the unemployment rate. This decline is more than expected, given past

trends. Changes in policy and administrative practices

may have increased the rate of caseload decline. The

length of this economic expansion, the longest since the

end of World War II, may have contributed as well.

The historical relationship linking change in the Food

Stamp Program caseload per one-percentage-point change

in the unemployment rate has varied over time (table 1).

Changes in policy and administrative practices have influenced this link, making it difficult to discern the true relationship between the unemployment rate and food stamp

caseload. 

Findings: Several studies have estimated the relationship

between the unemployment rate and food stamp caseloads,

while controlling for other factors such as policy changes

in the Food Stamp Program and welfare system, and variations among State economic, demographic, and political

characteristics. Controlling for these factors is especially

important to understanding the role of the economy in the

food stamp caseload decline after 1994. A robust economy

is clearly a major reason for the decline in food stamp

recipients, but the policy changes during this era also had

an effect.

Using State-level data, several Economic Research

Service studies have estimated the economy’s effect on

food stamp caseloads. State-level data allowed the

analysis to include the wide variation in States’ timing of

welfare reform and the divergent trends in macroeconomic conditions. In static models, where change in the

caseload is related to change in the unemployment rate

Figure 2—The unemployment rate and the number of food stamp recipients, 1969-2001

Source: The unemployment rates are from the Bureau of Labor Statistics and the food stamp caseloads 

are from the U.S. Department of Agriculture, Food and Nutrition Service.

Number of food stamp

recipients (millions)

Unemployment rate (percent)

Note: The vertical towers indicate recessions.

1969 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 2001

0

5

10

15

20

25

30
How Unemployment Affects the Food Stamp Program / FANRR-26-7

4

during the same annual period, researchers have found

that a 1-percentage-point increase in the unemployment

rate led to a 3- to 4-percent increase in food stamp caseloads. This translates to about 700,000 to 1 million more

food stamp recipients given the 1980 to 1998 average

caseload of 22 million, which was the time period for the

estimated results. If this same relationship held for the

fiscal year 2000 caseload of 17 million, there would be

an additional caseload of 500,000 to 730,000 per unit

increase in the unemployment rate. The static model is

limited in that it restricts the effect of the unemployment

rate to a contemporaneous effect.

Dynamic models have also been used to estimate the relationship between change in the unemployment rate and

change in the Food Stamp Program caseload. With dynamic

models, economic changes can have an effect beyond the

current period. In dynamic models, the presumption is that

a food stamp recipient this year is more likely to be a food

stamp recipient next year than someone who is not

receiving food stamps this year. The model also allows a

-80 -60 -40 -20 0 20 40 60

Figure 3—Percentage change in food stamp caseloads by State, 1984-89

Percent

Source: U.S. Department of Agriculture, Food and Nutrition Service.

AL

CT

CO

CA

AR

AZ

AK

IA

IN

IL

ID

HI

GA

MA

MI

LA

MD

ME

KY

NJ

NH

NE

MT

MO

MS

MN

DC

DE

FL

KS

NV

RI

PA

OR

OK

ND

OH

NC

NY

NM

WA

WI

VA

VT

TN

SD

SC

TX

WV

WY

UT
How Unemployment Affects the Food Stamp Program / FANRR-26-7

5

delay for a nonrecipient to enroll in the program after

becoming unemployed. With dynamic models, researchers

have found that, in the long run (3 to 4 years), a 1-

percentage-point increase leads to a 6- to 9-percent increase

in food stamp caseloads. If this same relationship held for

the fiscal year 2000 caseload of 17 million, in the long run

there would be an additional caseload of 1.0 to 1.5 million

per unit change in the unemployment rate. 

Certain types of potential food stamp households are

more affected by economic conditions than other types

(fig. 4). This observation is confirmed in a study finding

that a 1-percentage-point increase in the unemployment

rate leads to a 11-percent increase in the number of food

stamp recipients in families with multiple adults and children, and in the number of adults living separately, but

only a 1-percent increase in families with single adults

with children. Recent evidence, however, suggests that

while single adults with children are becoming more

attached to the labor force, others such as the elderly and

disabled remain less attached to the labor force. 

As the importance of the Food Stamp Program rises during

times of economic distress, a logical question for policymakers becomes: how many more people will benefit from

the Food Stamp Program in the event of a recession?

Research results suggest the current period (1-year) effect

of a 1-percentage-point change in the unemployment rate

is about 700,000 more food stamp recipients. In the longer

run, a 1-percentage-point increase in the unemployment

rate leads to about 1.3 million more food stamp recipients.

These estimates fall within the range of estimates from the

static and dynamic models. 

Information Sources:

Figlio, David N., Craig Gundersen, and James P. Ziliak.

“The Effects of the Macroeconomy and Welfare Reform

on Food Stamp Caseloads,” American Journal of

Agricultural Economics, (82):635-41, 2000. For a

summary, see:

http://www.ers.usda.gov/publications/erselsewhere/eejs0208

Gleason, Phil, Carole Trippe, Scott Cody, and Jacquie

Anderson. The Effects of Welfare Reform on the

Characteristics of the Food Stamp Population. Report

prepared by Mathematica Policy Research, Inc., for U.S.

Department of Agriculture, Economic Research Service,

July 2001.

http://www.mathematica-mpr.com/pdfs/welreffod.pdf

Gundersen, Craig, Michael LeBlanc, and Betsey Kuhn.

The Changing Food Assistance Landscape: the Food

Stamp Program in a Post-Welfare Reform Environment.

AER-773. U.S. Department of Agriculture, Economic

Research Service, March 1999. 

http://www.ers.usda.gov/publications/aer773

Jacobson, Jonathan, Nuria Rodriguez-Planas, Loren

Puffer, Emily Pas, and Laura Taylor-Kale. The

Consequences of Welfare Reform and Economic Change

for the Food Stamp Program: Illustrations from

Microsimulation. E-FAN-01-003. U.S. Department of

Agriculture, Economic Research Service, January 2001.

http://www.ers.usda.gov/publications/efan01003

Kornfeld, Bob. Explaining the Recent Decline in Food

Stamp Caseloads. E-FAN-02-008. U.S. Department of

Agriculture, Economic Research Service, March 2002.

http://www.ers.usda.gov/publications/efan02008

Figure 4—The unemployment rate and the number

of food stamp recipients, by labor force participation

category, 1989-2000

Percent

Source: Unemployment statistics are from the Bureau of Labor Statistics

and the number of food stamp recipients is from authors' calculations 

based on information from the U.S. Department of Agriculture, Food 

and Nutrition Service.

1989 91 93 95 97 99

0

1

2

3

4

5

6

7

8

9

Households with weaker labor

force attachment

(millions)

Unemployment rate

(percent)

Households with stronger

labor force attachment

(millions)

2000
How Unemployment Affects the Food Stamp Program / FANRR-26-7

6

U.S. Department of Agriculture, Food and Nutrition

Service. Characteristics of Food Stamp Households:

Fiscal Year 2000. Report prepared by Mathematica Policy

Research, Inc., October 2001.

http://www.fns.usda.gov/oane/menu/published/fsp/files/

participation/2000characteristics.pdf

U.S. Department of Agriculture, Food and Nutrition

Service. The Decline in Food Stamp Participation: A

Report to Congress, July 2001.

http://www.fns.usda.gov/oane/menu/published/fsp/files/

participation/partdecline.pdf

Wilde, Parke, Peggy Cook, Craig Gundersen, Mark Nord,

Laura Tiehen. The Decline in Food Stamp Program

Participation in the 1990’s. FANRR-7. U.S. Department

of Agriculture, Economic Research Service, June 2000. 

http://www.ers.usda.gov/publications/fanrr7

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