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How do work requirement waivers help SNAP respond to a recession?

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Introduction

In principle, the Supplemental Nutrition Assistance Program (SNAP; formerly The Food Stamp Program) is designed to expand during economic downturns. Work requirements embedded in the program can impede this expansion if SNAP participants cannot find work or newly unemployed individuals can only stay on the program for a short time. In practice, ongoing policy responses at the state and federal levels, in combination with standing rules to waive work requirements, ensured that SNAP functioned both as a safety net and a fiscal stabilizer during the Great Recession. Because many workers were unemployed for so long and the Great Recession was so deep, maintaining SNAP eligibility and increasing program take-up were critical both to individuals impacted by the recession and to economic stimulus policy.

SNAP is a nearly universal means-tested transfer program in the United States that offers nutrition assistance to low-income families and also provides economic stimulus to communities. A household is only eligible for SNAP if it has a gross income below 130 percent of the federal poverty level or a net income below the poverty line. Consequently, eligibility expands when unemployment rates rise and household incomes fall. SNAP eligibility also expands during economic downturns when states produce evidence that an area has a lack of sufficient jobs; in these places, so-called able-bodied adults without dependents (ABAWDs) do not have to meet work requirements as a condition for SNAP program participation.

Since 1996, certain non-disabled SNAP participants ages 18–49 without dependent children are limited to 3 months of benefits out of 36 months if they do not work, participate in workfare, or take part in an employment and training program for at least 20 hours per week. States are not required to provide these participants with slots in training programs and states have a finite number of good cause exemptions that can apply to individuals. For many participants, this provision functions as a time limit for SNAP eligibility.

These time limits inhibit SNAP’s capacity to expand during economic downturns and to provide resources to purchase food to otherwise eligible households, limiting SNAP’s effectiveness both as an automatic stabilizer and as a safety net. But, the law provides a remedy. Since 1996, and affirmed in each subsequent Farm Bill reauthorization, states and areas within a state are eligible for waivers from work requirements when there is evidence of a lack of sufficient jobs. The intent of a work requirement waiver is to ensure that in times when it is difficult to find work, ABAWDs are not penalized for not working. Waivers also make SNAP a more-effective automatic stabilizer: times when jobs are scarce are precisely the times when fiscal stimulus is most potent and necessary.

Waiving time limits during recessions allows otherwise eligible households to participate in the program when work is hard to come by. This supports the tendency of SNAP caseloads to increase with unemployment (Ganong and Liebman 2018). Poverty and economic hardship typically increase in recessions and decrease in economic expansions such that households with few resources are especially affected by the business cycle. Among poor households, the effect of the Great Recession was particularly severe. The unemployment rate rose notably more for lower education workers, tripling from a prerecession low of 5.8 percent in October 2006 to 15.8 percent in February 2010 for individuals with less than a high school degree. This is a typical feature of recessions: less-educated workers face larger employment losses when the economy contracts (Aaronson, Daly, Wascher, and Wilcox 2019). Additionally, it took longer for the unemployed to find jobs; the average duration of unemployment increased from a prerecession low of 17 weeks in 2006 to 39 weeks in 2011.

Waiving time limits improves the capacity for SNAP to act as an automatic stabilizer and to target fiscal stimulus dollars that flow through the economy. SNAP, Medicaid, and unemployment insurance provide the majority of automatic spending fiscal stabilization during economic downturns (Russek and Kowalewski 2015). Moreover, SNAP’s responsiveness to downturns has increased over time (Bitler, Hoynes, Jencks, and Meyer 2010). Research shows because SNAP benefits are spent quickly, increases in benefits in response to an economic downturn serve as effective fiscal stimulus to local areas (Keith-Jennings and Rosenbaum 2015; Blinder and Zandi 2015).

Over the course of the Great Recession, SNAP expanded to provide more benefits to eligible and newly eligible participants, including ABAWDs. To buttress the joint goals of providing resources to households and fiscal stimulus to the economy, states, Congress, and both the Bush and Obama Administrations supported the expansion of SNAP work requirement waivers for eligible places during the Great Recession. These actions were necessary for macroeconomic stabilization and because the existing rules for waiver eligibility were not sufficiently responsive to economic circumstances.

In this economic analysis, we look at how evidence for lack of sufficient jobs was used to increase and extend SNAP waiver eligibility, both in standing regulation and through policy action taken over the course of the Great Recession and subsequent recovery. We find that different triggers were more effective at improving SNAP’s capacity to function as an automatic stabilizer at various points in the business cycle. Our analysis shows that standing regulations were the most potent trigger during the Great Recession’s onset but were too slow to provide the degree of coverage that policymakers wanted. It was not until the Bush Administration clarified how work requirement waiver eligibility would be tied to Emergency Unemployment Compensation (EUC) in January 2009 that coverage met policy goals.

This analysis is relevant in a current policy context. In a Notice of Proposed Rulemaking, the comment period for which closed on April 10, the U.S. Department of Agriculture (USDA) proposed modifying the economic conditions under which states could apply for waivers from work requirements. The USDA’s stated goal is to limit waiver eligibility, arguing that at a time of low national unemployment, “nearly half of ABAWDs live in areas that are covered by waivers despite a strong economy” (981). In the Regulatory Impact Analysis that supports the rule, the USDA describes how its proposed changes to qualified geographies and admissible lack of sufficient jobs evidence would limit waiver eligibility in 2018. We find that the USDA’s proposed rule would respond more slowly to a recession than current rules, would curb a state’s ability to apply for work requirement waivers when its economy is weak or relatively weak compared to the overall national economy, and would limit access to SNAP during a sluggish recovery.

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