New SNAP rule change just made it harder to combat future recessions

Harsh economic times affecting household budgets

Today, the U.S. Department of Agriculture (USDA) released a final rule on work requirement waivers to the Supplemental Nutrition Assistance Program (SNAP; formerly the Food Stamp Program). The release of the rule finalizes the USDA’s efforts to limit eligibility for SNAP work requirements by modifying the economic conditions under which states could apply for waivers from work requirements.

SNAP is designed to expand during economic downturns, and in doing so, it offers nutrition assistance to low-income families and also provides economic stimulus to communities and the economy as a whole. Accordingly, the USDA’s final rule has greatly weakened a crucial part of the safety net for vulnerable populations and one of the most effective recession-fighting tools in the fiscal policy toolkit.

Work requirements are imposed on those who are otherwise eligible for SNAP but who are between the ages of 18 and 49, not disabled, and do not have dependents (“able-bodied without dependents” [ABAWD]). ABAWD work requirements inhibit SNAP from expanding rapidly during economic downturns as it becomes more difficult to find a job and satisfy the work requirement. This constraint makes SNAP a less-effective automatic stabilizer.

The law provides for a safety valve—work requirement waivers—that exempts places from time limits on benefit receipt where there is evidence of a lack of sufficient jobs. States are permitted to apply to the USDA for waivers to the time limit provisions for the entire state as well as sub-state geographic areas if their economic conditions meet certain standards.

In their final rule issued today, the USDA:

  • has removed several standards for evidence of a lack of sufficient jobs from the core criteria for meeting a work requirement waiver. These criteria include when an area has a recent three-month average unemployment rate over 10 percent, has a historical seasonal unemployment rate over 10 percent, is designated as a Labor Surplus Area, qualifies for Extended Benefits to Unemployment Insurance (EB), has a low and declining employment-to-population ratio, has a lack of jobs in declining occupations or industries, or is described in an academic study or other publication as an area where there is a lack of jobs;
  • has amended the geographic units that can qualify for a waiver, including that counties are only eligible for a waiver if part of a Labor Market Area (LMA) that qualifies, and the time period for which data can be used;
  • has implemented a 6 percent floor on the specific standard that a place that has a 24-month average unemployment rate that is 20 percent above the national average for the same period—meaning that no area with an unemployment rate below 6 percent is eligible;
  • and, has maintained that a place that has a recent twelve-month average unemployment rate over 10 percent can qualify for a waiver.

In prior work, The Hamilton Project has modeled how the USDA’s proposed changes would have impacted SNAP’s capacity to respond to changing economic conditions during the Great Recession in our economic analysis “How Do Work Requirement Waivers Help SNAP Respond to a Recession?” We also participated in the USDA’s notice and comment process for the SNAP work requirements rule. The chief concern we noted was that the proposed changes meant that fewer counties would have been eligible for a waiver throughout the Great Recession and during the period of high unemployment following the recession, thereby weakening SNAP’s crucial role as an automatic stabilizer and a safety net to vulnerable populations.

Today we provide new evidence for how the USDA’s final rule would have worked had it been in place during the Great Recession. The final rule will in fact be worse than the proposed rule on these dimensions, and if it had been in place, would have severely limited work requirement waivers during the entirety of the Great Recession and throughout the recovery.

Figure 1 models eligibility for work requirement waivers from 2007 to the present. We do not model changes to eligibility among ad hoc sub-state geographic areas nor to the newly restricted time period over which core criteria are allowed to draw upon. The figure models the following scenarios:

  • Existing Eligibility (purple): The purple line shows the existing set of eligibility standards as well as policy changes made by USDA and Congress over the course of the Great Recession to increase waiver eligibility, including 1) a 3-month and a 12-month average unemployment rate of 10 percent, 2) a 24-month average unemployment rate of rate 20 percent above the national average for the same period, 3) qualifying for unemployment insurance EB, 4) qualifying for Emergency Unemployment Compensation (EUC), and 5) qualifying under the American Recovery and Reinvestment Act (ARRA).
  • Proposed Eligibility (green): The green line models the share of counties that would have been eligible for a work requirement waiver from 2007 to 2017 had the original proposed rule been in place with the following criteria: 1) a 12-month average unemployment rate of 10 percent, 2) a 24-month average unemployment rate 20 percent above the national average for the same period with a 6 percent unemployment rate floor, and 3) qualifying for EB.
  • Eligibility based on 6 percent threshold, county or LMA (teal): The teal line models the share of counties that would have been eligible for a work requirement waiver from 2007 to 2017 for counties or counties in qualifying LMAs with the following criteria: 1) a 12-month average unemployment rate of 10 percent, and 2) a 24-month average unemployment rate 20 percent above the national average for the same period with a 6 percent unemployment rate floor. The crucial difference between the teal line and the proposed rule is that qualifying for EB no longer makes an area eligible for a work requirement waiver.
  • Final Rule (orange): The orange line models the share of counties in eligible LMAs that would have qualified for a work requirement waiver from 2007 to 2017 had the final rule been in place with the following criteria: 1) a 12-month average unemployment rate of 10 percent, and 2) a 24-month average unemployment rate 20 percent above the national average for the same period with a 6 percent unemployment rate floor. The crucial differences between proposed rule and the final rule are twofold: first, qualifying for EB no longer makes an area eligible for a work requirement waiver; second, a county can only qualify for a waiver if it is part of an LMA that qualifies for a waiver.

Counties Eligible for ABAWD Work Requirement Waiver Under Various Scenarios

The final rule has eliminated or modified each of the most effective core criteria for work requirement waivers during the Great Recession. The 20 percent rule without an unemployment rate floor was the most effective of standing rules at providing waiver eligibility at the start of the Great Recession. Later on, in the absence of administration and Congressional action, EB and eligibility among counties with unemployment rates above 10 percent would have provided the most coverage as unemployment rates were still elevated. While we cannot fully model the ad hoc contiguous geographic units that states previously had the prerogative to group for a waiver, removing the eligibility of individual counties to apply for a waiver additionally would have reduced coverage throughout the time period in question.

In a recession, the national economy deteriorates and unemployment rates rise nearly everywhere. Despite a deeply worsening economic situation, even states with high unemployment rates may not qualify for a waiver under the final rule if their unemployment rate is not 20 percent higher than the national rate. Further, at the beginning of a recession, the economic situation will not have been bad for long enough to trigger eligibility based on an annual average. Removing waiver eligibility based on unemployment insurance EB and putting a 6 percent floor on the 20 percent rule means that many places would not have been eligible for work requirement waivers not only at the start of the Great Recession, but at the depths of the Great Recession.

As the orange line in figure 1 shows, even at the worst period in the aftermath of the Great Recession, roughly 40 percent of counties would have been eligible for waivers based on the final rule. Even worse, there would have been no expansion of eligibility for waivers during the entire Great Recession—only 25 percent of counties would have been eligible throughout. This would have limited the extent to which SNAP played its crucial role as an automatic stabilizer in the Great Recession and would have likely had a serious impact on food security.

The final SNAP work requirement rule limits the flexibility of states to use waivers in response to indicators of an economic weakness. The final rule would have performed worse during the Great Recession than what the combination of existing rules, steps taken by the Bush Administration, and Congressional action achieved. Critically, following the notice and comment process, the final rule will be worse than what was proposed in its draft earlier this year.

We reemphasize that no standing rules provided coverage of the scale and speed associated with Congressional and Bush Administration action taken during the Great Recession to waive work requirements. To the extent that there is a glaring problem with existing work requirement waiver criteria, it is that they are insufficiently responsive at the onset of a recession. In a Hamilton Project policy proposal, Diane Schanzenbach and Hilary Hoynes recommend tying work requirement waivers to the Sahm Rule to solve this problem; work requirements would be waived when the three-month moving average of the unemployment rate is 0.5 percentage points above its prior 12-month minimum. The final rule materially weakens SNAP’s capacity to act as an automatic stabilizer during recessions, at a time when steps should be taken to make the country “Recession Ready.”

Update: This post was updated on December 11, 2019 to reflect the additional restriction on waiver eligibility that counties can only qualify for a waiver based on the unemployment rate of their associated LMA. Each model additionally accounts for those New England counties which are part of more than one LMA to be considered eligible if they are a part of at least one eligible LMA.