Free Markets, Free People
Secretary of Agriculture Tom Vilsack is excited. He’s bullish on jobs. The reason is because the Administration has a fantastic job creation program already in place: Food Stamps. You see, 1 in 7 Americans are now on food stamps. And this triumph of the American economy means more jobs for everyone. Having 14% of Americans receiving food stamps, you see, is an Administration economic success story!
Well, obviously, it’s putting people to work. Which is why we’re going to have some interesting things in the course of the forum this morning. Later this morning, we’re going have a press conference with Secretary Mavis and Secretary Chu to announce something that’s never happened in this country — something that we think is exciting in terms of job growth. I should point out, when you talk about the SNAP program or the foot stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.
Here’s the video of Sec. Vilsack’s exciting statement:
Why, I now wish I was on food stamps. Then every dollar I spent would add $1.84 to the economy. Unlike now.
I mean, sure if I was some sort of racist doubter, I might wonder why, as food stamp use has increased over the past couple of years, GDP growth has declined or been very anemic. I might wonder why, if I was cynical and racist, huge increases in unemployment and millions added to the food stamp rolls were formerly a sign of economic failure, not a jobs program to be touted.
But I’ve learned so much in the past day! I’ve learned that increasingly large rolls of unemployment recipients, and an increasingly large population of food stamp recipients grow the economy and create jobs. I’ve learned that these are signs of success rather than failure. I’ve learned that if every American was on Food Stamps, we’d grow the economy by 84%. I’ve learned we have always been at war with Eastasia.
Learning is fun.
I now hate all of you who use your un-American paychecks to by food with your un-American earnings, instead of helping the economy out by getting food stamps. Now I know you hate America. And freedom.
By the way, I’ve started picking up these odd radio signals from somewhere in the vicinity of Fomalhaut B. I just thought somebody should know about that…Maybe give Krugman a call.
You may recall that I questioned the efficacy of Paul Rosenberg, et al.’s argument that increasing food stamp benefits would directly lead to an increase of 9 to 10 million more people being employed:
Without arguing the statistical or modeling specifics behind the chart, there is one glaring item that reveals how much magical thinking went into its creation. By far the most “stimulating” actions set forth are “Temporary Increase in Food Stamps”(calculated to create 9,803,333 jobs), “Extending Unemployment Insurance” (9,236,667 jobs), and “Increased infrastructure Spending” (9,010,000 jobs). The closest tax-cutting measure, according to this analysis, in job creation is a “Payroll Tax Holiday” which is estimated to create 7,253,333 jobs. Do you see the problem?
How, exactly, do food stamps and unemployment benefits create jobs? Arguably, spending on infrastructure could create construction jobs on a temporary basis, although that hasn’t proven to be the case with the stimulus bill that was passed. But there is simply no logic to the idea that providing government benefits to the poor and unemployed will serve to create jobs, much less 9 to 10 million of them. That’s just magical thinking.
Whatever the virtues of income support, and even if that support will be quickly spent in the economy, there is no justification for concluding that it will expand the economy. At best, it can stabilize a downturn by maintaining some level of consumer spending. But that does not expand the economy in any way, shape or form, and it certainly doesn’t create jobs [at] an unprecedented level as suggested by Rosenberg.
As it turns out, we have plenty of empirical evidence to show that, in fact, increasing food stamp aid does nothing to increase employment. Indeed, for the past decade, the US has dramatically increased the number of participants who receive food stamps to the point that 1 in every 8 Americans now partakes in the program:
States eased limits on people with cars and required fewer office visits from people with jobs. The federal government now gives bonuses to states that enroll the most eligible people.
A self-reinforcing cycle kicked in: outreach attracted more workers, and workers built support for outreach. In a given month, nearly 90 percent of food stamp recipients still have incomes below the federal poverty line, according to the Department of Agriculture. But among families with children, the share working rose to 47 percent in 2008, from 26 percent in the mid-1990s, and the share getting cash welfare fell by two-thirds.
Whether this is a good policy or not is neither here nor there. Instead, what should be glaringly evident is that there is no correlation between food stamp distribution and job creation. Over the past decade, as the number of people using food stamps rose from around 17 million to almost 35 million, the economy has both created and shed millions of jobs. For example, since December 2007, when the recession officially began, the economy lost 8.4 million jobs according to the Labor Department. Yet in that same time, according to the chart above, around 7 million more people received food stamps (rising from about 27 million to 34 million). If the “food stamps = job creation” were correct, how did we lose all of those jobs?
The inescapable conclusion is that food stamps do not create jobs, and at best only serve to keep some minimal level of economic activity going during down times.