Why Did the Food Stamp Caseload Decline (and Rise)? Effects of Policies and the Economy

Year: 2005

Research Center: Institute for Research on Poverty, University of Wisconsin-Madison

Investigator: Danielson, Caroline, and Jacob Klerman

Institution: University of California

Project Contact:
Caroline Danielson
University of California
Office of the President
1111 Franklin Street, 11th Floor
Oakland, CA 94607-5200
Phone: 510-987-9899


Over the past 15 years, the size of the total Food Stamp Program (FSP) caseload has varied widely. The number of FSP participants rose by 47 percent in the early 1990s, peaking in 1994 at 27.9 million. The caseload dropped 39 percent between 1994 and mid-2000 to 16.9 million participants. Since then, it has again risen sharply. In July 2004, the end of the period examined in the study, the total number of FSP participants stood at 24.4 million. Three factors are of special interest in understanding this path of the caseload: the economy, cash assistance policies, and FSP policies.

During the study period, economic conditions varied widely, and the social safety net was significantly redesigned. The unemployment rate peaked in the early 1990s and declined until mid-2000. It rose through 2003 and fell once again. Major changes to State welfare programs were intended to encourage work and increase welfare exit rates. The changes culminated in passage of the Federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996, which replaced Aid to Families with Dependent Children (AFDC) with the Temporary Assistance for Needy Families (TANF) program. The changes were also aimed at retaining and even strengthening other components of the social safety net—the Earned Income Tax Credit, Medicaid, and food stamps—for parents with children who complied with TANF program requirements but who were unable to achieve self-sufficiency through their own earnings.

However, a sharp FSP caseload decline during the same period as the welfare reforms of the mid-1990s led to concern that changes to State cash assistance programs embodied in their TANF plans were also disconnecting eligible recipients from other means-tested programs. In response to such concerns, legislation, including the Farm Security and Rural Investment Act of 2002, gave States opportunities to implement policies aimed at easing the burden of certifying and recertifying for food stamp benefits on families who were leaving cash assistance or who were combining cash assistance with earnings.

Monthly semiannual administrative data that report State FSP caseloads are used in the study. The analysis estimates the effects of FSP policies, welfare policies, and the economy on total FSP caseload and on two components of it: the portion combining cash assistance and food stamps and the portion receiving only food stamps.

Results show that welfare reform had a large negative impact on total FSP caseload. Findings indicate that if no State had implemented a waiver to its AFDC program and no State had implemented TANF, the total FSP caseload decline from January 1994 to July 2000 would have been 12.5 percentage points less than the actual 39-percent decline. In other words, the caseload would have declined only two-thirds as much as it actually did. On the other hand, if no State had implemented policies aimed at reducing the stigma and burden of benefit receipt, the caseload would have increased 13.7 percentage points less than the actual 44.5-percent increase from July 2000 through the end of the study data in July 2004. Therefore, these policies improved access to the FSP.

In the case of the economy, simulations indicate that, if the economy had never improved over the course of the 1990s, total FSP caseload would have declined only 13.4 percent instead of the actual 39-percent decline from January 1994 to July 2000. Had the economy not deteriorated in the early 2000s, total FSP caseload would have increased by 33.8 percent, a somewhat smaller increase than the observed 44.5 percent.

In summary, the analysis indicates that the improving economy, combined with implementation of TANF, explains the entire FSP caseload decline in the mid-1990s, while the weakening economy and policies aimed at increasing access to the FSP explain half of the increase in the 2000s. While the economy is twice as important as TANF implementation in explaining the drop in total caseload in the 1990s, FSP policy changes aimed at increasing access to the program among eligible families are somewhat more important than the economy in explaining the rise in the early 2000s. In addition, while the study does not find consistent effects of policies in the two portions of the caseload it examines separately (those combining cash assistance and food stamps and those receiving food stamps alone), the economy played a large role in the paths of both of the caseloads over the period.