The U.S. government is now spending roughly $5.6 billion per month on food assistance helping out 41,836,000 Americans. How bad is it for the lower economic strata of families in our economy? In January of 2007 we had 26,000,000 Americans on food assistance. The economic crisis has added 15,800,000 Americans onto the food assistance program now known as SNAP. These numbers are incredible and demonstrate how deep the recession has gotten. Even though on paper the recession ended in the summer of 2009 these numbers show a very different economic climate. Where did these 15 million people come from? Many have fallen off the middle class treadmill and have been sucked into the ever growing invisible class of people in the U.S.
Take a look at this chart:
I find the above disheartening because those that struggle the most financially in our economy started feeling the recession in 2000. The credit bubble did very little to help this group. What the debt bubble produced was it allowed for the masking and destruction of the middle class who actually thought they were moving forward but were merely playing house with massive mortgage debt and credit cards. The stock market has yielded no results for over a decade for most laymen investors. Why? The stock market is now a fast paced casino where insider information trumps any sound advice or connections to success in the real economy. Yet the poor in our society barely have enough for food, forget about investing in our stock market. Yet it is stunning that 1 out of 7 Americans is now on food assistance. If you break down the average costs per head, the numbers appear grim:
$5,601,600,000 (monthly cost) / 41,836,000 (Americans on food assistance) = $133 per person
I think a lot of people like to beat up on this group because they think that overall people are defrauding the system. Really? Just look at the above data. How much can you do with $133 per month? Sure you have cases in the media of fraud but we’re talking about 41 million people here. A family of three will get something like $400 per month. What about rent? Utilities? Is it any wonder that many families camp out at Wal-Mart stores overnight just so they can have their electronic debit cards refilled so they can purchase food for family members at the end of the month? It is amazing that a tiny program like SNAP with an average payout of $133 a month is literally keeping us one inch away from Great Depression like scenarios.
I think the reason so little attention is given to this group is each state issues their own version of the SNAP debit card:
This takes the stigma away from families needing to use food coupons to purchase food at the store. Also, with so many families on food assistance you would expect to see more of this but because it is hidden, many are likely to blend in with other Americans. The working and middle class are facing the brunt of this recession. Many have railed on California about it being a welfare state yet looking at the data shows us a different picture. For example, at the end of 2009 these are the number of people on SNAP per state:
As of July of 2009 California had 37 million residents while Texas had close to 25 million. In other words, even a state like Texas that has seemed to weather the economic storm a bit better than other states has a larger proportion of residents on food assistance than an economically ravaged state like California.
$133 per month per person is basically the safety net that is keeping many families from starving. It is incredible that we have gotten to this point. You would think that the media would be talking about this issue on a daily basis that 1 out of 7 Americans are on food assistance. This coincides with the fact that 17 percent of Americans are either unemployed or underemployed.
Costco as of last year recognized the shift in this consumer market and started accepting food cards:
“(WSJ) Costco Wholesale Corp., one of the country’s largest warehouse-club chains, said it will start accepting food stamps at its 420 stores nationwide, as the number of Americans receiving government assistance continues to soar.
Under pressure from politicians, Costco began accepting food stamps at six New York City stores earlier this year and was surprised to discover that this led to a rise in memberships and sales. Other warehouse-club chains began accepting food stamps within the last year.
“Given the economy and layoffs, this was a positive for our members and the right thing to do,” said Richard Galanti, chief financial officer of Costco, which is based in Issaquah, Wash.”
It is only a sign of the times. You also see dollar stores doing exceptionally well in this economy as they have found a new growing consumer market:
Given the current economic trend, these stores will have a guaranteed customer base for years to come. I’m not sure this is the kind of growth we want in our economy. It is no wonder why many of the dollar based stores have started offering a larger portion of food over the past few years.