Food stamp hike helps families cope

$210M is likely to flow through Tenn.'s economy By Bonna Johnson • THE TENNESSEAN • July 13, 2009 TRACKING THE STIMULUS Slowly cruising the aisles of her favorite grocery store, Rosa Diaz kept an eye out for specials to help her stock up on staples, like fruit juice and packaged snacks for her 2-year-old son. "That's a decent price," Diaz said as she placed a couple of large jugs of orange juice, advertised at two for $3, in her shopping cart. Ever since her food stamps increased in April — from $289 a month to $375 — the 21-year-old single mother can afford to fill up the pantry for her small family, which also includes her younger sister, and keep them fed until she gets more money the next month. "Sometimes we came to the end of the month, and we didn't have any more food," said Diaz, who stretches her monthly allotment by staying away from expensive name brands and searching out sales at the H.G. Hill store near her apartment in Madison. As part of the federal stimulus package, families on food stamps across the country got a boost in their monthly benefits of about 13.6 percent. On average, a family of four received an $80 increase per month, according to the U.S. Department of Agriculture. The stimulus-funded bump in food stamp payments is intended to not only increase the purchasing power of poor families but also help the economy grow by infusing millions more into grocery stores, which in turn pay their employees and suppliers, and trickling down to the farmers growing crops and even the truckers hauling food. In just the first three months since the increase in payments, an additional $49 million in stimulus funds has been spent in food stamps in Tennessee, according to Michelle Mowery Johnson, spokeswoman for the Tennessee Department of Human Services. Over the course of the next fiscal year, which started July 1, some $210 million in stimulus funds is expected to flow through the Tennessee economy because of the increase in food stamps, she said. Anti-hunger advocates don't expect recipients to start purchasing caviar and Perrier now that they have more money. "I think the impact is probably that it's going to help people buy more food," said Brian Zralek, executive director of Manna Inc., a Nashville anti-hunger group. For Diaz, who is five months pregnant, this means less anxiety about being able to feed her family all month long. Indeed, benefit amounts have not kept pace with the cost of groceries and needed to be increased anyway, said Richard Dobbs, policy director for food stamps at DHS. "It's really helped," Diaz said. "They needed to do something." At the same time, though, it's not going to help her buy a new car or pay her rent, she said. The worsening economy, plus a bit of bad luck, has made it increasingly difficult for the young mother to make ends meet. She had been working with her mother and sister in a cleaning business, but as the economy took a downward turn, they lost clients. After her car was wrecked recently, she's had no regular transportation to get to the clients they have left. "Things are still hard," Diaz said. A second stimulus Diaz isn't the only one feeling the limitations of President Barack Obama's $787 billion stimulus package approved in February. There is already talk of a second stimulus even as Republicans criticize the current package for not working and failing to create jobs. Enrollment in the food stamp program, which was recently renamed the Supplemental Nutrition Assistance Program, has been rising in Tennessee as layoffs mount and the Tennessee unemployment rate climbed above 10 percent in May. While the aim is to help poor families weather the recession, they likely would have gotten the same increase in October, when the federal government usually applies a cost-of-living adjustment anyway, Dobbs said. Because of the April increase, there won't be another increase this year, he said. At the same time, though, he sees the higher payments as a way to help protect the jobs of cashiers and shelf stockers. And, "the more benefit we provide to (recipients) to purchase food, that frees up more income to pay rental expenses or utility bills or medical bills," Dobbs said. Many grocers, though, have not noticed the extra injection of money into the economy and said it may take more time. "The initial thought is that they haven't seen a direct impact from the food stamp increase," said Jarron Springer, president of the Tennessee Grocers and Convenience Store Association. Christy Davis, a clerk with Johnny Howell Produce at the Nashville Farmers Market, said she's not noticed any change now that her food stamp customers have more to spend. About one-third of sales of Howell's farm-fresh produce are paid through food stamps, she said. At the Madison H.G. Hill, business is up, but not so much from higher food stamp payments, said owner Todd Reese. "More people are going to the grocery store instead of eating out," he said. Pump primer Some economists credit an increase in food stamp amounts — along with unemployment benefits — as being the most effective way to prime the economy's pump. "People who receive these benefits are very hard-pressed and will spend any financial aid they receive within a few weeks," wrote Mark Zandi, an economist with Moody's Economy.com, in a 2008 report. "These programs are also already operating, and a benefit increase can be quickly delivered to recipients." Infrastructure spending, no matter how "shovel-ready" the projects, won't help the economy so quickly, Zandi wrote in a forecast earlier this year. Critics, though, say higher food stamp payments won't help the economy grow faster and instead will expand welfare spending to unaffordable levels. "Every dollar Congress hands out from food stamps must be taxed or borrowed from someone else," said Brian Riedl, a senior federal budget analyst at the conservative Heritage Foundation, a critic of the stimulus package. "You're taking water out of one side of the pool and dumping it into another side of the pool, but you haven't raised the water level." Raising food stamp payments may be a humane policy, Riedl said, "but that doesn't mean you're growing the economy any faster." It's perfectly fair to say you don't want people to starve, Riedl said, and that's what officials should use as a line of argument instead of claiming that the increase in food stamp payments will stimulate economic growth. For Makeesha Ayodele, 30, it all comes down to feeding her two children, ages 10 and 4. At $384 a month, she usually pitched in an extra $100 of her own money to keep her family fed. When her payment rose to $440 in April, she could use some of that extra hundred bucks "to help pay part of my rent and keep the cell phone on," said Ayodele, who was back at the Nashville food stamps office last week trying to get back on the program after losing her benefits in May.