Tuesday, February 13, 2018

Changes to SNAP program may have impact on rural economies

By now, most of you are probably familiar with President Donald Trump's proposal to at least partially replace the SNAP program with a food delivery service that OMB Director Mick Mulvaney has compared to "Blue Apron." There have already been many criticisms of this proposal and the fact that it will take away the right of SNAP recipients to choose their own meals and subject them to eating whatever food the government sees fit to provide them. After all, Mulvaney defended the proposal by saying that one of its benefits is that the government will be able to negotiate prices on the wholesale market. What Trump however is proposing is not an entirely new program. The federal government already delivers pre-boxed food to families on tribal reservations all over the country. Consider that the federal government has not conducted a nationally representative study of that program since 1989, a fact that is quite troubling.

One of the most overlooked aspects of this proposal is the impact that it will have on low-income economies, particularly in isolated rural communities. With the federal government at least partially assuming responsibility for delivering food to SNAP recipients, money will be lost from local economies. As I covered in a previous post, SNAP has a measurable economic impact. A SNAP recipient is likely going to spend their dollars in local stores, which employ local people. Even those who spend their dollars at big box retailers are still contributing to keeping an employer in the local community, which helps to keep people employed.

According to the Center on Budgeting and Policy Priorities, over 80 percent of SNAP authorized retailers are small businesses. For many of these small businesses, revenue generated from sales to SNAP recipients may be quite significant. In fact, we already have examples of towns whose economies have been significantly boosted by revenue generated from SNAP. According to a study published by the United States Department of Agriculture, each $5 of SNAP generated approximately $9 of community spending. After all, when a person buys something at a store, their dollars continue to work its way through the economy.  If you want a more detailed explanation, feel free to visit this link.

By fundamentally changing a program that generates positive economic outcomes for impoverished communities, the Trump Administration is setting many communities up for failure. The impact of this proposal goes beyond the people who are receiving SNAP. Consider the economic impacts of the SNAP program and how it helps local business owners employ people in the community. If SNAP is cut and fewer dollars flow into a business then the business owner may have to lay people off or even close his business. The quality of life then also goes down for people in the surrounding community, especially in rural communities. Many rural communities are not exactly awash with options so losing a neighborhood grocery store could result in substantially longer drives to do simple things like grocery shopping, which can represent an additional hurdle for low-income people. The lack of a grocery store in the community may also affect their ability to attract new businesses, which often want access to basic amenities. Further, if a retailer is thinking of expanding into a community and sees examples of prior failures, they may be more reluctant to open up a location there. The end result of all of this is a weaker rural economy and a worsening of the rural:urban gap.

As you can see, changing SNAP is akin to knocking down a domino, it starts a chain reaction that can have a potentially disastrous effect on a local economy. It is my hope that President Trump and Director Mulvaney reconsider this project but if they do not, I hope that Congress decides to not pursue it.

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