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Food Stamps

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For better or for worse, food stamps don’t hold onto their value the way things like gold, oil and real estate do. Those three things contain a certain amount of value that rises and falls in accordance to what’s happening in the economy, but still have purchasing power throughout the decades. Food stamps, on the other hand, are like paper dollars: their value continually decreases as the years pass and inflation rises. Even in a short period of time like a decade, the purchasing power of food stamps has gone down, so let’s take a look why.

Food Costs and Food Stamps in 2002

The American Coalition for Ethanol writes that the average groceries cost in January of 2002 was $59 per household per week, or $3,086 for the year. It only took six years for that figure to increase by 20%, with the average grocery cost in May of 2008 $72 a week, or $3,743.

The Henry J. Kaiser Family Foundation reports that in 2002, the average amount of food stamps received was $79.67 per person. Hawaii was the highest at $120.28 a month, while Wisconsin was the lowest at $62.69. Either way, the purchasing power of food stamps was fairly close to the cost of groceries, meaning that food stamps went quite far.

Food Costs and Food Stamps in 2012

Fast forward a decade, and the picture is decidedly bleaker. The USDA reports that in 2012, a household’s weekly grocery costs could be anywhere from $126.50 (thrifty plan with two children under the age of six) to $287.20 (liberal plan, with the children between the ages of 6 to 11). It’s an increase of anywhere from 100-300%, which is huge.

Food stamps, on the other hand, have not kept pace at all. The average amount of food stamps doled out in 2012 was $133.42, marking an increase of roughly 63%. Even if we take the lowest weekly grocery budget of $82.40 — for a family of two adults aged 51-70, existing on a “thrifty plan” — the gulf between food costs and food stamps is still quite wide.

How Inflation Works

Inflation is such an inherently complex topic of economics, entire college programs are devoted to understanding it, but we’re going to keep it as simple as possible. Inflation is when you have to pay more for the same amount, or receive less by paying the same dollar figure. For example, let’s say a movie today is about $10 and a generation ago it was $1. With minimum wage today set at $7.25/hour and $3.35/hour in 1981, that means you would have only had to have worked about 20 minutes to see a movie back then, and about an hour and a half today.

Food stamps has gone on the same tangent: food prices have gone up (e.g. the movie ticket price), but the amount of food stamps doled out hasn’t matched it (e.g. the minimum wage).

In particular, three years in the 10-year period (2004, 2007, 2008) saw big increases in food-price inflation, which caused the purchasing power of food stamps to fall even more. These jumps tend to balance out a bit, but as we can see from the above numbers, they don’t balance out completely and equally — there’s still a big gap between how much food costs and how much food stamps can buy.

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