Business

Banker Says Food Stamps Work Requirements Will Hurt Sales

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Any drop in food stamp subsidies because of work requirements for welfare will lead to lower sales for some companies, according to some financial analysts.

“In 2009, the federal stimulus bill allowed states to waive the work requirement, which limited out-of-work adults to three months of SNAP benefits before they must find a job, in areas with high unemployment,”Paul Trussell, a research analyst at Deutsche Bank, told his clients Thursday, according to Business Insider.

More than 43 million people are still on food stamps, but that number is dropping as states reinstate the work requirements. (RELATED: 7 More States Are Ready To Cut Special Post-Recession Food Stamp Program)

Trussell’s concern is the effect the drop in food stamps enrollment will have on businesses like Dollar Tree and Walmart, which cater to lower income families. Sales at Dollar General and Dollar Tree grew this year, but not as much as expected, partly because fewer people are using food stamps at the stores, CEO Todd Vasos said in the company’s earnings report this summer. (RELATED: Dollar Stores Profits Dropping Because Fewer People Are On Food Stamps)

The Supplemental Nutritional Assistance Program (SNAP) work requirement, part of the 1996 welfare reform law, mandates that individuals without dependents and who are considered able-bodied must either prove they are working or in a training program at least 20 hours a week, or lose food stamps after three months.

Food stamp use declined 5.7 percent between June, 2015, and June, 2016, which is the “biggest [year-over-year] decline in persons and households participating in SNAP in the program’s history,” Trussell notes.

Food stamp enrollment peaked in 2013, and has dropped over the past two years. The program is still twice as large as it was before the recession. Nearly 46 million people were on food stamps in 2015, compared to just over 28 million people in 2008.

The program costs taxpayers more per recipient than before the recession. The federal program paid $69.6 billion in benefits to last year, double the $34.6 billion paid in 2008.

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