A perfect storm is hitting low-income families. During the pandemic, Congress passed an aid package that increased benefits under the Supplemental Nutrition Assistance Program (SNAP), which is commonly referred to as “food stamps.” These temporary additional benefits expired in 2023. Coupled with the substantial inflation and rising food prices over the last two years, low-income households are scrambling to find a way to make their smaller food budgets stretch farther. In practice, this means finding cheaper food alternatives and foods with a longer shelf-life to reduce waste.
To be sure, food manufacturers and grocers are happy to oblige. Low-income households, and SNAP recipients represent a substantial portion of revenues for many companies. These companies have seen their revenues plummet in the last year. To bring these customers back, many companies are pivoting toward lower-cost alternatives to meet market demand. For example, recognizing many people are being priced out of fast-food restaurants, Conagra is introducing a new line of Banquet Chicken Patties (priced at 6 for $6.99) as a substitute for fast-food chicken sandwiches. Other companies are beginning to produce larger, “value-sized” versions of their products (e.g. chips, sodas, etc.) to sell at a lower per-unit price. Other companies are partnering with grocers to offer sales, like buy-one-get-one-free, on non-perishable items to get people to stock up. While some companies have been able to meet demand, others have not been as nimble. Dollar Tree and Family Dollar, which serve low- to middle-income households, announced they will be closing 1000 stores nationwide.
Discussion Questions:
- In terms of utility maximization, which form of assistance is likely to have a greater impact on a low-income household: $200 in cash that can be spent on anything, or $200 that can only be spent on certain foods? Explain.
- What are some other public assistance programs the federal government offers. What are the similarities and differences between them and SNAP?
Sources| CNN: https://www.cnn.com/2024/03/13/investing/family-dollar-dollar-tree-closing-stores/index.html; Reuters: https://www.reuters.com/business/retail-consumer/major-food-companies-offering-deals-new-sizes-low-income-americans-spend-less-2024-04-08/; CBPP: https://www.cbpp.org/blog/end-of-snaps-temporary-emergency-allotments-resulted-in-substantial-benefit-cut; Unsplashed: Photo by Eduardo Soares on Unsplash