Reduction in food stamp benefits may negatively impact small grocery stores

Reduction in food stamp benefits may negatively impact small grocery stores

In a recent development, the domestic policy bill signed by President Trump has imposed stricter work requirements on food stamp recipients, potentially affecting millions of people and small grocery stores in rural areas.

The left-leaning Center on Budget and Policy Priorities estimates that over 5 million people live in households at risk of losing some food assistance due to the expanded work requirements. Small grocery stores, like Hudson's Grocery in Claiborne County, Mississippi, rely heavily on SNAP benefits to sustain their operations. George Hudson, the owner, fears that potential SNAP cuts could force him to raise prices to make ends meet.

These stricter work requirements could significantly impact small grocery stores, especially in rural areas, and local economies. By requiring more adults to work, volunteer, or attend training for at least 20 hours a week to remain eligible for SNAP, many current beneficiaries may lose their benefits if they do not meet these new rules. When SNAP cuts or stricter eligibility rules reduce benefit use or the number of eligible recipients, these small stores face lower sales, which may force them to raise prices, reduce inventory, or cut jobs.

In rural areas, where SNAP participation is higher, businesses and communities rely on the spending power SNAP provides throughout the supply chain, including farmers, manufacturers, and wholesalers. Therefore, benefit cuts or stricter requirements could have a ripple effect, weakening the local economic ecosystem beyond just grocery stores.

The changes to SNAP could also lead to job losses and decreases in property tax revenue due to store closures. The federal program supports approximately 388,000 jobs across the food industry. Some states, like Pennsylvania, have questioned whether they can continue operating the program due to the extra costs.

The new cost-share rules for states will take effect in fiscal year 2028, with states having error rates of 6% or greater paying between 5% to 15% of benefit costs. Some experts, like Kevin Corinth, a senior fellow at the American Enterprise Institute, are skeptical about the extent of the SNAP cuts and expect to see an increase in employment due to the stricter work requirements. However, Corinth anticipates that many states will lower their error rates in the coming years, and most will probably not have to pay a major portion of the benefits.

The bill also shifts some program costs to states, requiring them to pay more administrative costs and a portion of the benefits unless they maintain lower payment error rates. Additionally, the bill makes it harder for certain immigrants who are lawfully present to receive food stamps, and ends work requirement exemptions for veterans, homeless people, and certain former foster youth.

Local officials in some areas are concerned about how the cuts could affect food access in their communities. Some estimates suggest that millions of people enrolled in SNAP, which provides food assistance to approximately 42 million people, could be affected by more stringent work requirements. Several states have stated that the changes will put hundreds of thousands of households at risk of losing some or all of their SNAP benefits.

In conclusion, the expanded work requirements and capped benefit increases are expected to reduce SNAP enrollment and benefits, particularly affecting small rural grocery stores that rely on SNAP households as regular customers, which in turn could negatively impact rural local economies through reduced sales, potential job losses, and diminished support for regional food supply chains.

1. The stricter work requirements for SNAP recipients, as stipulated in the domestic policy bill, might lead to job losses within small grocery stores, especially those in rural areas.
2. In rural areas, where SNAP participation is high, businesses may experience lower sales due to potential reductions in the number of SNAP recipients, which could cause supply chain stakeholders like farmers, manufacturers, and wholesalers to face financial challenges.
3. The shift of program costs to states, as outlined in the bill, could lead to states paying a percentage of benefit costs, potentially straining their financial resources, particularly if they have higher error rates.
4. Some experts anticipate that the stricter work requirements could increase employment; however, they also expect states to lower their error rates in the coming years, which means most will likely not have to pay a significant portion of the benefits.

Read also: