Restrictions on food assistance will hurt Michigan’s economic recovery

A plan to apply asset limits to households in Michigan receiving Food Assistance Program benefits, will make it harder for those who are out of work or underemployed to qualify for benefits and will place Michigan among a minority of states applying strict limits, a new paper from the Michigan League for Human Services concludes.
 
Most states – 30 — have moved to eliminate asset tests for food benefits, an option allowed under federal rules, in order to help families survive the economic turmoil of losing a job or lacking full-time work. Many states are taking advantage of this smart, common-sense policy during tough times, and until now, Michigan was one of those states. Department of Human Services officials, however, plan to impose $5,000 asset limits on Oct. 1 and are sending letters to more than 200,000 households warning of the change.

The paper, Bucking the Trend: Michigan to Add an Asset Test for Food Benefits, is available on the League’s website.
 
Michigan’s unemployment rate rose to 11.2 percent in August, and a large share of those working part time are doing so because they can’t find full-time work.
 
“We’re bucking the trend where states try to help families get through these tough economic times by making it easier to qualify for food assistance. These are benefits paid for with federal funds. Reducing the availability of food benefits means fewer dollars coming into Michigan and circulating in our local stores,’’ said Michigan League for Human Services President & CEO Gilda Z. Jacobs.
 
The Department of Human Services has calculated that for every $5 in food benefits, $9.20 in economic activity is generated. The federal program is the Supplemental Nutrition Assistance Program but in Michigan it is called the Food Assistance Program.

Michigan’s proposed asset test was apparently prompted by a lottery winner who still qualified for food benefits because he took the winnings in a lump sum rather than have them paid out over time as income. 

“We agree that food assistance should not go to big lottery winners, but that is a very rare case,’’ Jacobs said. “We should be careful to not throw out the baby with the bathwater in order to remedy a single anecdote.’’
 
The program, formerly known as Food Stamps, is available for low-income families, those with incomes of less than 130 percent of poverty. That’s about $2,000 a month or less for a family of three.
 
Though Michigan’s poverty rate is 14 percent, about 20 percent of households are considered asset poor — without enough resources to tide them over for three months should income disappear.  Nearly half of Michigan’s African American households and a third of female-headed households are asset poor.
 
Good public policy would encourage low-income households to save to help them through times without income. Asset tests can prolong the amount of time families need government assistance. The move to impose an asset test on food assistance, however, is moving in the opposite direction and discouraging such savings.

“This is a hard time in Michigan for many families who are transitioning  from middle-class jobs to lower-paid jobs and part-time work,’’ said Karen Holcomb-Merrill, the League’s policy director. “We should be enacting policies that encourage savings. This may have the opposite effect.”
 
DHS is implementing a $15,000 limit on the value of all automobiles in a household. The unintended consequence would be to create a hardship for rural families and those with multiple workers. Making a family use vehicles of lower-value in order to keep food assistance, could compromise safety, too.

The Michigan League for Human Services is a nonprofit, nonpartisan statewide policy and advocacy organization dedicated to ensuring that Michigan’s low-income residents achieve economic security.