When Congress allowed the Emergency Unemployment Compensation program to sunset in 2013, Republicans were vilified for enacting such a draconian measure. In hindsight it worked and resulted was a surge of “long-term unemployed” workers going back to work. In 2014 unemployment steadily declined from 6.6% to 5.6% in 2014.
At the start of 2016 unemployment stood at a healthy 4.9%. The only remaining conundrum was how to get more able bodied Americans workers back into the labor force. That appears to be happening this year. The March employment report included an observation that after a decade long decline the labor force participation rate continued to inch up from 62.6% at the end of the year to 63% in March.
Where and why are workers finally starting to emerge from the abyss of the great recession? It’s not demographics or economic strength. Once again it appears to be sensible changes to government food assistance programs. We used to call them food stamps but nowadays the 74 billion dollar Federal food program is called Supplemental Nutrition Assistance Program or SNAP.
Starting in April, SNAP benefits for able-bodied adults without dependents (ABAWD) will be limited as Congress passes more authority back to states to make the program more efficient. 40 states will limit the able bodied to 3 months of benefits every three years. I will be watching the labor force participation rates in these states to see if they vary from other states who aren’t limiting food stamps to the most needy. I would wager that the 3 month participation rate trend will grow as people who can work are nudged back into the workforce.