The Income Volatility See-Saw: Implications for School Lunch. ERS Report Summary

Income volatility challenges the functioning of the safety net provided by U.S. Department of Agriculture (USDA) food assistance programs for low-income families in time of need. Low-income families may be on a see-saw of income changes that make it difficult for program administrators to accurately target benefits and to define sensible eligibility periods. Which families are low-income and for how long are important issues for program policy, and income volatility directly affects those policy decisions. Also, flexible food assistance that smooths household food consumption over the ups and downs of labor force participation is important in providing assistance to the working poor. Understanding the implications of income volatility for food assistance program eligibility is important if the programs are to effectively serve the intended recipients. Using nationally representative household survey data and looking at how income volatility affected eligibility for free and reduced-price lunches in the National School Lunch Program (NSLP), the reported study sought to answer questions regarding how often does program eligibility for low-income families changes within a year, how income volatility compares across income groups, and what labor force participation and household changes are most frequently associated with short-term income changes. The study found that changes in total household hours worked and in the share of adults working were the primary causes of the changes in monthly income. The lower a household's income, the more likely it is to face volatile swings in monthly income. Such income volatility meant that, before recent rule changes, the children in these households moved back and forth across the eligibility threshold for the NSLP. New rules in the Child Nutrition and Women, Infants, and Children (WIC) Reauthorization Act of 2004 have redefined eligibility so that income volatility has become less relevant as a source of the erroneous certification. [For associated report, see ED502402.]