PERRYMAN: Food bank networks offer economic benefits

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

Posted: Sunday, December 28, 2014 7:00 am

By Ray Perryman

While it perhaps should not be necessary to suggest solving pressing human and social concerns for pecuniary interests, the evidence is both persuasive and overwhelming.

As noted in last week’s column, we recently studied economic aspects of hunger. The cost of hunger (when measured comprehensively) includes 2.5 million U.S. jobs on an ongoing basis, with the long-term consequences of a single year of hunger in America being in the trillions of dollars in lost business activity.

A second major economic aspect of hunger that we analyzed is the economic stimulus provided by the nation’s network of food banks and the charitable distribution operations they facilitate. These organizations provide jobs and purchase goods and services necessary to their operations.

Moreover, by providing food to low-income households, they free up financial resources to be spent for other consumer goods. This spending leads to a notable economic stimulus.

Feeding America is a large network of food banks across the United States which are essentially warehousing and distribution operations. They receive and process inventory and deliver it to thousands of distribution centers, most of which are nonprofit charitable organizations.

The Feeding America network and other food banks offer employment opportunities and purchase goods and services from local businesses. Data describing operations of these facilities was used as a starting point for this phase of the analysis, adjusting for other food banks not in the network.

Our analysis indicates that operations of food banks and distribution networks involve sizable economic benefits. Through their operations, food banks lead to an increase in business activity of an estimated $1.5 billion in gross product each year as well as 16,100 permanent jobs in the United States. The impact of charitable food distribution networks is much larger; estimated to include $16.5 billion in gross product each year and 220,100 permanent jobs in the United States.

At the same time, food banks and food distribution networks free up funds to be spent for other purposes. As low-income families are provided food, they have additional money to meet other basic needs. We estimate that the incremental household spending facilitated by food banks and the charitable distribution network includes $44.0 billion in annual gross product and 535,500 permanent jobs in the United States.

Putting these pieces together (operations of the food bank network plus the consumer spending effects) yields an estimate of the overall economic benefits of the food bank and charitable distribution network for the U.S. economy. We found that these benefits include $62.0 billion in gross product each year and 771,682 permanent jobs.

Expanding the food bank and charitable food distribution network to meet current hunger needs would increase economic benefits.

We estimated the amount by which the food bank and charitable distribution network would need to be expanded to meet current hunger needs based on the unmet needs for meals in 2014 considering federal programs and the existing food bank and charitable apparatus. The incremental economic benefits for the U.S. economy include $187.1 billion in annual spending, $87.2 billion in gross product and almost 1.1 million jobs.

The food bank and charitable food distribution network is an important community asset, generating nearly 772,000 jobs in communities across the nation. The process of helping the hungry through the private sector with support from local communities is efficient, well organized and is an economic stimulus.

Expanding this network sufficiently to address current food insecurity needs would increase this economic stimulus by another 1.1 million jobs (when multiplier effects are considered). More importantly, (as I’ll discuss in a subsequent column) the enormous social costs of hunger could be virtually eliminated.