Some key elements of the federal economic recovery package — an increase in food stamp benefits for North Carolina and the Making Work Pay tax credit — kicked in Wednesday and are expected to provide an economic boost and help struggling families put food on the table.
This news could not come at a better time as unemployment here and across the state continue to hit 30-year highs.
The federal stimulus package is pumping an extra $145 million over the next six months into the food stamp program in the state. With the state's unemployment nearing 11 percent — 16 percent in the Greater Hickory Metro Area — many more people are in need of assistance, such as food stamps.
These benefits will help many of the more than 10,000 unemployed people in the region get through these difficult economic times. The expansion may also help the local economy grow.
The U.S. Department of Agriculture estimates that every $1 in food stamps expands a local economy by $1.84. For North Carolina, it could also create an economic boost of an estimated $270 million and save or create 100,000 jobs over the next two years, according to a Labor Department study.
Experts agree that food stamps are an effective form of economic stimulus because low-income people generally spend, rather than save, their available resources to meet basic needs. The gains from the added food stamp benefits will ripple through the entire economy.
Also this week, workers are beginning to see a boost in their paychecks as employers implement the recovery act's Making Work Pay tax credit. An estimated 111 million Americans will see an increase in their take-home pay from the new credit. Unemployed workers will receive an extra $25 per week under the act and see the number of weeks that they can receive jobless benefits extended.
Like food stamps, unemployment benefits are one of the most cost-effective forms of stimulus since they go to people who will spend the money quickly to cover basic expenses. Every $1 in unemployment benefits generates $2.15 in economic activity.
Although only in the early stages, we expect the state and our region will soon begin to see the benefits of the federal recovery plan.
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