Food Insecurity and Its Impact on the Economy

About 47.4 million Americans are living with food insecurity, including 7.2 million children, according to a 2023 study from the U.S. Department of Agriculture. They make up about 13.5% of the nation’s households.

Food insecurity is a lack of confidence that a person will be able to get enough to eat from day to day to maintain good health.

Widespread hunger does not harm only the poor. The effects spread throughout the U.S. economy.

How Does Food Insecurity Impact the Economy?

When people cannot afford to buy enough good-quality food, it has significant negative effects on the economy, including, of course, affecting the health of the workforce.

For individuals, the malnutrition and sickness that food insecurity can cause leads to more absences from work. These illnesses, particularly when chronic, require massive resources for treatment. Food insecurity is also linked to low wages and neighborhood segregation.

Food insecurity is usually not fatal, as the so-called “extreme hunger” found in the poorest nations often is. Rather than a complete lack of food, food insecurity indicates a lack of access to nutritious food and a reliance on the cheapest and lowest-quality products.

Unlike extreme hunger, food insecurity is usually associated with low-income people living in advanced economies.  

Impact on the Workforce

Stronger economies have a higher labor force participation rate, which is the percentage of people of working age who are working or looking for work.

A healthy job market is one in which the labor force participation rate is high and the unemployment rate is low. Without enough sustenance, workers can find participating in the workforce to be extremely difficult.

Sustained food insecurity can lead to higher rates of chronic illness, causing both lost economic activity when people are kept from working and high healthcare bills. To participate at full capacity in the workforce, employees need enough nutrition.

Food insecurity in children impacts their parents’ ability to work. When children can’t go to school, parents may have to stay home with them, which can mean they are not contributing to the economy. The result is lost productivity.

Food insecurity can negatively affect the performance of childless people as well. It can increase presenteeism, when employees try to work through illness.

One way that companies calculate productivity is to measure output or units produced relative to total labor hours. Ultimately, food insecurity can reduce what a worker can produce and, therefore, reduce the competitiveness of their employer.

Impact on Children

Access to a stable food supply is critical for healthy physical and cognitive development in children. Not having food security can result in several physical and psychological harm. Education suffers when children cannot focus due to hunger.

Children who are suffering food insecurity are more likely to miss school or to try to work through hunger, which limits their performance. Absorbing information is more difficult when a student is distracted by hunger pains, regardless of age. 

Healthcare Costs

Food insecurity can result in significant healthcare costs. According to one analysis, food insecurity increases illness costs by tens of billions of dollars nationally while diminishing lifetime earnings. That includes lost work time and productivity and the cost of treating illnesses in people who are unlikely to be able to afford health insurance.

In the United States, diabetes is just one of the chronic illnesses exacerbated by food insecurity. The disease accounts for an estimated $1 of every $4 spent on healthcare in the country, including about a third of Medicare drug spending.

Diabetes accounts for high rates of complications and hospitalizations, along with a higher likelihood of comorbidities, including coronary disease. Economically, this translates to a large expenditure of resources on medical care. Chronic illnesses with other causes may also be exacerbated by food insecurity.

Impact of Food Insecurity Solutions

The attempts to solve food insecurity also carry economic consequences. 

Government Investments

Governments often spend money to try to reduce food insecurity. Their investments to stabilize access to food can positively impact the economy.

In the U.S., people who need access to food can get government-funded food stamps. Money spent by the Supplemental Nutrition Assistance Program (SNAP) delivers economic activity by triggering spending at farmer’s markets, grocery stores, and other locations where the benefit is accepted.

Federal studies have estimated that every $1 of federal spending increases gross domestic product (GDP) by $0.80 to $1.50, according to the U.S. Department of Agriculture (USDA), the federal agency that administers the SNAP program in America.

SNAP is considered an “automatic stabilizer” in economic recessions because the number of people who require assistance grows during economic downturns and shrinks during upturns.

Charitable Contributions

When addressing hunger is left to nonprofits, charitable contributions to those organizations are directed at hunger and food insecurity instead of other social issues. Anti-hunger advocates estimate that this money totals $17.8 billion in charitable contributions.

These donations represent an opportunity cost. That is, the contributions needed to address food insecurity displace money that would have gone to benefit other causes.

The Bottom Line

Food insecurity can affect current workforce participation and harm the future workforce, such as chronic school absences among children suffering from it. This insecurity also worsens chronic illnesses, which can carry staggering healthcare costs.

Some solutions to food insecurity, like social safety net programs, may boost the economy.