The Income Volatility See-Saw

Income volatility challenges the effectiveness of the safety net that USDA food assistance programs provide low-income families. This study examines income volatility among households with children and the implications of volatility for eligibility in the National School Lunch Program (NSLP). The results show that income volatility was higher for successively lower income groups and that the major determinants of changes in NSLP eligibility were changes in total household hours worked and the share of working adults. Income volatility in two-thirds of lower income households caused one or more changes in their monthly NSLP eligibility during the year. An estimated 27 percent of households that were income eligible for subsidized lunches at the beginning of the school year were no longer income eligible for the same level of subsidy by December due to monthly income changes.