Food Insecurity and Its Impact on the Economy

Food insecurity is when someone is unsure if they will be able to eat in the future and when they do not believe they will have enough food in their household to sustain a healthy life.

Whether someone can access food is considered a social determinant of health—a condition they are born into that has a substantial impact on their health and life. As such, it is an important factor to consider when assessing health equity.

Ultimately, when food isn’t reliably available to families, it can have long-term effects on the broader economy. Not only does food insecurity stunt physical development, it also shrinks productivity, wastes money, and harms educational outcomes, therefore reducing overall lifetime earnings for those who experience it.

Key Takeaways

  • Food insecurity is when people are not certain that they will have access to food at all times.
  • Food insecurity is a social determinant of health, one of the factors that helps explain large disparities in groups of people.
  • The major costs of food insecurity include the costs of illness and hunger, and diminished lifetime earnings.
  • Food assistance programs are considered “automatic stabilizers” that give families food and also stimulate the grocery industry and supply chains.

How Does Food Insecurity Impact the Economy?

When people cannot access enough food, it can have several significant negative effects on the economy, including affecting the health of the workforce.

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

Food insecurity, in its milder forms, can be less fatal than the starvation often present in emerging economies, known as extreme hunger. Instead of a complete lack of nutrition, food insecurity refers to times when access to nourishment is unstable, and it is usually tracked in advanced economies. This may not cause clinical signs of malnutrition. 

The effects of food insecurity can be severe for children. It can delay cognitive development, cause additional struggles with education and behavior problems, and increase the risk of chronic illnesses.

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 as well as high health care bills. To participate at full capacity in the workforce, employees need enough nutrition.

Food insecurity in children also 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 end result is lost productivity.

And even when a worker can still function or doesn’t have children, food insecurity can negatively affect their performance. For example, it can increase “presenteeism,” when employees try to work through illness. One way 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 adverse impacts. In children, food insecurity can derail development into adulthood. Education, in particular, can suffer if children cannot focus due to hunger.

Food insecurity can lead to more physical illnesses in the long-term, such as diabetes and heart disease, as well as more mental and emotional problems, which can make learning more difficult. It also leads to more social issues.

Those who have suffered food insecurity as a child are reportedly more likely to miss school or to try to work through hunger, which limits performance. Absorbing information is more difficult when a student is distracted by hunger pains, regardless of age. 


Students with food insecurity tend to fall behind in school. They can be unprepared for work later in life emotionally, socially, educationally, and even physically. This further harms the economy as it affects the performance of future workers and, in turn, productivity.

Health Care Costs

Food insecurity can result in significant health care costs. According to one analysis, food insecurity increases illness costs by tens of billions nationally while diminishing lifetime earnings. That includes lost work time and productivity and the cost of treating illnesses.

In the U.S., diabetes is just one of the chronic illnesses exacerbated by food insecurity. The disease accounts for an estimated $1 of every $4 spent on health care 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 farmers markets, grocery stores, and 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, the federal agency that administers food stamps in America. SNAP is considered an “automatic stabilizer” in economic recessions because it naturally grows during economic downturns and shrinks during upturns (when fewer people need food stamps).


Low-income SNAP users tend to spend their benefits quickly. They also tend to rely on the benefits less when the economy is booming.

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.

Why Is Food so Important to the Economy?

The production of food represents a significant chunk of the economy. In the U.S., food-related industries made up more than 5% of gross domestic product and represented roughly 12% of household budgets, according to figures from the U.S. Department of Agriculture.

Where Does Food Insecurity Have the Greatest Impact?

In the United States, food insecurity impacts more than twice as many Black and Latinx people than white people, according to the Food Research and Action Center, an anti-hunger advocacy group. Geographically, food insecurity is most common in the Southern region, followed by the Midwest region.

How Does Food Waste Affect the Economy?

Food waste increases the price of food for consumers, because it leads to higher costs associated with transportation and disposal, which require labor, land, and energy. Wasted food may also represent a missed opportunity to provide nutrition to hungry people.

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 health care costs. But some solutions to food insecurity, like social safety net programs, may boost the economy. 

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