Businesses feeling effect of food stamp cuts
August 25, 1997
Web posted at: 12:58 p.m. EDT (1658 GMT)
From Correspondent Cynthia Tornquist
NEW YORK (CNN) -- For Pablo Espinal, welfare reform amounts
to trouble at the cash register.
As owner of the Associated Supermarket in Crown Heights,
Brooklyn, he estimates 25 percent of his revenue comes in the
form of food stamps.
"I'm afraid this (food stamp cuts) will affect a lot of
people working for us," Espinal says. "(We'll) probably have
to get rid of some employees because of business drops."
Espinal is not alone.
One year after food stamp cuts were passed by President
Clinton, business leaders in poor communities across the
country are reporting a similar downturn.
"What you have now is store owners that have less resources
that end up having to lay off staff and are unable to fix up
stores," says Agustin Garcia of the Dominico Hispanic Chamber
of Commerce. "Obviously it has a direct impact on the
community and in the quality of life of the entire
But supporters of welfare reform say, with time, just the
opposite will happen.
"The food stamp program wasn't designed to benefit grocery
owners," says Robert Rector of the Heritage Foundation. "It
was designed to benefit recipients. If we cut back the
welfare benefits, most of the recipients will respond not by
having less to spend, but by earning more money."
Billions at stake
Advocates of welfare disagree.
"I don't believe there is any evidence that cutting
government benefits for poor Americans is going to translate
into better business arrangements," says Liz Krueger of the
Community Food Resource Center. "Cutting federal benefits is
not going to change that."
It is difficult to predict just how much income will be lost
or gained in a neighborhood under welfare reform. The U.S.
Department of Agriculture estimates out of every $1 billion
in food stamps lost, 25,000 jobs will be cut as businesses in
turn lay off employees.
In New York City, the Community Food Resource Center predicts
businesses will lose $268 million in 1997 due to cuts in food
stamps. Whether that will result in lost jobs remains to be
seen. Los Angeles and other cities predict similar losses.
Some states, like New York, are trying to soften the blow by
extending benefits to 100,000 legal immigrants cut off by
reforms. Even so, store owners like Espinal worry that stores
in their communities will go out of business.
Only time will tell if his predictions are true.