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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 community."
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.
Related stories:
- Clinton: Welfare recipients seeing their own Independence Day - July 5, 1997
- AllPolitics: States Must Pay Minimum Wage For Workfare, Administration Rules - May 16, 1997
- Florida to sue Washington over welfare reform - April 22, 1997
- Welfare reform squeezes grandparent caregivers - December 8, 1996
Related sites:
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- U.S. Department of Labor - Welfare Benefits
- Welfare and Families from Idea Central
- Common Sense Welfare Reform Act from the Progress and Freedom Foundation
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