Strategy for Survival: Lure of the Underground Economy

When a Southeast Asian refugee on welfare chooses to work in the underground economy, it is often for reasons beyond simple greed.

Resettlement workers and county officials say the formation of a vast underground economy must be viewed in the context of three decades of war in Vietnam and a United States that has embraced a million refugees from Southeast Asia without providing the proper training and assistance for self-sufficiency.

While not applauding the welfare fraud, many resettlement workers and county officials throughout the state say they have come away with a grudging respect for refugees working in underground jobs.

“You’ve got to give these people credit,” said Lavinia Limon, executive director of International Institute, a private agency assisting refugees and immigrants in Los Angeles County. “They’ve developed the underground economy because they are ambitious. They’re not content to get that welfare check, kick back and watch a ballgame.”

Survivors of War

“After 30 years of war, these people are survivors,” said Robert Gulden of the Norwalk office of the United Cambodian Community, which provides job placement and other services to refugees. “Now they’ve learned to survive within our system.”

Southeast Asian refugees say the hardships of war have taught them the necessity of maintaining a nest egg. Many refugees said they continue to feel a strong sense of obligation to relatives still trapped in Vietnam, one of the world’s poorest countries. Welfare income alone, refugees say, is simply not enough to sustain a family here and also send money home.

“They have a dual obligation,” said Bill Cassidy, a former U.S. Senate staff member and one of the country’s foremost authorities on Vietnamese exile life. “With a dual obligation, they must have dual incomes.”

Through businesses centered in Orange County, refugees are using unreported income and welfare dollars to buy goods to send to Vietnam. The goods are then sold on the Vietnamese black market, bringing up to five times their U.S. value to the relatives and much-needed income in the form of customs taxes to the Communist government. In one of the ironic twists of the underground economy, U.S. welfare dollars are helping to keep afloat a hostile country.

Each month, Nga, a 39-year-old mother of two, tries to save $20 to $30 from her welfare check. In four months, she says, the money is enough to buy a large package of clothing or medicine for a daughter and other family members in Vietnam.

She said she places her order through a Vietnamese-owned appliance store in the Orange County city of Westminster, which charges her a 20% fee. Once delivered, the items that are not kept by the family are sold on the black market. Nga said her $100 parcel can net her daughter and other relatives up to $500, an incredible amount in a country where the per-capita yearly income is about $200.

“One hundred dollars won’t kill you over here, but it’s a fortune over there,” explained Kim T. Huynh, a Los Angeles area refugee resettlement worker. “The refugees see it as their moral obligation. I know women who eat very little and share rooms with other families so they can send money home.”

Resettlement workers and county officials throughout the state who deal with refugee problems on a daily basis contend that flaws in job training and job placement programs also have forced refugees to adopt their own strategies for survival, which include working in underground jobs.

These program failures, they argue, have contributed significantly to a 50% welfare dependency rate among California’s Southeast Asian population.

Officials in Sacramento and Washington disagree that the program flaws have created welfare dependency, but they agree that the programs have neglected the most needy refugees.

Designed for impoverished Americans, the programs have provided neither the staff nor the types of services needed to reach a diverse population of refugees, ranging from Saigon physicians to slash-and-burn Hmong tribal farmers, officials say. Most refugee families on welfare are eligible for vocational training and job placement help under the federal Work Incentive program, known as WIN, which is administered jointly by the state and counties. But state and local officials acknowledge that WIN lacks the funding and bilingual staff needed to serve refugees.

As a result, many refugees have been deemed “unemployable” upon arrival because they possess few job skills and cannot speak English. Their cases have never been updated or placed in active files to be referred to employment services, administrators admit.

Similar problems have hindered the effectiveness of the federal Targeted Assistance Program, which over the last three years has funneled $80 million in aid to California counties for job training and job placement. Private agencies on contract to counties to serve refugees have focused their efforts on single refugees and refugee couples without children. They have neglected the large, unskilled families who, lacking a choice, form most of the long-term welfare-dependent population.

Welfare Without Strings

“By and large, refugees have been allowed to fall through the cracks,” said John Oppenheim, an administrator with the Santa Clara County Department of Social Services. “Probably 95% of our refugee clients were not asked to do anything. It was basically welfare without any requirements.”

Even when refugees have been considered employable and are required to attend job and language training programs, some have found ways around the system.

Resettlement workers say some refugees have become “professional students,” purposely failing examinations or changing vocational programs in midstream. Others who are seemingly healthy present medical excuses from the same Vietnamese doctors.

Until a tighter system was implemented by the state late last year, job program directors rarely reported uncooperative refugees for sanctioning. They said welfare never punished them.

“In the past, refugees have not been afraid of getting their welfare benefits taken away if they didn’t participate,” said Carol Porter, project director of a refugee employment training program run by the Los Angeles Unified School District.

“You’ve got these great big machines on the federal, state and local level, but they’re not always coordinated,” she said. “And the refugee knows it.”