O.C. Merchants Fear Effects of Cutback in Food Stamps

The most sweeping welfare reform measures yet take hold in Orange County today as 14,000 to 16,000 legal immigrants lose their eligibility for food stamps, forcing others to brace for the economic fallout.

“We are very nervous,” said Robert Tran, manager of Vanco Foods in Garden Grove, one of hundreds of merchants in struggling immigrant neighborhoods fearing sharply reduced revenue when the cutbacks take effect.

Tran said his store in a new white-stucco strip mall has already seen sales drop because of earlier welfare reductions, and might have to lay off workers if the latest cuts further hurt his bottom line.

The food stamp reductions will take roughly $1 million a month out of the county’s retail economy, mostly in low-income districts of Westminster, Garden Grove, Anaheim and Santa Ana, where most of the legal immigrants live and shop.

The action, required under the federal welfare law overhaul enacted last year, is expected to remove 10% to 15% of food stamp recipients currently on the county’s rolls.

Heidi Sommer, who is analyzing welfare changes for USC’s Southern California Studies Center, said the impact will extend beyond food stores to other neighborhood businesses.

“Food stamps are about $68 a month [per person]. When you live below the poverty line, that can be 20 to 25% of your income,” Sommer said. “If you take this source of money away, you still need to buy food. So you will cut back spending elsewhere, on things like shoes, or a bus pass or clothes. Or you will stop buying expensive foods like meat.”

Chantha Hel of Santa Ana said members of her family are already tightening their belts in anticipation of losing some food stamps, which will reduce their total monthly benefits by 27%. “I won’t spend as much on clothes and shoes,” she said. “I don’t know what to do.” A recent study by San Francisco-based California Food Policy Advocates found that retailers who sell goods other than food could lose twice as much business as grocery stores and supermarkets.

This “domino effect” is already being felt at Jose Alcala’s clothing store on Main Street in Santa Ana, where customers are purchasing fewer items and seeking out the lowest prices.

“People are afraid of [welfare changes], even people who aren’t losing their benefits,” Alcala said. “They are watching every penny. They aren’t spending the way they used to.”

Angelo Doti, assistant director of the county’s Social Services Agency, said officials have detected this same mind-set. “A lot of it is psychological,” he said. “People are uncertain about their future, so they are sitting on their wallets, sending less money back to the folks in the homeland.”

The county is still trying to determine exactly how many of the 27,000 legal immigrants who receive food stamps will lose their benefits. The most recent estimates put the number at 14,000 to 16,000. A state law signed earlier this month by Gov. Pete Wilson allows immigrants younger than 18 and older than 65 to retain their benefits for three years.

The food stamp cuts are the most significant welfare spending reductions since Congress passed, and President Clinton signed, the nation’s historic welfare overhaul legislation. But they are only the beginning of a massive welfare-to-work program that promises to touch the more than 100,000 county residents who receive public assistance.

The county has been denying new food stamp benefits to legal immigrants for a year, and dropped 1,100 able-bodied adults from the food stamp rolls in February.

Food banks and charitable groups reported increased demand for their services after these earlier cuts took effect, and are bracing for even more appeals for help after this group of legal immigrants loses eligibility for food stamps.

At the Second Harvest Food Bank in Orange, heightened demand for aid comes as food donations and available supplies of surplus commodities from the U.S. government are declining. At the same time, grocery stores are contributing less of the dented canned goods and day-old bread that have long been a staple of food banks nationwide.

“Our volume has dwindled somewhat, and that’s going to be a problem with welfare reform coming on,” said Tom Seeberg, director of the food bank. “Product is down, demand is up. It’s bad news.”

Proponents of the welfare changes insist that the food stamp cuts are fair because legal immigrants should rely on their sponsors and family members--and not the government--for financial support.

County officials said some of the economic losses the cuts could entail might be offset by the spending of new wage earners, if the former food stamp recipients find jobs.

Still, some immigrants who now receive food stamps already have jobs that simply don’t pay a living wage.

Loc Nguyen, a counselor at the Vietnamese Community Center in Santa Ana, said many recipients are already relying heavily on their families for shelter and financial support.

“Many already share everything, including the house they live in,” Nguyen said. “That is part of the culture.”

*

The scene at the Little Saigon Supermarket is deceptive.

The lines at the checkout stands are three deep and shoppers fill their baskets in every corner of the store. But appearances sometimes mask the truth, and Denise Tran, who manages the market in the heart of Little Saigon, said that in spite of the bustle, business is down. Way down.

It dropped 15% in August alone--in large part, she believes, because many of her customers are legal immigrants who are losing their food stamps.

“Many of them have told me they have a lot less money to buy food,” Tran said.

Aside from the impact the welfare changes will have on the food stamp recipients, the decline in purchasing power among legal immigrants is also expected to have a significant effect on grocers in Orange County’s immigrant communities.

Many of them, like Tran, worry that the new welfare law will hurt them almost as much as it will hurt the people who are losing federal assistance.

Asian grocers, most of whose businesses are concentrated in Westminster, Garden Grove and Santa Ana, said they noticed a decline in sales as early as a year ago, when the new law was announced, and customers began cutting back in anticipation.

Tran said customers who used to buy large quantities of staple items began buying smaller packages of rice and flour.

Customers immediately stopped buying expensive items like rib-eye steaks, Tran said. Noodles, rice sticks and all types of produce, on the other hand, are moving more quickly than normal.

Indeed, on a recent afternoon, there were seven butchers behind the meat counter at Little Saigon Supermarket and no customers to wait on.

“We are very nervous, of course,” she said, “because we don’t know what is coming next.”

The situation is so grave for some grocers that the new welfare law may have the unintended consequence of forcing food store layoffs, creating more welfare candidates.

Robert Tran, who manages Vanco Foods in Garden Grove, said the business his family worked hard to build is experiencing tough economic times, partly because competition among grocers is intense, but also because the loss of purchasing power his clients are experiencing has hurt him too.

“Last month was bad,” Robert Tran said. “Sales were down 50%. Some of that is from new competition, but we think it also has to do with the food stamps.”

It has gotten so bad, he said, that they are having to consider layoffs among the more than 200 people who work for them at two tidy supermarkets selling mostly Asian food products. Plans to open another store have been put off indefinitely.

“Now we will have to think not twice, but three or four times before we consider expanding,” he said. “And in this business you either grow or die.”

*

The choices Chantha Hel will have to make as her family loses $128 a month in food stamps starting today are simple, yet painful.

Already stretched to her financial limits, the 51-year-old woman says she will spend less money on clothing for her seven children.

As Hel begins to calmly describe how she manages her meager financial resources, her eyes well up, and soon she is crying. She puts her 8-year-old son’s shoe on the table. The sole of the black, high-top sneaker has come apart, and the money she would have used to buy him a new pair of shoes may now have to go to buy beef and pork to feed the family.

“I never buy clothes for myself, only for the children,” she said. “Now, I don’t have the money to buy [them] shoes.”

Hel and her husband, Hov Heng, fled Cambodia’s civil war in 1979 looking for a better life. They spent five years in a refugee camp in Thailand, where they lived in a self-made hut with no bathroom, before coming to the United States.

Both Hel and her husband, who according to Cambodian custom kept their own last names after marriage, are unemployed.

Hel, who was a housewife in Cambodia, said it is important for her to stay at home and raise the children, who range in age from 3 to 17. Her medical problems, including asthma, qualify her for federal aid and also keep her out of the work force, she said.

Heng, who made a living growing fruit in Cambodia, said he has all but given up trying to find a job in Orange County after facing repeated rejections. Heng, 61, believes many employers won’t hire him now because of his age. High blood pressure and arthritis make him weak, he added.

Their income for a family of nine amounts to $2,137.40 a month. About half now goes for food. An additional $450 pays for a one-bedroom, one-bath apartment on Santa Ana’s Minnie Street, where many of the nine family members sleep in the living room.

The rest of the money is devoted to clothing and other supplies, such as soap and toilet paper.

Of the approximately $1,000 a month the family pays for food, $467 comes from food stamps. The rest of the money comes from other welfare benefits received by Hel and the children.

The value of the food stamps received by the family will now drop to $339, according to the family and state records.

Hel does not want to cut back on food, especially meat, because her children need the nourishment. The clothing is where she will have to skimp to make ends meet.

During an interview at the Cambodian Family Community offices in Santa Ana, the couple said they had no opinions about the merits of welfare law changes.

“I only want the children to get more education and get a good job,” Hel said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Food Stamp Fallout

An estimated 15,600 legal immigrants in Orange County are losing their eligibility for food stamps today, removing nearly $13 million from the economy. The result: Most of that money will not be spent on other items as welfare clients shift resources to buy food.

Estimated Result of Food Stamp Cuts

Estimated value of cut: $12.9 million

Cut in food spending: $3.9 million

Cut in nonfood spending: $9.0 million

Food Stamps in Orange County

About 14% of Orange County’s food stamp recipients are legal immigrants. And more than half the county’s food stamp recipients live in just three cities. Where food stamp recipients--legal immigrants and others--lived, as of May:

*--*

Location Number Anaheim 19,823 Brea 387 Buena Park 4,033 Costa Mesa 3,161 Cypress 918 Dana Point 398 El Toro Marine Base 4 Foothill Ranch/Lake Forest 562 Fountain Valley 1,146 Fullerton 3,048 Garden Grove 15,389 Huntington Beach 4,370 Irvine 1,310 Laguna Beach/Aliso Viejo 335 Laguna Hills 462 Leisure World Laguna Hills 14 Laguna Niguel* 466 La Habra 4,127 Los Alamitos 267 Midway City 938 Mission Viejo 639 Newport Beach** 297 Orange 3,378 Placentia 1,424 Rancho Santa Margarita 205 San Clemente 820 San Juan Capistrano 432 Santa Ana 25,064 Seal Beach 76 Silverado Canyon 22 Stanton 2,265 Sunset Beach 5 Trabuco Canyon 14 Tustin 1,913 Villa Park 847 Westminster 8,955 Yorba Linda 343 Other 329 Total 108,186

*--*

* Includes South Laguna and Monarch Bay

** Includes Balboa Island, Corona del Mar and Lido Isle

Sources: California Food Policy Advocates, Orange County Social Services Agency; Researched by SHELBY GRAD / Los Angeles Times