Gabriel’s Market has overcome a lot of challenges. Over the last 30 years, the South Philadelphia convenience store has fought off competition from big chains, overhauled its selection to appeal to new immigrant communities, and even endured all this time without a sign.
Yes, a sign. “We put all our money into the product to sell to the customer,” explains manager Luisa Gabriel.
Now the store is facing another obstacle: the 5 percent cut to food stamps that went into effect Nov. 1.
The country’s Supplemental Nutrition Assistance Program was scaled back across the board when a temporary increase in the benefits expired. Congress is eyeing even deeper cuts, ranging from $4 billion to $40 billion over the next decade.
According to the Pennsylvania Food Merchants Association, SNAP makes up 25 percent to 35 percent of sales for grocers in Philadelphia’s low-income neighborhoods. Gabriel said food stamps account for at least 30 percent of her business volume.
“I’m sure at the end of the week I’m going to start noticing,” she said of this month’s cuts.
Kimberly Flanagan, owner of the Belgrade Deli in Fishtown, is also worried that her customers may purchase less due to the SNAP cuts. She expects to be able to better assess the situation in the next few weeks. She said her sales dropped when Pennsylvania ended its cash benefits program, known as General Assistance, last year.
“I’m concerned with what’s going to happen,” she said. “I’m just paying the bills. I started the store three years ago with $3,000 in my pocket.”
David McCorkle, president of the Pennsylvania Food Merchants Association, said grocers will likely reduce workers’ hours to manage the SNAP cuts.
“In the supermarket industry … the profit is one penny on a dollar of sales,” he said. “If the revenue drops, that means that store expenses must drop.”
In Philadelphia, where nearly one in three residents use food stamps, advocates for the poor estimate that the recent cuts will suck $52 million out of the economy each year. Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities, said that could set off a harmful domino effect.
“If you take that food stamp spending out of the economy,” he said, “that means less sales at the store” as well as fewer employees and workers’ hours. He added, “Those people have less income. They spend less. It ripples throughout the economy.”
According to Stone, the reverse is also true. He said increasing food stamp spending is one of the best ways to boost the economy.
“Food stamps are a good stimulus for the economy because they go to people who need the money and are going to spend it rapidly,” he said.
Not everyone signs onto this idea, of course. Elizabeth Stelle, a policy analyst at the conservative Commonwealth Foundation, argues that SNAP spending does not stimulate the nation’s economy on the whole.
“Any money that is dedicated to the food stamp program is first taken out of the pockets of other citizens,” she said. “So by growing food stamps or any other sort of public assistance program, you’re creating less opportunity in the private sector for people to get out of poverty.”
However, Stelle acknowledged that the cutbacks could hurt some grocery stores in the short term.