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New York - Costco Under Fire For Not Accepting Food Stamps

Published on: November 19, 2008 10:41 AM
By: NY Times
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New York - Farmers’ markets accept food stamps. The Harlem Fairway offers food stamp take-out meals. The new Trader Joe’s in Brooklyn accepts food stamps. Even Whole Foods, which has been trying to shake that “Whole Paycheck” image, accepts food stamps. But Costco, the warehouse retailer that made its reputation as the anti-Wal-Mart, generous not only to Costco’s customers but to its workers as well, does not.

“Costco in general has a reputation of being a socially conscious company,” said Eric N. Gioia, a city councilman from Queens who last year began a campaign asking Costco to accept food stamps after discovering it did not during the “live on food stamps for a week” stunt. “There is no logical reason for someone not to accept food stamps. It is not only compassionate, but it’s good for their bottom line.”

Specifically, Mr. Gioia points to the Costco on Vernon Boulevard in Long Island City, Queens, in his district. First opened in 1996, the store is within walking distance for nearly 30,000 residents of three public housing projects: the Queensbridge, Ravenswood and Astoria Homes. “This is their best chance of eating healthy wholesome food at deep discounts,” Mr. Goia said. “And so in this particular case, it’s an especially glaring omission not to accept food stamps.”

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Richard Galanti, the chief financial officer of Costco, who handles news media inquiries, declined to comment on the issue.

There has been keen interest in the food stamp program in recent months, as the nation slides deeper into a recession. Last spring, even before the latest economic convulsions, food stamp enrollment was projected to reach 28 million in the coming year, the highest level since the federally financed aid program began in the 1960s. But rising food prices have cut into what food stamps can buy, forcing government officials to come up with creative ways to increase food stamp allotments. For example, Gov. David A. Paterson decided to use a provision in the state’s energy assistance program to increase food assistance.

Pilot food stamp programs were initiated during the Great Depression and again under President John F. Kennedy, but it was during the Great Society era of the mid-1960s that the food stamp program became formally established. The paper coupons were replaced with electronic debit cards that use four-digit identity codes similar to bank cards in 2004, which prompted the renaming of the program to the Supplemental Nutrition Assistance Program as of Oct. 1 this year. The new cards are preferred by users because they reduce the stigma of the paper coupons and preferred by vendors because they get paid more quickly, often within 48 hours.

According to Mr. Gioia’s office, executives at Costco told the office that they declined to accept food stamps for three reasons.
# They did not think they would qualify based on the federal government requirements.
# It was too expensive to adapt their equipment to accept food stamps.
# With their annual fee/bulk-purchase model, people on food stamps probably could not shop there anyway.

Are these valid concerns? If the corner bodega could qualify to accept food stamps, why would Costco, a publicly traded company with $71 billion in annual revenue, not qualify?

A look at the Agriculture Department’s store-eligibility requirements showed that the process of applying seemed simple and pretty straightforward. Merchants can even apply online.

There are apparently two ways to qualify to accept food stamps. The first way is to have at least 50 percent of the total sales — food, goods and services — at the store be from the sale of eligible staple food (i.e. not junk food). Given the diversity of services (for example, photo processing) and goods (like coffins) that Costco offers, Costco may not qualify under this requirement.

But Costco definitely qualifies under the alternate requirement, which is requires that the store (more or less) offer at least three different varieties of food in each of the following four staple food groups on a daily basis: bread and grains; dairy; fruits and vegetables; and meat, poultry and fish. Costco stores sell a wide selection of food in all of these categories. In fact, the high volume of their dairy business (along with Wal-Mart’s) actually helped ease in the redesign of the gallon milk jug.

Even if qualified, is it hard for a store to start taking food stamps? According to the Agriculture Department’s Web site, there are three ways for stores to accept food stamps. One uses old-fashioned paperwork — for stores that do not have electricity or a phone line, or do not average at least $100 a month in food stamp transactions. (Costco has electricity and phone lines and would be likely do more than $100 per month per store.)

Larger stores that average more than $100 a month in food stamp transactions per customer can receive devices from their state governments that accept the debit cards free of charge. They simply have to sign an agreement to cover the use of the equipment and provide banking information to the company that handles processing before they can receive a device. And the number of devices per store depends on the percentage of food stamp sales. (Having a separate food stamp card-reading device can be cumbersome, so most businesses simply reprogram their payment-processing machines to accept the food cards. This would not seem to be a big stumbling block for a Fortune 500 company like Costco.)

The last point about memberships is interesting: Costco makes the bulk of its profit by charging an annual membership fee for access to its stores, executives have said — more than $1 billion a year. The basic membership for most households is $50, which is a one-time outlay that cannot be covered by the food stamps themselves.

While some food stamps recipients are destitute and could not come up with the $50, many surely would pay the fee if they knew that it would save them far more money over time, said Joel Berg, executive director of the New York City Coalition Against Hunger.

Mr. Gioia added, “Not only does it amount to 14 cents a day, but you’ll find that people who are on a fixed income and trying to feed their children become amazingly sophisticated at making smart economic choices.”

Mr. Berg noted that the Agriculture Department recently did a survey that found that food stamps recipients spent an average of $6 to travel for their food shopping, which probably means that many poor people are savvy enough to pay for car services and taxis to travel longer distances to buy food at discount stores that do accept food stamps.

“I am sure that many food stamp recipients would scrimp and save and borrow and do what it takes to get into a discount program — particularly since there are about 30,000 public housing residents near the Astoria Costco,” Mr. Berg argued.

And at a time when many New Yorkers are finding it more difficult to find fresh food within walking distance because of the decline of the neighborhood supermarkets (in part because of competition from the big-box retailers that can offer lower prices), the idea of a Costco within walking distance is appealing.

“It is inexplicable why Costco clings to a policy that is against both their public interest and the company’s own self-interest,” Mr. Berg said. “More than one million New Yorkers a year use more than one billion dollars worth of food stamps benefits. I can’t understand why Costco is essentially placing a sign in their window that says ‘Your Business Not Wanted.’ ”

The government pays dollar-for-dollar for the food stamp use, so it is not as though Costco has to discount their margins. Costco, which has created an image that has both upscale and downscale appeal, has been known for attracting the elite (at least in Washington). But perhaps Costco is more wary of the other end of the spectrum, finding western Queens appealing for its real estate, but not for its customer base.


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1

 Nov 19, 2008 at 10:47 AM Big Masmid Says:

I agree that its not nice of them, on the other hand we voted for C H A N G E , it was not specified what change includes, well lets start making a list:
1) no food stamps for the poor
2)

2

 Nov 19, 2008 at 10:51 AM yeshiva coupons Says:

its time we all get together and cancel the Yeshiva Chesed Dollars, the grocery stores are loosing 5% - 10% on every purchase, as it is they are burly making it, Costco you are an eye opener.

3

 Nov 19, 2008 at 11:00 AM Food Stamps Says:

The whole food stamp program is unfair. If I have a 401k or life insurance policy that has a value of over $3000 you are not eligible. If they take assets into account they should also take liabilities into account. If I owe on my credit cards $50,000 and have $25,000 in assets technically I am in the hole as bad or worse than someone who has no assets and no liabilities, yet the one with no assets gets food stamps and the one who owes more moeney then he has does not get food stamps. Is this fair????????????????????????

4

 Nov 19, 2008 at 11:05 AM Anonymous Says:

why should they accept food stamps? people that are on food stamps dont pay anyways so why are they entitled to discount products? What a bunch of selfish pigs. Its bad enough they mooch off the government , now we have to accomodate them on where to shop? How about Saks and macys as well

5

 Nov 19, 2008 at 11:11 AM boy genuis Says:

Reply to #4  
Anonymous Says:

why should they accept food stamps? people that are on food stamps dont pay anyways so why are they entitled to discount products? What a bunch of selfish pigs. Its bad enough they mooch off the government , now we have to accomodate them on where to shop? How about Saks and macys as well

Which part of the word food in food stamps do you not understand- I guess you thought food stamps can purchase perfume and jewelry

6

 Nov 19, 2008 at 11:12 AM Anonymous Says:

Reply to #4  
Anonymous Says:

why should they accept food stamps? people that are on food stamps dont pay anyways so why are they entitled to discount products? What a bunch of selfish pigs. Its bad enough they mooch off the government , now we have to accomodate them on where to shop? How about Saks and macys as well

G-d should help you should never be in that situation, but, like me, if you ever do find yourself unpredictably in that situation, perhaps you'll think back to the stinging words you left on this forum and re-evaluate them.

7

 Nov 19, 2008 at 11:20 AM Mike Drez Says:

Reply to #5  
boy genuis Says:

Which part of the word food in food stamps do you not understand- I guess you thought food stamps can purchase perfume and jewelry

By the way Macys does sell food. But what these guys that are on food stamps are capable of striking a deal with the store owner and will swipe the card for food and then they "purchase" other items

8

 Nov 19, 2008 at 11:29 AM You are uncaring Says:

Reply to #4  
Anonymous Says:

why should they accept food stamps? people that are on food stamps dont pay anyways so why are they entitled to discount products? What a bunch of selfish pigs. Its bad enough they mooch off the government , now we have to accomodate them on where to shop? How about Saks and macys as well

This will help people afford more for each dollar they receive. Hashem should never test you, yet when your children are starving, uncaring comments such as yours are unwarranted.

9

 Nov 19, 2008 at 11:57 AM Anonymous Says:

Reply to #3  
Food Stamps Says:

The whole food stamp program is unfair. If I have a 401k or life insurance policy that has a value of over $3000 you are not eligible. If they take assets into account they should also take liabilities into account. If I owe on my credit cards $50,000 and have $25,000 in assets technically I am in the hole as bad or worse than someone who has no assets and no liabilities, yet the one with no assets gets food stamps and the one who owes more moeney then he has does not get food stamps. Is this fair????????????????????????

You expect the people who run the food stamp program to understand accounting? It's an entitlement program - you are entitled to it as long as you show you own nothing. Many of the people who do qualifications have no idea of what they are doing other than entering information on a computer.

10

 Nov 19, 2008 at 11:55 AM Anonymous Says:

Reply to #5  
boy genuis Says:

Which part of the word food in food stamps do you not understand- I guess you thought food stamps can purchase perfume and jewelry

u will be surprized

11

 Nov 19, 2008 at 11:52 AM Anonymous Says:

how would someone on food stamps have to money to pay the membership??

12

 Nov 19, 2008 at 12:05 PM Anonymous Says:

I was thinking the same a person on food stamps should not have extra money to spend on membership. I am not sure but if anything target and walmart should accept food stamps if they do not yet that would be affordable. I think the whole idea of costco to accept foodstamps is absurd.

13

 Nov 19, 2008 at 12:10 PM Anonymous Says:

Reply to #2  
yeshiva coupons Says:

its time we all get together and cancel the Yeshiva Chesed Dollars, the grocery stores are loosing 5% - 10% on every purchase, as it is they are burly making it, Costco you are an eye opener.

You are 100% correct- it is extortion and protection money under the guise of " Charity"- storekeepers are left with little choice other than accepting this funny money- otherwise parents who are forced to buy these Chessed dollars will shop in the big supermarkets- where it does not really matter if a tiny minority of shoppers use them-

14

 Nov 19, 2008 at 01:06 PM Anonymous Says:

Reply to #2  
yeshiva coupons Says:

its time we all get together and cancel the Yeshiva Chesed Dollars, the grocery stores are loosing 5% - 10% on every purchase, as it is they are burly making it, Costco you are an eye opener.

This is a reply that only pertains to Chesed dollars and the like:
Having been a store owner for many years, I used to call the vouchers "voluntary taxation." Nobody forces you to take the chesed dollars; it is your choice. It is true that you "loose" 5% when you redeem them. However, my experience has been that people don't look at them as "real" money, and people spend more freely to get rid of them, similar to how some people feel about using credit cards, (where the store looses about 2-3%. Bottom line: people spend more with the vouchers.

15

 Nov 19, 2008 at 02:47 PM JoeFlix Says:

I am a Costco costumer and fan - they are the best.

Their prices are good enough - its crazy what you can pay there for big packs of fruits and veggies and even Kedem Grape juice if you have a big family and you can use your credit card to buy there once a month.

They dont HAVE to deal with the extra expense and headache of food stamps

16

 Nov 19, 2008 at 03:14 PM Anonymous Says:

Reply to #15  
JoeFlix Says:

I am a Costco costumer and fan - they are the best.

Their prices are good enough - its crazy what you can pay there for big packs of fruits and veggies and even Kedem Grape juice if you have a big family and you can use your credit card to buy there once a month.

They dont HAVE to deal with the extra expense and headache of food stamps

why can you only purchase there only once a month?

17

 Nov 19, 2008 at 02:51 PM Anonymous Says:

may be they are thinking that accepting stamps will bring in a lower class of people . who know?

18

 Nov 19, 2008 at 03:38 PM Anonymous Says:

i actually switched over to BJ'S (FL) a few years ago, because 1) they accept food stamps and 2) they accept all coupons.

19

 Nov 19, 2008 at 03:35 PM Anonymous Says:

Reply to #12  
Anonymous Says:

I was thinking the same a person on food stamps should not have extra money to spend on membership. I am not sure but if anything target and walmart should accept food stamps if they do not yet that would be affordable. I think the whole idea of costco to accept foodstamps is absurd.

walmart does; but target does not!

20

 Nov 19, 2008 at 04:33 PM Anonymous Says:

They don't accept food stamps

1. because they don't want the government telling them what they can or can't sell.

2.The POS system needs to be upgraded. The register gal would need to charge two cards - for food items the food-card- and none food items the credit card.

3. They are making enough money as is.

21

 Nov 19, 2008 at 05:46 PM Charlie Hall Says:

All kosher food stores in my neighborhood accept food stamps -- I've been told that it is a requirement of the local Vaad if they want the hechsher.

22

 Nov 19, 2008 at 07:21 PM vaad oy vey Says:

Reply to #21  
Charlie Hall Says:

All kosher food stores in my neighborhood accept food stamps -- I've been told that it is a requirement of the local Vaad if they want the hechsher.

it is sad that whether food is kosher hinges on irrelevant policy making

23

 Nov 19, 2008 at 11:02 PM Anonymous Says:

Thats all we need. All the escalades and fur coats showing up to cosco with the Benefit Card. It is so unfortunate, the ones that need it really need it . The ones that abuse it make it look bad for everyone.

24

 Aug 25, 2010 at 06:42 PM civil servant Says:

Reply to #9  
Anonymous Says:

You expect the people who run the food stamp program to understand accounting? It's an entitlement program - you are entitled to it as long as you show you own nothing. Many of the people who do qualifications have no idea of what they are doing other than entering information on a computer.

I suppose you are familiar with the all of the laws, rules, regulations, and mathematical formulas that those of us who DO actually determine eligibility for government benefits are required to know. To me it seems like you are not because if you were you would know that the financial eligibility guidelines are set by Federal Regulations. No one is "entitled" to any of these benefits. If you are legitimately qualified due to low income, you get benefits. If you are not, you don't. I don't appreciate your implication that those of us who administer these benefits are mindless drones who are just punch numbers into a computer and have no clue what we are actually doing.

25

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