STORIES OF spectacular achievement by Indochinese refugees have become a staple of modern American folklore. Most people think of Southeast Asian immigrants as honor students, flourishing entrepreneurs and well-bred and industrious workers. The facts are otherwise: As a group, recent Indochinese refugees are more likely to be poor, out of work and on welfare than any other ethnic group in America.

The plight of the Indochinese is so stark, and so little reported, that numbers illustrating their dependency often provoke disbelief. Almost two out of three Indochinese households headed by refugees who arrived after 1980 live in poverty. A staggering 69percent are on relief. By way of comparison, post-1980 refugees are three times more likely to be on relief than American blacks and four times more likely to be on relief than Hispanics.

Fresno, Calif., for example, is now home to an estimated 20,000 Hmong tribesmen from the highlands of Laos. Roughly seven out of 10 of these Hmong are on welfare, and almost one-fifth of the county's $210 million social service budget was spent last year on Hmong refugees -- who make up only one in 30 county residents. So far that money does not appear to have done much to help the Hmong become self-sufficient. As Ernest Velasquez of the county social services department explains: "What we have here are 16th century people thrust into 20th century life."

The fact that these refugees have been in this country for only a short time certainly accounts for some of their pervasive reliance on public assistance. But recency of arrival is not the whole story -- many immigrant groups from other Third World cultures do far better. In fact, recent refugees from Southeast Asia are much more likely to join the welfare rolls than refugees from any other region: they are twice as likely, for example, to be on relief as a newly arrived Ethiopian refugee.

What accounts for the gap between the popular mythology about the Indochinese and their actual status? A major part of the explanation is that most Americans, from Ronald Reagan on down, have confused the "first wave" of Southeast Asians that came to the United States after the fall of Saigon in 1975, with the far more numerous "second wave" immigrants who arrived after the Vietnamese invasion of Cambodia in 1978.

The first wave, totaling 130,000 immigrants, was essentially an elite group, composed of officials from the deposed South Vietnamese government, dependents of U.S. servicemen, and staffers of multinational corporations. With their contacts in the United States and proficiency in English, most first wave Indochinese prospered quickly -- so much so that, after only four years in this country, those who immigrated in 1975 earned 18 percent more than the average American. Beside doing well as a group, several early refugees became highly visible prodigies. Jean Nguyen, for example, was named by President Reagan as one of the "heroes" in his 1985 State of the Union address for being the first Vietnamese female to graduate from West Point; Hoang Nhu Tran who left Vietnam in a boat in 1975 was class valedictorian of the Air Force Academy this year.

By contrast, the second wave of Indochinese refugees to the U.S. lacked both the skills and the good fortune of their predecessors. Instead of being sophisticated city dwellers, the newer refugees were farmers, fishermen, small merchants, and mountain tribespeople.

On average, about half spoke no English at all and the typical adult refugee had barely completed sixth grade. Moreover, unlike the earlier refugees, many of the 680,000 second wave refugees endured brutal physical and psychological trauma before arriving in the U.S. Most of the newer refugees had either been imprisoned in Vietnamese re-education camps, tortured and nearly starved in Pol Pot's Cambodia, or raped, beaten, and robbed by the Thai pirates who preyed on the boat people in the Gulf of Thailand.

The profound dissimilarity between the first and second wave refugees has, since their arrival, been further obscured by the incessant diet of stories about Asian-American whiz kids. However heart-warming a staple the rag-to-riches tale has been for reporters and politicians, it has suffered from a kind of jingoistic ignorance. Stories about Asian Americans have tended to lump all Indochinese together and even mix them up with Japanese, Koreans, and Chinese as well. That is about as accurate as describing the French as Germans or Italians because they're all Europeans.

In the case of the Indochinese, it is precisely their little-noticed heterogeneity that helps explains why so many recent refugees have failed to adjust. Nearly half of those who immigrated to the U.S. after 1980 are from Laos and Cambodia, nations considerably poorer and socially less developed than Vietnam. Many grew up without electricity, running water, clocks or stoves -- much less mass transit, savings accounts, and American Express cards. Given their simple origins, it was not unusual for newly arrived refugees to clean wall-to-wall carpet with hoses or to flood the plumbing in their apartments by trying to flush fish heads down the toilet.

Perhaps none of the refugees were less prepared for life in the United States than the 70,000 Hmong tribesmen who came from the Laotian highlands . Most adult Hmong are illiterate in their own tongue (a written Hmong language was not created until the early 1950s) and many retain traditional beliefs in witchcraft and shamans. Their centuries of experience in slash-and-burn agriculture, opium growing, and guerilla warfare don't tantalize many employers.

Indeed, despite the billions of dollars of resettlement aid already spent by the federal government, a significant minority of the refugees never accommodate to life in the United States. Instead they conceal their alienation and depression behind a mask of traditional courtesy. One severely depressed Cambodian man, for instance, presented the Indochinese Psychiatry Clinic in Boston with a six-foot canvas painting depicting the torture and murder of fellow family members.

Though his case was extreme -- an inscription on his painting noted that 48 out of 49 members of his family were killed by Pol Pot's troops -- his enduring emotional problems are not unusual. In a standardized psychological test given to refugees in San Diego, 45 percent of the adults showed distress symptoms serious enough to require clinical treatment, four times the proportion among the population at large.

A small minority of Vietnamese youth have even formed violent gangs that terrorize their own communities, stealing cars and breaking into homes -- where they terrorize and pistol whip other refugees before robbing them. In one incident last year in Santa Ana, California, a Vietnamese mother of 14 children was on her knees performing her ritual nightly prayer when she was shot and killed.

The misfortunes of the Indochinese run counter to the common belief that cultural permissiveness lies at the root of laziness, crime, and poverty. No one, after all, questions that the Indochinese are polite and cherish hard work. Divorce and out-of-wedlock pregnancy are still taboo among the refugees. Drug and alcohol abuse, similarly, are minimal.

Yet, in the end, the value placed on family and education by the refugees may prevent the Indochinese from becoming America's next underclass. Studies of refugee children, including those of illiterate Hmong parents, indicate they generally do quite well in school. And even when a refugee family is on welfare, one member of the household typically has a paying job, enabling large families to pool resources to finance education and training. Nao Chai Her, a once-proud Hmong village leader who now subsists on welfare with 14 relatives in a 3-bedroom San Diego apartment, put it best: "In Laos we carry the children on our back when we farm. Here, when they are grown, they will pay the parents back."

David Whitman is an associate editor of U.S. News & World Report