Chapter 5: Profits and Perverse Incentives

For a while now, I've been listening to shareholder earnings calls from a multinational, multibillion-dollar, for-profit welfare company called Maximus. Greetings, and welcome to the Maximus Fiscal 2018 First Quarter Conference Call. At this time, all participants are in a listen-only mode. Maximus is one of a few for-profit companies that operate welfare offices in Wisconsin and throughout the country. It's the company I visited at the start of this season. Shareholder earnings calls are not the most edge-of-your-seat listening. Unless you know what to listen for. Like this earnings call from 2018. It started with the normal stuff, a lot of numbers, the CFO talking about their revenue projections. We now expect revenue for fiscal 2018 to range between $2.4 billion and $2.44 billion. But then the mic goes to Maximus' CEO, a man named Bruce Caswell. He earned more than $6 million in compensation last year. And here's where my ears start to perk up. I knew Maximus was already making a lot of money managing and enforcing work requirements in certain welfare programs around the country. But on this call, Bruce wants to tell investors, get ready to make even more money because they're at the vanguard of what he calls a movement. If you think about what's being called Welfare Reform 2.0 domestically and the movement to add work requirements not just to the Medicaid program, but other programs like SNAP, which is the food stamp program, and other similar programs, it's a competency that no other company in the market has like Maximus. Work requirements for welfare programs, they're not just a competency for Maximus. They're a policy the company was largely built on. It went public the year after Welfare Reform 1.0 was passed in 1996. And since then, work requirements are a policy that the company has tried to shape, perpetuate, and grow by spending millions of dollars in lobbying and political donations to both Democratic and Republican parties and elected officials. Like I said, this investor call I just played you a bit of, it happened in 2018. Momentum for adding work requirements to more government benefit programs? It's only kept building since then. I want to thank everyone for joining us today on this important hearing and how we can restore work requirements to lift more Americans out of poverty. In recent months, House Republicans have held hearings on work requirements, sent letters to the White House about it, taken to the airwaves, sounding the call. I actually think we should have work requirements. If we imposed work requirements on SNAP and on Medicaid, we would have the ability to save $1 trillion. Across the country from Georgia to Iowa to Wisconsin, state lawmakers are pushing for more work requirements in their states. What happens when you pay people to stay home? They stay home. Get those people back to work. Work requirements. Work requirements. Work requirements. And a few years ago, back when this welfare reform 2.0 movement was just beginning to bubble up, Maximus, the for-profit welfare company, was already starting to see new business rolling in. Here's CEO Bruce Caswell again on that 2018 shareholders call. In fact, I'm thrilled that we were recently awarded, I won't name the state, but we were recently awarded some business to provide employment and training services to the food stamp population, which has been a requirement under federal law for I think 33 states. And in earnings calls over the next several months and years, Bruce is back on the phone with investors, hyped about how things are unfolding. Well, hyped by corporate CEO standards. Maximus is in the process of launching a new contract in Wisconsin. A new welfare-to-work contract where Maximus will be assigning and enforcing work rules for even more people enrolled in the food stamp program in Wisconsin. So they can gain employment, avoid reliance on benefits, and meet federally mandated work requirements. But as I've been listening to these Maximus earnings calls over the last few years, I've also been listening to people on the other side of that equation. people on welfare who are subject to work requirements, who for-profit companies like Maximus are ultimately earning money off of. I'm a big dollar sign for them. This is Maya Miller. Like a lot of women I've talked to who've been on welfare, she first turned to the system right after she'd had a baby. The daycare job she'd had for years until then didn't pay much and didn't have paid maternity leave, So welfare helped her make ends meet in those early newborn days. And like a lot of women I've talked to, when the program's work requirements kicked in on her case, she didn't feel like they helped her get the kind of training she needed to actually advance her career. After a few months, she left welfare for another low-paying daycare job she found on her own. And she felt trapped. You don't have enough to survive. You're pending pension all over again. You're living paycheck to paycheck. You're basically worse off, you know, than from where you came. But even though Maya had found her new job on her own, even though it was barely enough to support her son on, the for-profit welfare-to-work company where she was enrolled got thousands of dollars from the government as a reward for the fact that Maya had gotten that job. And when Maya found that out, she was mad. I'm making your company money and I need somebody to assist me. And I wasn't receiving that. It really got under my skin to know that they would get allocated more money based upon my participation versus actually me getting the services or something that I really could gain from. Honestly, quite frankly, I feel like all the money that they received off me, I should have gotten big bonuses. You get the bonus, not the company. Yes, that's what should be offered. You keep the job for 90 days, we're going to give you $1,000. Welcome to The Uncertain Hour. I'm Chrissy Clark. This season, the welfare-to-work industrial complex. Who it profits, like really profits, and who pays the price. On today's episode, we're diving deep into the opaque business models of for-profit companies to better understand how they actually make money off the welfare-to-work system and have taken in hundreds of millions of dollars in revenue. It's a model that hasn't gotten a lot of notice since it was implemented almost 30 years ago as part of welfare reform. Back then, there were a few articles written about the specter of what might happen if private companies started taking over. How would the goals of a government program meant to help poor people fare in the hands of corporations duty-bound to make money for their shareholders? The journalist Barbara Ehrenreich warned of perverse incentives. She wrote that the question of how welfare privatization will work, quote, hinges ultimately on that great mathematical mystery. Where will the profits come from? Her fear? We might never know, because the answers might be deep in contracts and subcontracts, kept hidden from view by private companies. Decades later, through our reporting, we're trying to get to the bottom of this mathematical mystery. We've talked to company insiders, watchdog groups, and welfare participants, combed through government contracts, to try and answer how do these companies make money and at whose expense? Chapter 5. Profits and Perverse Incentives. Antoine Dukes is a natural-born salesman. He's sold mortgages. Second mortgages, car long. A little more exciting. I was a manager over a sales force. sales team. Pretty much most of my life I did sales. Back in 2015, Antoine pivoted to doing sales for a whole new industry, welfare. Antoine became a, quote, job developer for a couple of for-profit companies that run welfare-to-work programs in Wisconsin. First, a company called ResCare, where Maya Miller, who we heard from at the top of the show, was enrolled. Then Antoine worked at Maximus, that company whose shareholder earnings calls I've been listening to. Antoine's task at ResCare and Maximus was basically to sell local employers on the idea that they could fill some of their positions with people on welfare, and to sell people on welfare on the idea that they could climb out of poverty if they took one of those jobs. And for Antoine, this wasn't just another sales pitch. It was a calling. I thought I could put more effort into helping people. It was a good feeling, you know, to help people. People come back and say, hey, you know, I appreciate you giving me this job. You don't get these type of opportunities a lot, especially for black and brown people. They don't get those type of opportunities a lot where you just might, who's truly trying to help you and not play games. And it's just your number. Now, you want a number to me. I wanted to make sure you got the job and make sure it was sustainable. Over the years at ResCare and Maximus, Antoine says he worked to develop relationships with local employers, invited them to job fairs he'd organize at the welfare office, where they would set up tables and try to recruit. One company he worked with was General Mills. They have a cereal factory in Milwaukee. And Antoine says they seem to constantly have openings. They needed bodies. They were desperate because they had a high turnover. They explained to me, listen, we need help. We need the help because we got to pump out cereal. We got to get boxes stacked. We got to get stuff out. But we don't have the manpower. And I kept telling them, hey, come to my job fairs, and I'll fill all your positions. It wasn't always easy. A lot of people on welfare face real barriers to employment. Didn't finish high school, had criminal records. But Antoine's a believer in second and third chances. Like this one guy he worked with, a war vet who'd struggled with addiction. He said what happened was he had gotten shot. Oh, he was in the Army. And then he started taking, I think it was Vicodin and one of those trucks he got hooked on. He'd served time in jail. and with that on his record, he was having trouble finding a job. Antoine immediately thought of General Mills. Because they need a body. They're not concerned with your background. The job Antoine could get him only paid $10 an hour. But, he told the guy, if you can prove yourself and hold on to the job for six months, I'll get you something better. Six months later, the Army vet still had his job, so Antoine made good on his promise. He called up another company, FedEx. So he hired him at $15 an hour. And then about five months in, he came back to me and said, hey, guess what? They made me supervisor after five months. They made him supervisor. And he said, hey, I want to thank you. And he gave me a card. He gave me a Walmart gift card for $100. He said, listen, you saved me. This is the best-case scenario. Someone on welfare gets an entry-level job that leads to a higher-paying job down the road. An employer looking to hire finds a worker to help their company meet its bottom line. And the state has one less person on its welfare rolls. Everybody wins, including Antoine. He says Maximus and ResCare offered bonuses to their staff for getting people jobs. After Antoine got 30 people hired in one month, he says Maximus gave him a $500 bonus. And then after I got 100 people hired, I got $1,000 bonus. But as Antoine got people into jobs and made his bonuses, he started to realize something. The system rewarded people like him for the number of jobs they were getting welfare recipients. But the quality of those jobs was another thing altogether Antoine says he came to this realization about four or five years ago when he got a call from the owner of a local McDonald's franchise. He says, you know, I'm looking forward to coming on your job fair. I started you guys getting people out. I said, well, what's your pay? And he said, well, my pay is minimum wage for my employees. My manager, I think, $9.50. This did not meet Antoine's standards for a sustainable job. I said, no, I'm not working for that because if I get a person a job at McDonald's, then they got to get another job just to stay. You know, you can't, who can live off that? You know, you're going to have to have two jobs. So I said, you know what, it's just not worth it to anybody because I still got to get my job. So he hung up on me. About a month later, Antoine says his boss told him to come into her office. She said that after Antoine had told the McDonald's franchise owner he wasn't going to send people to fill his jobs, the franchise owner had called her. She was like, he said that you won't work with him. He says you were really rude to him. I said, no, I wasn't rude to him. I explained to him that I cannot send him people to work for him, make a minimum wage. I wouldn't work with him because their pay was horrible. She was like, I understand Antoine, but we have to use them because he's a pillar in the community. I said, no, no, I understand that. So then my boss says, well, I'll tell you what, anybody that has a really bad background that you can't place, we'll just use McDonald's for that. As far as Antoine could tell, what Antoine's manager seemed to be telling him was that for some people on welfare, his role was just to get them into jobs, not to get picky about what kind of jobs they were. Antoine wasn't really in a position to argue. I said, OK, but I was never going to send anybody there. We asked Maximus about this conversation. They had no comment. The McDonald's franchise owner told us he doesn't remember the calls Antoine is describing, but that even a few years back, those wages Antoine quoted would have been for entry-level positions, often for high schoolers. He said McDonald's can be a great first step in a career, gives adults opportunities to work their way up to better pay, and that his franchises currently have no formal relationship with Maximus. But plenty of people at Maximus have gotten sent to McDonald's in the last few years. According to data we got from the state, McDonald's has been one of the top 10 employers of people who are enrolled in welfare through Maximus in Milwaukee since 2019. And across the state of Wisconsin, among people enrolled in welfare through any private agency, McDonald's is the fourth top employer. When Antoine came home from work the day his manager talked to him about McDonald's, He was upset. But he also had a pretty clear idea why his manager was pushing him to work with companies, even if they were low-paying. Because even if a near-minimum-wage job at McDonald's wasn't enough to bring a person above the poverty line or support a family, even if it wasn't enough to get them off welfare, that job was valuable in other ways. Not just for individual job developers like Antoine, who got bonuses if they got people into a certain number of jobs. But these jobs were also valuable to Maximus, the company as a whole, because of the way the state of Wisconsin has structured its contracts with private companies who run welfare offices. They get paid based on how many people got hired for the month. They had to get a paying job in order to get paid. That's what paid performance was. Remember those performance outcome payments that I mentioned earlier in the series? those special rewards I learned about, payments from the state that contractors like Maximus can claim when someone on their caseload gets a job. Well, connecting people with low-paying but often plentiful jobs at places like McDonald's, that has, over the years, brought Maximus and other private welfare contractors tens of millions of dollars collectively from the state of Wisconsin. And again, those jobs didn't have to keep you out of poverty. They just had to last more than one month and earn you at least $870 in that month, or involve at least 110 hours of work. At a yearly salary, that would equate to about a $10,000 a year job, if the job even lasted that long. Antoine says when he was working at Maximus and ResCare, the for-profit welfare companies, management kept close tabs on these payments. And they had to make a profit. That's what it's about, you know? You've got to get so many people hired. It was all a numbers game. It is. It's a numbers game. These performance outcome payments are not something that private welfare companies or the state of Wisconsin talk about much to the general public. They're not something that's mentioned on the website you go to if you're signing up for welfare. But if you file a public records request for all the contracts that private welfare companies have with the state of Wisconsin, which we did, And if you dig deep into their clauses and tables and appendices, you will find a few paragraphs that get into them. And these incentives make some sense in theory. Rick Ibarra, senior manager for business services at Maximus in Milwaukee, he says even jobs that are low-paying, entry-level jobs can help build employment skills for a person who doesn't have much job history. Rick says these performance outcome payments, or what he calls by their fun-sounding acronym, POPs, they incentivize his company in the right direction. We are always working to get as many POP claims as we possibly can. It is about the incentive, but more importantly, it's about the success on the participant side. So, you know, when you're getting a POP claimant, that means that you have done something very good, for the program participants that you're working with. If you get the pop claim, that means that your program participants have done well. But based on what I've been told by company insiders like Antoine and participants like Maya, and based on the state data we obtained, we found that just because a company is making money from performance outcome incentives, it does not mean that their participants have necessarily done well. In the last couple years, the median wage for people who found jobs while enrolled in welfare in Wisconsin has hovered around $11 an hour. Which, even if you were working full-time, would put you below the poverty line for a family of three. All the same, in the last 10 years, the state has paid companies like Maximus, ResCare, and other for-profit and non-profit companies tens of millions of dollars in these kinds of 30-day job attainment payments. This is not to cover the costs of any work the contractors are doing or overhead. It's extra money to reward them, like a bonus. To be clear, private companies aren't the only ones that have struggled to use the welfare-to-work system to get people into jobs that help them become economically self-sufficient or lift them out of poverty. In other states where governments run welfare-to-work programs, they don't have a great track record either. But with governments in charge, there's no explicit profit motive. When for-profit companies get involved, there's an extra layer of management, a profit-seeking middleman. And Maximus is explicit in its annual reports to the Securities and Exchange Commission about how important performance outcome payments are to its bottom line. Poverty is big business. We have privatized so many of these programs. there's money to be made regulating poor people. Pat D'Alessio is a legal aid attorney in Milwaukee. She's long worked with low-income families, many on welfare. She says more government money should go directly to families rather than for-profit welfare companies. And she questions how much this privatized welfare-to-work system actually helps people. It doesn't get them out of poverty. They're still caught in low-wage jobs. in general, people are getting the opportunity for long-term success. And most people, you know, they can get these low-wage jobs on their own. I've talked to other welfare experts who've studied the privatized system in Wisconsin who've told me there's this larger challenge with privatizing welfare. No matter how you write the contracts, companies with a profit motive are going to prioritize finding ways to make money off those contracts above all else. That's also the conclusion Antoine Dukes came to The guy who's worked for two of the biggest for-profit welfare contractors That operate in Wisconsin, Maximus and ResCare And yet, he says, these performance outcome payments Were a driving force among the companies he worked for In terms of how they ran the welfare programs Not just because of the money they got out of them But because it was part of how the state measured the company's success I mean, because the state, when we used to do meetings with the state and Maximus, they wanted to know results. They would always say, if you don't hit numbers, you will lose contract to another agency. They would say that. They would threaten that a lot. Hey, if you guys want to keep the contract, you have to start hitting your numbers. If you don't hit your numbers, you don't have a contract. They say that every meeting. So then the managers will go back to the supervisors. Hey, we want to make sure we keep the contract. And that was the main goal, keep the contract. Antoine says he eventually got tired of playing what felt to him like a numbers game. As much of a salesman as he is, making money off low-wage jobs for welfare participants, it didn't feel like a sale worth making. He got out of the welfare-to-work industry. Near the beginning of 2020, a few years after his boss at Maximus told him he had to send people to McDonald's, Antoine quit his job. He started his own job placement company, not through any welfare program. He just helps local employers that he gets to choose fill jobs. To find recruits, he still looks to communities where people might be on welfare. I posted this on Facebook in 2021. If you know anyone tired of being on programs like W-2, i.e. welfare, and is frustrated about filling out tons of paperwork to get a job and still can't work, have them contact me. I will put them to work without sending all that paperwork or filling out job logs for a job. It's now time to move away from programs like W-2. If the goal of a program or an agency like Maximus, a program like W-2, if the goal is to help parents who are struggling financially, if the goal is to help them get out of poverty, get a better life, was Maximus succeeding at that? Nope. I'm going to say no to that. I'm going to say because of the fact that they really don't want to help everybody. And over the years, I've learned that. But working in Rescure and Maximus, they didn't want me to help everybody. They just didn't. Something for-profit companies do seem to want when you listen in to their investor calls, like this one from Maximus, is more work requirements. Which could get them even more business. There's obviously a lot of energy right now at the federal level on the topic of work requirements and what they call consumer engagement and personal responsibility as it relates not just to the Medicaid program, but to the SNAP program. and even extending into the housing programs administered by HUD. Private companies have a vested interest in perpetuating the welfare-to-work work requirement system. They've spent many millions of dollars in lobbying and campaign contributions over the years, trying to influence policy. We asked the state of Wisconsin to comment on these private companies track records A spokesperson from the agency that oversees welfare wrote that performance outcome payments aren just to reward a private company for a job a participant gets but to recognize services the company provides that might improve a person's employability. And in recent years, the state has added a new category of performance payments to incentivize companies to connect people with higher-paying jobs. Though, to qualify for those payments, the job only needs to pay $16.40 an hour in Milwaukee. Still not a living wage for a parent with one child. And it's pretty rare for companies to claim one of these payments. I got a more blunt assessment of Wisconsin's Welfare to Work program in a brief phone call I had with Maggie Reno, the director of analytics and research at the state agency that oversees welfare. She says there are clear challenges facing the program, which, again, the state calls W-2. We're keenly aware that a lot of folks end up back on W-2, and that's something that we're really keyed into. We know our participants land in low-wage jobs. It's a little hard to hear, but she's saying they're keenly aware that a lot of folks who go through the Welfare to Work program end up back on welfare or in low-wage jobs. And what do these for-profit welfare-to-work companies have to say for themselves about their track record? Maximus told us in a statement that they're proud of the work they do in Wisconsin and that on top of helping people find jobs, they often help people on welfare secure childcare, transportation, and other services. We also reached out to ResCare, one of the other places Antoine worked, which recently changed its name to Equus. In a statement, that company said that they're dedicated to assisting welfare participants gain access to employment based on their experience and available training opportunities. Of course, written comments from company spokespeople can only communicate so much. After the break, I finally get to talk to the founder of one of these companies, who helped shape this whole privatized model, built his wealth off of it, And he is surprisingly frank about it all. That's after a break. I really wanted to talk with someone high up in one of these major for-profit welfare companies to ask them more about their business models and these performance outcome payments and what they had to show for their welfare-to-work programs. I spoke with a Maximus vice president early on, but the company declined my requests for a follow-up interview with him. ResCare also declined my interview requests. I had better luck with AmericaWorks. It's a privately held for-profit welfare-to-work company that operates in Milwaukee and altogether runs about 30 welfare offices in 17 states. The founder of AmericaWorks, a guy named Peter Cove, agreed to talk to me over Zoom. Oh, there you are. Nice to meet you, Chrissy. Oh, you're such a pretty face. Thank you. Well, before we go any further, I caught a glimpse of you before you turned off your video. Tell me about the mustache. Well, I've had it for about 60 years. 60 years? At least that. Peter Cove has long been a firm believer in the power of work and the power of facial hair. He's got quite the prominent mustache of the handlebar variety, kind of a salt and pepper version of the Monopoly man. He's also fond of bow ties. Today, Peter lives in a quaint town in Connecticut in a big white house neatly landscaped. A vintage British motor car sits in the three-car garage. It's a lifestyle he's funded by founding the company America Works. Which is the first for-profit welfare-to-work company in the United States. And you put the for-profit right in that sentence. Why is that important to highlight? Because, number one, we were the first to do that. And number two, we are the best. The mission statement of America Works? It, quote, changes people's lives by lifting them from government dependence into the productive world of employment. Pope John Paul II had an encyclical on work that if you deny a man a job, you deny them part of their spirituality. Work really does allow you to prepare and present who you are to the world. You're quoting the Pope. Are you religious? I'm Jewish. But that doesn't mean I can't quote the Pope. I mean, they don't make Jews like Jesus any longer. Peter started America Works in the 1980s, before cash assistance had mandatory work requirements or was allowed to be run by private companies. At first, America Works helped government welfare offices find jobs for participants who were looking. But then that idea started bubbling up early on in Wisconsin, soon in other parts of the country, that work should be required to get welfare and that private companies could land contracts administering and enforcing welfare-to-work programs. Peter liked this idea. It reflected his ideology, and as a businessman, he smelled a business opportunity. He was eager to be at the table, influencing policymakers to lean into the thing he'd already made a business out of. In the mid-1990s, Peter got that chance. Vice President Al Gore invited Peter to the White House to sit on a panel about reforming welfare across America. At the time, the culture was rampant with fears about so-called welfare queens and unshakable government dependency. The Clinton administration was on a mission to, quote, end welfare as we know it. And Donna Shalala, who was then Secretary of Health and Human Services, said, you know, we can't have welfare reform in this country until we solve transportation and daycare and education and health. I said, can I speak? And I said, Madam Secretary, have you noticed that we have for the last 40 years said we need all these things and nothing's happened? What we need to be doing is moving people into jobs. work was really the key and the cornerstone of what we should be doing in our country as a policy in an early example of private welfare companies trying to influence welfare policy peter evangelized this idea to folks in the clinton administration and people in republican speaker of the house newt gingrich's camp at that point republicans didn't really believe that people on welfare wanted to work. And Democrats, liberals, didn't believe that they could work, that there were too many barriers they had to be able to go to work. When politicians from across the aisle came together for a full-blown retooling of welfare in America in the form of new legislation passed in 1996, Peter says he was right there, helping shape policy. So you'd see our fingerprints in the bill on the fact that training programs were not what were going to be supported. They were going to support getting people into jobs. And you would also see our fingerprints on the work requirements. That meant that if you were able-bodied and you were on welfare, you had to go to work. Under this brand new version of national welfare policy, welfare recipients would generally be required to start searching for work right away. And private business could be enlisted to run the welfare-to-work program. So to me, that's how we changed the whole dynamic of welfare-to-work in this country. And so began a wave of privatizing government welfare offices. The new welfare reform law allows states to contract with private, for-profit companies to run their welfare systems. We can speak to the business community because we're a private company ourselves. The push for privatizing welfare systems has already spread across the country. Here in Texas, private companies are competing for a contract which could be as much as $2 billion to run the state's welfare services. As one speaker at a welfare privatization conference put it at the time, yes, they had one of those, privatizing welfare offices was probably the, quote, hottest privatization trend in the country. Companies that already had other contracts with the government started eyeing welfare as a new money-making venture. Big companies like the weapons manufacturer Lockheed Martin, the computing giant IBM, and smaller fries like America Works. I asked Peter Kove what his elevator pitch was to lure governments to contract with him. All right, we're going up on an elevator and I've got a minute. Exactly. What we basically say to government is we will charge you for getting someone off welfare and keeping them off welfare for, let's say, six months, in which time you're going to make back much of what would have been put out for keeping them on welfare. And to the private sector, we say we're going to bring you a worker who's going to save you a lot of money. Right. And so do you think of yourself as serving, like, who is your customer? Is it government? Is it employers? Both, both government and employers. We need the government to give us the money at some point. We just said, the way you pay us is you pay us for getting the person off of welfare in a job and staying in a job. And we say to the company, here's somebody you can take, who more likely than not is going to make it. And we're going to help you with our corporate representatives and others to be sure that the person stays in the job. Government is one of your customers. Businesses are another. What about the welfare recipient? Are they? I think of them more as the product of our company rather than customers. So people are the products? Well, there are. I mean, yeah, of course. I mean, they're inventory for us. They're our raw product, our inventory. they come in and we have to do something with them. Terminology may bother some people, but that's in fact what we do. And how much do you make off your inventory, off of your products? We make enough to stay in business. Our revenue runs between $40 and $50 million a year. It's all part of the pitch that America Works brings to state and local governments whose welfare offices it wants to run. For us, as a private-for-profit company, we had a bottom line. And so we said, if we don't succeed, we go out of business. That's not true of government. If government doesn't succeed, it just gets funded at a higher level. If we don't succeed, we go out of business. But how do you measure that success? I ran Peter through some of the results we found in our analysis of data from the state of Wisconsin. From 2016 to 2021, America Works, the company he founded, got on average $6.3 million each year from Wisconsin. That includes the money the company gets in exchange for managing various parts of the welfare program in the eastern-central part of Milwaukee, and all the performance outcome payments it gets. During that time, America Works had an average of 2,700 people enrolled in their cash welfare program each year. And based on our analysis of state data an average of about 1 of those enrollees were considered job according to the state What realistic or what a good number for how many people would actually be getting jobs through America Works in that? I would say about two-thirds. So two-thirds is almost 70%. I'll do a little quick math for you. That would be about 1,100 people. But according to state data, in that time, America Works claimed job attainments for way less people than that, an average of just 450 people each year. That means that at America Works, roughly just 27% of the number of people deemed job-ready got jobs that lasted more than 30 days. 27%. So much less than two-thirds. Not even one-third. what do you make of that? What do I make of that? That we're not doing as well as I would hope we would be doing that I would hope that we would be getting more people into jobs and that it's not easy in Milwaukee we have a very entrenched welfare population there and moving them from the world's and off is not easy and all I would say to you is we've got to do a better job there And don't forget, those jobs that America Works did claim an average of 450 people got each year, none of them are necessarily even jobs you can support yourself or a family on. In order for a company to make a claim on these jobs, it only needs to earn you about $800 for a month. Meanwhile, America Works earned an average of a million dollars a year in rewards from the state for the fact that people on their caseload got those jobs. I should say, other private contractors besides America Works fared just about the same in terms of the number of job-ready people who actually got jobs. From 2016 to 2021, not a single welfare company, for-profit or non-profit, in Milwaukee County claimed more than a third of job-ready welfare participants got a job that lasted more than 30 days. We also looked at how many people contractors claimed had gotten jobs that lasted longer, at least 90 days. According to our analysis of state data, America Works claimed that on average only 16% of job-ready people on their caseload got those longer-lasting jobs. Other private contractors in Milwaukee fared about the same. And then the kinds of jobs, how do you approach that? How do you think about, like, should it just be literally the first job that somebody can get? And then it's sort of ideally a ladder from there. At this point, you can hear Peter fidgeting a bit, clicking his pen over and over. Or is it, does it make sense in some cases to, okay, you got this McDonald's job, but don't take it. Let's see if we can get you a job with a slightly higher wage. How do you, how do the, how do the programs approach that question? What was your first job? My first job was babysitting. Would you think as a company that I should have told you, don't take that, you can get a better job than that? Well, when I was 12, no, because I probably couldn't have gotten any other jobs. I'm trying to make a point. My point is that I believe in the dignity of work, and I believe that you get into the job and then you move up from that job. A lot of the people that we place don't even know how to present themselves in a job. That first job gives them the opportunity to learn what the work is like, how to behave in the job. What do you do when someone asks you to do something you don't want to do? How do you handle coming in late? What do you say to the person? There are all kinds of work issues that people don't really understand because they haven't really worked. And consequently, I want to see people take any job they can get, and then we'll help them move up. We reached out to current management at America Works about how many jobs people on their caseload have gotten. They didn't respond to repeated requests for comment. We asked the state of Wisconsin about it, too. A spokesperson told us that the company has, quote, met or exceeded the required number of performance outcomes. But are those requirements good enough? If the company has, in many recent years, according to our analysis, been making claims that on average, less than a third of the number of job-ready people in their caseload got jobs that lasted more than 30 days, to be fair, not all jobs may turn into one of those claims. There's lots of documentation needed to submit a claim, and some jobs don't pay enough or give people enough hours to count. But the state also keeps track of a broader metric with a lower standard. How many, quote, full-time jobs, meaning at least 30 hours per week, do people in AmericaWorks get? This includes jobs that don't even last a month. According to that much lower standard, data still shows that less than a third of job-ready people got those kinds of jobs at AmericaWorks. And we know from studies of welfare-to-work programs more broadly that people do not usually end up getting jobs that help them climb out of poverty in the long run. But the thing is, even if America Works and other private companies aren't showing huge results in Wisconsin for getting people into jobs, let alone jobs that last very long or get them out of poverty, most of their money comes from all the other stuff they get paid to do to run a welfare-to-work system. Like enforcing time limits for welfare and enforcing work requirements. All the job searches, job fairs, job training classes that welfare recipients are required to document they've actually done. All the stuff that was so aggravating to Darnetta, Maya, and so many other people I've talked to on welfare. I've heard people tell me that they felt that the requirement part felt demeaning or condescending. that they have said, you know, of course, I know that work is important, and I want to work and I've worked in my life. But actually, the bureaucracy and kind of enforcement around the work requirements, the job logs and the whole paper trail around it, I have heard some people say that starts to feel like it's getting in the way of actually getting in the job. They're absolutely right. I would not disagree with that. My wife calls it administrivia. and there's a lot of it. And sometimes the work requirements are done in a very onerous way, which is wrong. That's wrong. But the idea that in any way it's demeaning to ask a person to work in order to get benefits, to me is not demeaning. What's demeaning is to keep the person from working. Just to play devil's advocate with that, I mean, doesn't a system that is requiring work, as soon as you bring in the requirement piece, aren't you ensuring that there's going to be a lot of that? What did your wife call it? Administrivia. Administrivia. You know, like, isn't that necessary? If you're going to say, this is a requirement, and we're going to enforce it, you're opening up the floodgates to a lot of paperwork and a lot of monitoring and a lot of That happens with government, absolutely. And I agree that that can happen. But what also can happen is that people can go to work. Some critics say with all of these private companies dependent on welfare to work programs, have we started a new welfare industrial complex? These for-profit companies that are dependent upon these work programs. The fact is, it's not the providers that need the government. It's the government that needs the providers because they have not been good at getting people into jobs. So I see it not as a welfare industrial complex. I see it as a marketplace where people can vie to do things for the government that the government is not capable of doing itself. But, like I said, even if private companies are not that good at getting people into jobs, or good jobs, these companies still get paid by the state. For every person that just walks into an America Works office in Wisconsin and says, hi, I need help, and gets enrolled in welfare, for every one of those cases that America Works manages, the company takes in money, regardless of whether that person actually gets a job or gets out of poverty. For-profit contractors love to say that they only get paid for how well they perform. But a lot of the money these companies get is for administrativia. Last year, in 2022, the state paid America Works almost $5 million for managing about 2,000 welfare cases, assigning participants required work activities, making sure they were doing them for the required number of hours, providing them with required motivational classes and work placements, monitoring and sanctioning them. One way or another, these agencies are earning money. Many of them are for-profit companies. Their goal is to make money. There's that old joke about the couple who complains about a restaurant. The wife says, the food is horrible. And the husband adds, and they have such small portions. If you look at the track record of the welfare-to-work model, private contractors seem to be getting people into pretty bad jobs, and not that many of them. But if we're paying these companies millions of dollars in taxpayer money to help people climb out of poverty, shouldn't what's being served up be good and plentiful? That's it for this episode of The Uncertain Hour. Next week, we look at how the privatized welfare-to-work system shapes jobs everywhere, even for people who aren't on welfare. I didn't want to get on W-2 because of all the strenuous stuff they were sending people through just to get a check. So I didn't even bother to apply. I was like, work for a temp agency, I'll probably come out better than 673 or money anyway. How many different temp agencies do you think you've worked for? At least 15 to 20. A lot. And how many different temp assignments? Ooh, more did I care to count. That's in the next chapter of this season of The Uncertain Hour. This episode was reported by me, Chrissy Clark. It was written and produced by me, Grace Rubin, and Peter Balanon-Rosen. Michael May is our editor. Data Wrangling, So Much Data Wrangling, by Elizabeth Gothrop and Ben Clary from APM Research Lab. If you want to read more about Maximus, ResCare, and other for-profit welfare companies, check out some great articles by Tracy McMillan in Mother Jones and H. Claire Brown at The Counter. Research and production assistance from Mark Hay Green and Tiffany Bowie. Betsy Towner-Levine provided fact-check support. Scoring and sound design by the amazing Chris Julen. Jake Cherry mixed our episode. Caitlin Esch is our senior producer. Bridget Bodner is director of podcasts at Marketplace. Francesca Levy is the executive director of digital. Neil Scarborough is Marketplace's VP and general manager. Archival sound from the American Archive of Public Broadcasting, Wisconsin Public Radio, C-SPAN, and PBS Wisconsin. Special thanks to Nancy Fargali, Donna Tam, Catherine Winter, Tom Sheck, Carolyn Heinrich, and Haley Hirschman.