Chapter 6: The Welfare to Temp Work Pipeline

In all the reporting I've done on the privatized welfare-to-work system in Wisconsin, there's something I kept noticing in the data about where a lot of people who go through the system end up. The idea of welfare-to-work is, of course, to connect people on welfare to jobs that hopefully allow them to support themselves. But actually, in Wisconsin, in the last several years, the most common type of job that people on cash welfare find is at temp agencies. How are you today? Good. Like this one. We have first and second shift available. What shift are you looking for? I'll do second shift. Okay. Quick refresher, a temp agency is a company that hires people to work jobs at other companies. Jobs that are, as their name suggests, temporary. and often low wage. I'm going to go over the orientation with you. If you have any questions, just stop me and let me know, okay? The temp agency I'm standing in right now, it's in a strip mall on the south side of Milwaukee. It's a company called Parallel Employment Group. And when I get there, a new hire is getting oriented for his new temporary assignment at a local sausage factory in town. A woman from the temp agency sits at a desk and reads the new recruit, a battery of rules and safety guidelines. The safest way to sharpen a knife is to hold the knife on a flat, solid surface while running the sharpener over the blade. Injuries to the hands and fingers are very common accidents in the plants. While moving product racks, you should keep your hands on the inside of the rack to protect your hands and fingers from being crushed. The temp work at the sausage factory is intense. You must wear your earplugs. You might not notice right away, but in the long run, it can do some damage to your hearing. Dress in layers. It's cold in there. It's about 30 degrees. The temp work involves long hours. So you must be flexible with working 8 to 10-hour shifts and Saturdays as needed based on production needs. Are you okay with that? And the temp work pays less than a permanent job would at the factory. Okay, and you're at $11.75 an hour. If you're either late or absent or counseled on performance more than three times. They can and will end your assignment right then and there. Do you have any questions on the attendance policy? No, that's all understandable. The soon-to-be sausage factory temp worker finishes filling out the intake paperwork. Does his drug test. It's a mouth swap, so go ahead, put it in your mouth, keep it in your mouth. Gets issued some steel-toed boots, the cost of which will come out of his pay. Without steel-toed boots, you will not be able to work. And he's reminded, don't leave the boots or anything in the sausage factory locker at the end of your shifts. Because it's a temp job after all. You never know when you might get terminated. And if you are? You will not be able to go back to get your stuff, okay? And finally she tells him, after 90 days, there's a chance he could get hired on at the sausage factory permanently. But it's no guarantee. They will ask for your attendance report, and they'll look at your performance before they give you an offer. Okay? Are you available to start Monday? Yes, ma'am. She pulls some paperwork off her clipboard, hands it to him. Thank you so much. He heads out the door. To you too. But then one of the temp agency staffers calls out to him, wait. Oh, hold on. You forgot something. They give him a complimentary T-shirt and a complimentary lunchbox. Actually, you guys give him a lunchbox. And a complimentary water bottle. And one more thing. You get to refer people. $100 bonus. $100 bonus? I didn't, so I gotta get on. Just go online. That promise of $100 referral bonus, the care package of lunchbox, water bottle, and T-shirt, the temp agency was showering these things onto their new sausage factory recruit for one big reason. To draw in more people. Because these jobs, often so precarious and low-paying, they've gotten really hard to fill, according to Kirk Ledoux. Back then, he was the executive vice president of this temp agency. Now he's the president. There's just a dogfight for people. And so you're doing whatever you can to get people through your doors. And you're going to use whatever avenue you can. Right now, it's an employee market. And if you just can get to work, be there every day, you're going to be a valuable commodity. I first talked to Kirk and visited this temp agency about three years ago, right before the pandemic. Unemployment was really low back then. Today, it's even lower. meaning it's even more of what Kirk calls this dogfight for people. But there is a secret weapon temp companies like Kirk's have in this fight, a useful tool that has helped bring workers these valuable commodities through its doors. That secret weapon is private welfare-to-work companies that contract with governments to run welfare offices. Yolanda Chavez, she works with Kirk at the temp agency, explains that a welfare-to-work company will call her up when they're trying to find a job for someone on welfare, like this nonprofit that runs a government welfare office near them in Milwaukee, a company called UMOS. So they do refer and send some of their, the people that come there, they do send them over by us at times. And then there's a for-profit welfare company, a little south of Milwaukee, that sends her people on welfare too. rest care in Racine. We have someone there at contact. She will reach out to us. Hey, I have, you know, you want to come set up a table this week? I have some new clients coming in and we'll go and set up a table. So we do work with her and she'll refer candidates to us as well. Job fairs, things like that. Yes. In fact, this temp agency that I'm sitting at, Parallel Employment Group, was in a recent year, according to data we obtained from the state of Wisconsin, the sixth biggest employer of people who've moved from welfare to work in the state. And it's not just this company. In the last decade, up to eight of the top 10 employers of people on welfare each year have been temp agencies. According to the most recent available data in Wisconsin from 2013 to 2019, an average of nearly 70% of the people on cash welfare who had a job had a temp job. These jobs are, by their nature, temporary. Often they're low-paying and precarious in places like meatpacking plants, warehouses, factories. And some temp companies that are having a hard time filling these jobs, they've joined forces with policymakers and private welfare companies to advocate for creating more and stricter work requirements in welfare programs. Work requirements to funnel more people receiving government benefits into these low-paying, precarious jobs. And once those jobs end, after a few days or a few months, often those people turn right back to the welfare office in an endless loop. Welcome to The Uncertain Hour. I'm Chrissy Clark. This season, we're looking at the welfare-to-work industrial complex, who it profits, like really profits, and who pays the price. On this final episode of this season, we look at the cozy relationship between the for-profit welfare companies tasked with helping people on welfare find jobs and the for-profit temp companies desperate to put those people to work in some of our economy's lowest-paying jobs. It's a symbiotic relationship where both welfare companies and temp companies benefit from the mandatory work requirements that govern our welfare system. And it's a relationship where both companies take in millions of taxpayer dollars for putting people on welfare to work in these low-paying, precarious jobs that often keep them in poverty and on welfare. Taxpayer dollars that could instead be going directly to families who are struggling. We ask, has the welfare-to-work industry really become the welfare-to-temp work industry? And I get to put some of what I've learned over the course of my reporting on the welfare-to-work system to one of the system's original architects, the former governor of Wisconsin, Tommy Thompson. Chapter 6, the welfare-to-temp work pipeline. To be a job developer at a welfare-to-work company is to be a collector of business cards. They're kind of your little black book. I notice you have like a stack of cards here. Are those like employers that you have good relations with? Yep. I'm back at Maximus, one of the for-profit companies that run welfare offices in Milwaukee. I'm in the part of the office where the job developers sit. It's a job developer's task to drum up job leads for people on welfare. They can get bonuses if they place enough people into jobs each month. And they all seem to have piles of business cards stacked on their desks, including Delonte Carter. Remember him from the first episode of the season? Black turtleneck, close-cropped hair, the guy who helped Quanessa fix her resume and find her that custodian job? He says this pile of business cards, it's an important tool of his trade. These are definitely some of the top key employers that we may work with on a weekly, sometime even day-to-day basis, where we have clients who are coming in and they're looking, again, for hot jobs and opportunities right away. I can go right to this pile, and I at least have two to three of each sector that's always available. Can you just go through some of your two? Yep. So we have like Aramark, the United States Postal Service, L.I. Barton, which is a security company. It runs the gamut of industries. But there's one sector that shows up a lot in this pile. You guessed it, the temp industry. And I saw Adeco. A temp company. I have a lot of Adeco. Kelly. Kelly Services, also a temp company. Employment Connections plus BG Multifamily, Goodwill Talent Bridge. Temp company, temp company, temp company. I encourage our projects to work with staffing agencies because it becomes a force multiplier. That's Joe Murphy. We also met him back in episode one in this season. Trim goatee in a dark pinstriped suit. He's a vice president at Maximus, the guy who was my sort of chaperone when I visited. The guy who gave those motivational pep talks to the women on welfare going through that Maximus job readiness class that he designed. Joe says not only are temp jobs good options for people on welfare as a first step on the ladder of employment, he says temp companies, or staffing agencies as he calls them, are also just really helpful partners to private welfare companies like Maximus, this force multiplier. They have recruiters and they have salespeople that go build relationships. And if you can make the right connections locally, it seems to get participants employed. They provide a good service. Like I said earlier, according to state data we obtained in Wisconsin from 2013 to 2019, an average of almost 70 percent of all the people who went through the state's privatized cash welfare to work system and had a job had a temp job. At Maximus, the rate was even higher. An average of nearly 75% of people on their caseload who had jobs had temp jobs. I should say, since the beginning of the pandemic, it appears fewer of the top 10 employers of people on welfare have been temp agencies. But still, two out of the top 10. And I just want to point out, if you look back through the history of government programs focused on helping people get jobs? There were many decades when federal policy explicitly barred those programs from referring people to temp agencies. Temp companies were seen as labor sharks, peddling jobs with uncertain futures, middlemen who took a cut of the money that could otherwise be going directly to the worker. But under pressure from the temp industry, those rules and how they were interpreted evolved over the 1960s, 70s, and 80s. Meanwhile, use of temp companies grew across the economy, especially in blue-collar jobs, as factories and warehouses saw temp work as a cheaper, more flexible source of labor. All of which has brought us to the point where, these days, temp companies are, in Wisconsin, the major employer of welfare participants. Except, Joe corrects me, Actually, let's not call them temp companies. When we hear the term temp, temp, it's temporary, okay? And in reality, it's a staffing firm to get them a full-time position. So when you hear the word temp job or a temp firm, it sounds like it's going to be part-time work for a short period of time. But in reality, it's a staffing firm that offers a full-time position. In fact, Joe and his colleagues at Maximus told me they only work with temp companies if they offer jobs that can become permanent, usually after 90 days. These are what's known in the biz as temp-to-perm positions, which sounds like a hairstyle, but also like a decent opportunity for people on welfare So I was curious about this If Maximus was telling me they only connect people on welfare with temp jobs that could become permanent how many of them actually do? How do you track that? So, like, how many of your clients end up getting hired permanently? The one thing that we need to mention here is that... It took several minutes of back and forth to get an answer on this one. We'd have to go back and look at the data, but... First, one of Joe's colleagues told me they needed to check the data. They didn't have it at their fingertips, which, fine. But I just wanted to make sure, do you actually collect information in any kind of systematic way about whether those people are getting hired directly and getting permanent jobs? Joe looked around the room for a minute, and then he said, No, we don't. You don't track that? We don't track that, but let me think. Okay. Why wouldn't you track that? Because that seems like that would be a good, if that's the goal. It would become an administrative nightmare to try to keep those kind of statistics. So Maximus likes to say they only connect people with temp-to-perm jobs, but they don't actually have any way of knowing how many of them turn out to be permanent. There is research that's been done on this question more broadly. Studies that have looked at companies that offer temp-to-perm positions. Only about a quarter of people in those jobs actually get hired on. Another study of a program that connected people on welfare to temp jobs found no evidence that those jobs helped them transition to a permanent job. But whether or not these temp jobs that private welfare-to-work companies funnel participants into actually turn into permanent jobs, that doesn't really matter, at least when it comes to a welfare company's bottom line. Because remember, a job only needs to last a month or three months for the state of Wisconsin to pay a welfare contractor one of those performance outcome payments for getting someone on their caseload employed. If a temp job fizzles out the day after that month or three months is over, the contractor still gets paid. So why not put people into a lot of temp jobs, especially when they're so easy to get? Remember, there's a dogfight for people going on at the temp companies, and the only skill you really need is showing up. The welfare-to-temp work pipeline was on full display at a job fair I visited a while back that Maximus put on for people getting government assistance just before the pandemic. There were about 20 companies there looking for recruits. We have positions starting $11, going up to $11.50. Sitting at rows of tables adorned with bowls of Skittles and Snickers and swag pens and business cards. At least a half dozen of the companies were temp agencies. I go down the line of tables, SourcePoint staffing, Agilon staffing. So I went Life Got Better Staffing Service. Masters in Staffing. Elite Staffing. Your only child staffing solutions. I see a woman standing, looking at all the tables, with a warm but worried smile. Her name's Haven Brooks. She tells me she's four months pregnant, she's on food stamps, and she's enrolled in one of the welfare-to-work programs that Maximus runs. She's here today to try to find a job. Are you looking for a particular kind of job? Yeah, a permanent job is something I'm more interested in. I asked her what she made of all the temp companies that we're recruiting here. Me personally, right now, I feel like it's just not something for me because it's like they send you in circles with jobs. What do you mean, do you feel like they send you in circles? By way of explanation, she tells me, well, she's actually already working for a temp company right now, mostly packing boxes and warehouses for food and clothing companies. They call me whenever they have things available, so it's like on and off when I work. The work is so unstable and the wages so low, she can't make ends meet on her own, which is why she's on food stamps and why she's here at this job fair that Maximus organized so she can hopefully find a better job. A lot of times companies will say, we do temp to hire, temp to perm. Do you find that usually, does that work out? I mean, say it's an assignment they send you to, they say it's a attempt to hire. If you're here for at least three months, then you possibly get hired on permanently, but it's not guaranteed. Sometimes they don't even need you for the whole three months, so it's like you don't have a chance to get hired on permanently. So it's pointless, really. So there's the circle you just sort of... It's the circle that I really wasn't interested. And yet, here she is at this job fair organized by Maximus, the for-profit welfare agency that's supposed to be helping her. This job fair filled with recruiters for more temp companies with more jobs that may or may not ever hire her on permanently. I should say, we also reached out to the other private welfare contractors that we heard mention of earlier in this episode that had sent people on welfare to the temp company that works with the sausage factory. A spokesperson from the nonprofit UMOS said that they, quote, want their clients to move beyond the temporary staffing mentality to get certification that can lead to a career with more stability. The for-profit company ResCare, which recently changed its name to Equus, told us in a statement, that the companies dedicated to assisting welfare participants gain access to employment based on their experience and available training opportunities. But broadly, what seems to be happening to a lot of people going through the privatized welfare-to-work system in Wisconsin is that there are those, like Haven, who feel caught in an endless circle of temp job to welfare to temp job. And then there are the people who decide, If that's what's going to happen, what's the point in turning to welfare at all? And that has an effect on our whole economy. That's after a break. A while back, I drove a few miles across Milwaukee from the Maximus office to meet a woman named Tracy Jones. She was living with her son, his wife, and their kids. What is that? This is a microphone. Including an extremely cute three-year-old. You can say hi to your dad. Hi, dad. Is your grandma in here? Okay. Tracy had just gotten off work, the night shift, when I arrived. She was in the kitchen doing the dishes, wearing a Chicago Bulls jersey and giant fuzzy slippers in the shape of lion feet. The pillows are so great. And got the toes and everything. She's got a deadpan smile and a twinkle in her eye. Her family lives in a small apartment without much furniture. The adults divvy up paychecks to cover bills. For most of Tracy's life, money's been tight. To me, the best things in life are free, let me say that. Because the best things in life are free. But financially, I'm poor. Tracy's mom had gotten welfare when Tracy was a kid to help pay the bills. When Tracy had her own son in her early 20s and was bouncing between working and working toward a degree in human services at the local community college, she also turned to welfare now and then to help make ends meet. They said it helped you stay afloat. But around this time, this was the mid-1990s, welfare reform happened. And cash assistance for poor families went from a mostly no-strings-attached monthly check to a monthly check with lots of work-requirement-shaped strings attached. Tracy heard stories about all the required meetings, work readiness trainings, job search logs. The next time she hit a tight spot money-wise... I didn't even bother to apply because of all the stringy stuff they were sending people through just to get a check. People I knew, I heard the horror stories from them. Instead, one day on the bus, she saw this sign for a temp agency. I forgot where me and my son was coming from, but I rolled past this sign and it said, work today, get paid today, labor world. And I was like, work today, I was like, that sounded kind of smooth. I'm going to go check them out in the morning. The more she thought about it, temp work meant immediate money versus a $673 welfare check it would take weeks to get and require all these hoops to jump through. The choice seemed obvious. I was like, I might as well get a job, work for a temp agency. I'll probably come out better than 673 a month anyway. Her first temp job, they sent her to a candy factory that made heart-shaped Valentine's candies, the kind that say things like, be mine. Tracy's task, to find broken or misprinted ones, get rid of them before the candy was packed. That's when my world of temp and me starting working for temp began. That was more than 20 years ago. If employment comes with this built-in possibility of advancement, Tracy says with temp work, that wasn't there. Working hard and proving yourself didn't have much potential of turning into a promotion. Instead, Tracy found herself over and over in between jobs, in need of money. And the cycle kept repeating itself. She never had a chance to finish her college degree. And in hard times, when she lost a job or had a sudden unexpected expense, rather than turn to the safety net that welfare was, in theory, supposed to provide for families in need, Tracy turned directly to temp agencies. She opted out of the government safety net system. Instead, temp work itself became Tracy's safety net. Semi-permanent jobs, mostly with shifts and factories. Some people might hear this story of Tracy turning away from welfare. And think of it as a success. Better she look for a paycheck than a government check. But the kinds of jobs she was getting were keeping her stuck. You'll work a temp job and you'll find out that you're making half of what the regular staff is making. You have no benefits, no paid holidays, no sick days. And then the job would just be over. Temp work is too fickle. Temp job, you can come in and for no reason whatsoever you can be fired. When we spoke, Tracy's most recent job had been as a temp at a General Mills factory, where they make Chex Mix. Chex Mix. They have different flavors. They like strawberry Chex Mix. Strawberry Chex Mix. Who knew? Tracy's job as a temp was to supervise other temps. One of her responsibilities there? To make sure the temps didn't eat it. So if I caught somebody chewing on the floor or something, I would have to ask them to spit that out. That was your job? That was my job to say, excuse me, I don't know what you're chewing on, but I'm going to need you to spit that out. Tracy worked third shift, 11 p.m. to 7 a.m. She'd been there more than a year. The hours were brutal. It was a long bus ride late at night to get there. After her shift, when she got home, she had to watch her three-year-old granddaughter while her son and daughter-in-law worked. So she'd bring her granddaughter into the bedroom with her and doze while the child watched TV. Tracy showed me how she'd barricade the door so her granddaughter couldn't get out to the rest of the house and get hurt. Then, after she'd figured out how to manage all the complications of that Chex Mix factory temp job, it didn't last either. 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 do you think you've had? Ooh, more did I care to count. I asked Tracy why she thinks she's had so many temp jobs, and she drew a line straight back to how welfare changed and got all those work requirements put into it back in the 90s. She says that's when she had to drop out of college because college didn't count as work, and why she first started looking at temp jobs to make immediate money when the welfare-to-work system felt too complicated to navigate. The way she sees it, if so many work requirements had not been put into the system... Then I could have finished my degree. I could have took time to find permanent gain for what I like to call, what they call gain for permanent employment. When you have different options, you make different choices. If you think about it, temp companies have benefited from the way the Welfare to Work work requirement system operates today in two different ways. They get workers like Tracy, who turn to them because they've opted out of the onerousness of the welfare system and are using temp jobs as their safety net instead. And temp companies are getting people like Haven, the woman I met at that job fair organized by Maximus, people who are being hand-delivered to them by welfare-to-work companies. And it turns out, temp companies are well aware of the benefits that they get from welfare work requirements. In fact some of them are actively pushing to put more work requirements into more safety net programs so they can get more workers One of the temp companies who doing a lot of this pushing is the company run by this guy Well, I'll start with this. Getting paid for not working can become a habit. You know, it's almost like an addiction. Bill Stoller has positioned himself as the guy to help people kick that non-working addiction. He heads up Express Employment Professionals. It's the parent company of one of the temp agencies that's ranked among Wisconsin's top employers of welfare recipients. And Bill's temp company has gone to great lengths to promote the welfare work requirement cause. One strategy they've turned to? His company puts out white papers, the type of paper given directly to policymakers to urge them to pass certain laws. The title of one paper? Help Wanted, A Roadmap to Finding More Workers. It puts forward 10 ways policymakers can grow the U.S. workforce. Number one and number two on that list? Redesign government assistance programs and add work requirements. The white paper says, quote, If you're able-bodied, you should work. If you don't, why should you qualify for benefits, especially when businesses are crying out for workers? It goes on to urge policymakers to add work requirements to Medicaid benefits and make work requirements in cash welfare and food stamps even more strict. So I asked Bill, why is that a goal? Well, it gives us a pool of more people that we can help. Number one, that's really our purpose is to put people to work. And I think a person loses self-esteem when they don't go back to work, whether it's voluntary or involuntary. Work is very important for their psyche. It's important for their ego. I guess I just wonder when people don't have that desire, are they supposed to be taken care of on an ongoing basis? And Bill's temp company's been putting real money behind this effort to get more work requirements into government benefits. The company's political action committee and one of its founders have collectively contributed more than $100,000 in the last several years to politicians who are some of the most vocal supporters of adding new work requirements to programs like food stamps, Medicaid, and public housing. President Trump, Republican Senators John Cornyn and recently retired Jim Inhofe, House Republican Kevin Hearn. I wanted to see what Bill Stoller, the CEO of this national temp company, made of that thing we found out in our reporting. That according to recent state data from Wisconsin, an average of almost 70% of people in the state who are on welfare and have jobs work temp jobs. And that branches of his company, Express Employment, have ranked among the top 10 companies that welfare recipients work in. Yeah, I was just curious what you make of the fact that your company is one of the top employers, at least in Wisconsin, of people who receive that. Well, I'm thrilled to hear that because I think everybody deserves an opportunity. Everybody deserves a chance. I'm delighted that we're able to help people that truly do need help in finding work. Bill was telling me a version of what the folks at Maximus, the for-profit welfare-to-work company, had told me. Temp work is a good stepping stone for people on welfare as they're trying to climb out of poverty. But is that really true? A study from the National Bureau of Economic Research took a look at temp agencies' close relationships with the welfare-to-work system in Michigan and followed three groups of similar welfare recipients over two years. One group of people that the welfare-to-work model placed in temp jobs, a second group placed in direct hire jobs, and a third group left up to their own devices. The study found that in the short term, getting placed in a direct hire or temp job increased earnings. But when researchers checked back two years later, the people with temp jobs were actually doing worse than anyone, even people who hadn't been placed in any job right away. The people who'd been given temp jobs were likely to continue to temp, and since those jobs came with end dates, lower pay than regular jobs and often no benefits, they were also much more likely to turn back to welfare. Rather than the welfare-to-work system, it looked more like the welfare-to-temp-work-to-welfare-again system. I put this to Bill. Some people do have concerns that because of work requirements, so many people on government assistance are in temp jobs that they don't seem like particularly good jobs. Well, I think those that are concerned about that ought to go to work for a temporary staffing company and see all the things that we do to help people. Have you ever been a temp? Have I? Well, I always consider everything being temporary if I don't do my job. But I guess it worked for it. Have you ever worked for it? Sure. Well, no, I haven't. Some of the concerns that I'm bringing up are actually from people who are on government assistance and have worked for temp companies. And so are speaking from firsthand experience that they feel like, you know, this is the job I'm taking because it is the easiest, fastest job to get. And I know that I need to get a job because of work requirements. So to folks who do have firsthand experience are saying, listen, this is not a job I want, but it's the job that I feel kind of forced into. And I don't see a lot of opportunities here. What do you say to them? Well, again, I think you need to find, you need to have several experiences, and then you need to find the company that you do want to work for. Because I do believe that it's a two-way street, and it's not just the company that makes the decision, it's the worker that makes the decision, too. So Bill, Temp Company CEO, says that ultimately, it's in the workers' hands how things turn out. and that he thinks temp jobs can be good stepping stones for people on welfare. But research shows temp jobs seem to be more of a stumbling block for them, that a critical part of climbing out of poverty is to have not just any job, but a stable job, and that temp jobs have a way of trapping people in poverty, meaning they keep needing assistance. And there is another government policy that may inadvertently encourage this welfare-to-temp-work-to-welfare cycle even more. It's a program called the Work Opportunity Tax Credit, or WOTC. It's meant to encourage companies to take a chance on hiring people who are considered hard to employ. The government gives private businesses thousands of dollars in tax credits for every person they hire that's recently been on welfare. And the reason that you do that, if two people are equally qualified, the federal government wants you to stop and consider, if you hire the WOTC-eligible person, you're going to get a tax credit. Employers are using this as a windfall. This is Kitty Legere, Vice President of Tax Credit and Employer Services at Maximus, the private welfare-to-work company. The way the tax credit program works for every welfare participant that a company employs for at least 120 hours, so three weeks full-time, the government will give that company a tax credit, starting at $1,500 per person, and if more hours are worked, up to $2,400. dollars. It's a big deal. Yeah, it's a big deal. Like if you're a company that hires 5,000 people, you know, it's a half a million dollar deal. You know, that's a big deal when you're talking about dollar for dollar savings. I mean, you have to sell a lot of, you know, clothes, a lot of hamburgers, a lot of whatevers, to get $500,000 in this day and age. Right. And this is something you're kind of doing already. Right. Because in this tight labor market, temp agencies like that one giving out free t-shirts and cash bonuses for people applying to work at the sausage factory, they're hiring welfare participants regardless of any tax credit. And temp companies have always eyed these credits hungrily. According to a study from 2008 in Wisconsin, half of the top six claimants for these kinds of credits were temp agencies. More recently, a journalist at ProPublica analyzed applications for these tax credits in nine states between 2018 and 2020. They found nearly a quarter of all jobs that earned a credit were with temp agencies. A spokesperson for Bill Stoller's company, Express Employment, told me that their franchise owners are encouraged to participate in these tax credits. The owner of an Express Employment franchise near Milwaukee told me that in two recent years, they were able to get these tax credits for more than a third of the new hires that they screened. And these credits can be a big deal for temp companies. In one 11-year stretch, the temp company Kelly Services claimed over $190 million from the WOTC program, the equivalent of 77% of their net income. The equivalent of 77% of their net income from tax credits for giving so-called hard-to-employed people, including welfare participants and food stamp recipients, jobs that, by definition, mean the person will be out of a job in the future. As long as they work 120 hours, you get the credit. And it's not just temp companies cashing in on this work opportunity tax credit. For-profit welfare companies like Maximus often get a cut of it too, which is where Kitty comes in. She works for the division of Maximus that will do all the paperwork and screening to get a company a WOTC credit. And then if you get a credit, then we get a percentage of the tax credit. somewhere between, you know, 12 and 15 percent. Job developers at Maximus include flyers about this tax credit processing service they provide when they approach employers they're trying to get to hire welfare recipients. And in recent years, Maximus has attended and sponsored temp industry trade conferences to peddle this service they offer. So just to pause on this, this means that for every welfare recipient that gets a job and that a company claims a WOTC credit on, Maximus can essentially triple dip into the benefits of taxpayer dollars. They get taxpayer dollars for managing that welfare recipient's case, bonus payments in taxpayer dollars for getting a welfare recipient into a job, and then another bit of money for processing an employer's tax credit for hiring that welfare recipient. This whole welfare-to-work system that pays companies to get welfare recipients to take any job that comes their way, it has ripple effects. To get a little econ 101 on you, if low-skilled labor is bought and sold in a market, the price, in theory, is set by supply and demand. If a job won't pay enough for people to want to do it, companies should have a hard time finding workers and need to adjust their wages to attract people. But when you start introducing factors like work requirements and making it so people in the welfare-to-work system aren't supposed to say no to a low-paying job, and people who've turned away from the system desperately need money, you've kind of got a captive labor market. A pool of people ready to accept whatever employers offer in the lowest-skilled, lowest-paid corners of the economy. And it turns out, back when our modern, privatized welfare-to-work system was first developing in the 1980s and 90s, part of the point of it was to get more people into the labor force to help employers who were facing labor shortages. We got a shortage of nurses. We got a shortage of teachers. We got a shortage of welders. We got a shortage of plumbers. We got a shortage of automobile mechanics. If you want to look at the origins of our modern welfare-to-work system, one of the people you can point right to is this guy. Former Republican governor of Wisconsin Tommy Thompson aka Governor Get a Job Get a job and stay off of welfare And that what this whole reform program is all about in Wisconsin is to get people off of welfare into the marketplace and independent so that they can provide for themselves. Tommy Thompson built his political career on the idea that welfare was the source of some of Wisconsin's biggest problems and that the way to solve them was by replacing welfare with work. And he was a master at tying the labor shortages that businesses were experiencing 30 years ago to the idea of welfare reform. He basically said, nobody wants to work anymore because of welfare, so we need to change welfare. We need to add work requirements. Here he is in 1996. And there couldn't be a better time to end welfare. Our economy is growing so fast that we have a surplus of jobs with employers eagerly looking for workers. The Business Journal even reported recently that Milwaukee businesses were offering movie tickets, gifts, and even car loans as lures to potential employees. The jobs are there. Hello. Hello, Christy. How are you? I recently got in touch with Tommy Thompson. He says today, Wisconsin is still facing some of the same problems he was trying to address with work requirements. The shortage of teachers, of welders, of x-ray technicians, of laboratory technicians, of policemen. So when people are on welfare and not working, the government should not be subsidizing people not to work when the employers in Wisconsin are in vital needs of employees. Same way as back when I was there in charge. And how do you think that has panned out now? Because we do have data from the state of Wisconsin now that says that if you look at the top 10 employers for welfare recipients now, it's temp agencies, companies like Walmart, Amazon, McDonald's, Taco Bell. Those are not the same kinds of jobs that you were just talking about. You know, those are very low wage jobs. So help me square that. The truth of the matter is, is that we didn't do a good enough job. Congressional people have not put the money into the vocational training like I first wanted to do it. I think that is and continues to be a mistake. Right, because I have spoken with some welfare recipients who, you know, their experience has been, I had a low-paying service job, then I turned to W-2. welfare. And then I got the same kind of low-paying job, low-paying service job that sort of kept me in this poverty cycle. If you just require people to go to work, they're going to take a job at Taco Bell instead of getting a welding job. You've got to provide the vocational education for them. That's the problem. If you don't have the training, then what jobs are available are jobs that you can go to and get to trading on the job. And I think that's the mistake in welfare reform in America today. A lot of people just want to do it on the cheap and don't want to put the money in it. We have the money available. But since federal welfare reform in 1996, the amount of money states get from the federal government for cash welfare programs has stayed completely flat. With inflation, those dollars have lost nearly half their value. And states only spend a fraction of that money on education and training for people on welfare. In 2021, Wisconsin spent just 0.5% of their welfare dollars on that. The state spent 10 times that amount of welfare dollars on other stuff, like program management, administrative costs, enforcing and assigning required work activities, and paying job developers to build relationships with often low-wage temp employers. And of course, in Wisconsin, it's private welfare companies who the state is paying to do all this. Speaking of which, as governor, Tommy Thompson also pioneered the idea of privatizing welfare, contracting services out to private, often for-profit companies. So I was curious what he made of our findings, that the for-profit companies in his home state were taking in millions of dollars every year, but getting so few people into lasting jobs. Specifically in Milwaukee, private contractors were getting fewer than a third of people on welfare who were deemed job-ready into a job that lasted at least 30 days. Tommy Thompson told me, that's not good enough. If these private contractors are getting that few people into jobs, the state should rewrite the contracts they have with companies to require them to meet higher standards. You have to change the contract to say you have to have an 80% or 90% success ratio, or you're going to be penalized in your fee. Why that? Why 80%? Just because. I mean, you don't want to waste taxpayers' money first to pay them. And number two, you don't want to waste the time of a welfare mother. And third, you don't want to put them in a job that they're not going to be able to perform and get ahead on. Redo the contract or change the law and say, if you can't perform, you can't get paid. Simple as that. Of course, as I discovered in my reporting, even well-intentioned contracts can lead to perverse incentives. But all in all, what Tommy Thompson seemed to be saying is that in all these ways, the way the welfare-to-work system in Wisconsin works today, it has not turned out like he'd hoped it would. Or like he sold it to the public 30 years ago. I asked Tommy Thompson why he thought, after all these years, the idea of so-called welfare reform and work requirements was having such a resurgence, with politicians calling for more work requirements in Wisconsin and across America. He said partly it was because we have these labor shortages again. But he also said there was another reason. Outrage about who should or shouldn't get welfare sells. Well, because everybody hates each other. We've never been so broken, so partisan, so political, so divided. We haven't been this divided, I don't think, since the Civil War. Our country is truly divided. And the more harsh you can become, the more apt you are to be picked up on social media. So as a result of that, it's spreading, and it's easy to polarize people very easily in society today. As Tommy Thompson once said himself, welfare is a great campaign issue. And history's proved him right. It gets people's blood boiling. It taps into so many of our beliefs and anxieties about the American dream. But the vision Tommy Thompson was laying out about how to fix welfare by spending more money on welfare participants for more vocational training to help people get into better jobs, it's kind of the exact opposite of what some of the most vocal advocates of increasing welfare work requirements are talking about today. They want to use work requirements to cut government spending, not increase it. 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. And these lawmakers are explicit about how they want to use work requirements to fill plenty of low-paying, precarious jobs. Get those people back to work. To fill service jobs. Retail. Fast food. Not to mention temp jobs at sausage factories and Chex Mix factories. We once again seem to be coming to a crossroads in the debate over who deserves government help and what they should have to do to get it. The bipartisan consensus of the 1990s that decided work requirements were the answer? That consensus has unraveled. Now, we have some politicians, mostly Republicans, actively pushing for more work requirements, and they have allies in the for-profit welfare companies and temp companies making campaign contributions and issuing white papers to help sell the argument. On the other side, we have some policymakers, mostly progressives, saying what we call work requirements are ultimately just paperwork and busywork requirements. And that as a policy, they've clearly failed. They've been pushing for other ways of addressing poverty. Things like raising minimum wage, providing a universal basic income, or rather than work requirements, a New Deal-style guarantee of good federal jobs. The government gives a lot of help to people in other parts of the economy. Tax breaks for people with enough money to own a home or open a college savings account. When those benefits get doled out, they do not come with work requirements or processes to determine whether you're worthy enough for that help. But the welfare work requirement system that we've designed to help the poorest of the poor, It's built on the idea that we need to make people somehow prove they're deserving and worthy of that help. We've created a system full of onerous hoops to jump through, requirements to meet. And today, way fewer families get cash welfare from the government than before welfare reform. But it's not because we've fixed poverty. It's just that, like Tracy Jones at that Chex Mix factory in Milwaukee, fewer people turn to government cash assistance when they need help, often because the system is so onerous. Today, for every 100 families living in poverty, only 21 receive cash welfare. I keep thinking about all the people I've met who've gone through this welfare-to-work system. When they walked through the doors of the private companies that run welfare offices, they were often asked, what are your goals? What are your dreams? They were told to get motivated, think big, build a career. I keep thinking about all the career dreams they had. I want to be a nurse. I hope to open up a restaurant. My dream is to go to college and put the position behind myself where my baby will always have something to fall back on. So many dreams. The kinds of dreams that, if you grow up middle class with some financial support, are possible if you work hard. The kinds of dreams that the welfare-to-work system tells you to dream about in their motivational job readiness classes. But not the kinds of dreams that the jobs or the training these programs typically offer are helping people achieve. The cash welfare system has been designed as a way for people to prove they're worthy of help. But what would a system look like that's worthy of them? That's it for this episode and this season of The Uncertain Hour. If you like this season, please spread the word, share with your friends, write a nice review on your favorite podcast platform. It seriously helps us continue the work we do. This episode was reported by me, Chrissy Clark, and written by me and Peter Balanon-Rosen. It was produced by me, Peter Balanon-Rosen, and Grace Rubin. Michael May is our editor. Data Wrangling by Elizabeth Gothrop and Ben Clary from APM Research Lab. For more of the data they dug into about how private welfare contractors make money in Wisconsin and some other eye-popping data findings, go to uncertainhour.org. Research and production assistance from Muna Danish, Markay Green, Daniel Martinez, and Tiffany Bui. Betsy Towner-Levine provided fact-check support. Scoring and sound design by Chris Julin. 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. Special thanks to Curtis Gilbert, Ellen Rolfs, Nancy Fargali, Catherine Winter, Donna Tam, and Roston Wu. We learned so much about the temp industry from the academic research of George Gonos, Susan Hausman, and David Otter, and about work opportunity tax credits from Sarah Hammersma and journalist Emily Corwin. And to all the people I talk to who've gone through the welfare-to-work system in Wisconsin, Thank you so much for sharing your time, your insights, and your stories.