For-profit welfare companies are pushing low-income parents into temp agencies that offer precarious jobs with rock-bottom wages.
Since the 1990s, most cash welfare recipients have been required to get a job or do mandated “work activities” to receive their monthly check. These requirements are intended to help parents who are struggling financially into jobs that will help keep them out of poverty and off government benefits. But is the work requirement system meeting either of those goals?
According to our analysis of data from Wisconsin, an average of nearly 70% of employed welfare participants worked at temp companies. These companies put people to work in other companies, trying to fill temporary jobs where the work is often grueling and the pay low.
Host Krissy Clark visited a temp company in Milwaukee just before the pandemic started that was giving away gift bags and $100 referral bonuses to try to lure more workers for temporary jobs at a sausage factory in the midst of labor shortages.
“It’s a dogfight for people,” explained the temp company’s now-president. The temp jobs required making sausages in a 32-degree room, often for a 10-hour shift. Temp workers were warned that they could be in danger of damaging their hearing on the factory floor and having their fingers cut off or crushed, and that their jobs could end at any time for any reason. The pay: $11.75 an hour.
Temp agencies and for-profit welfare companies often have a symbiotic relationship. Welfare companies receive a taxpayer-funded bonus for getting recipients into a job, and temp companies always have openings that need to be filled. Temp agencies also get rewarded with a tax credit for hiring welfare recipients.
Welfare-to-work has been so good for temp agencies that some of them actively lobby for more work requirements in government benefits through campaign contributions and white papers.
“It gives us a pool of more people we can help,” said the CEO of one temp company whose franchises have ranked among the top 10 employers of Wisconsin welfare participants. “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.”
On this episode, host Krissy Clark looks at the cozy relationship between for-profit welfare companies and temp companies desperate to put people to work in some of the country’s most precarious jobs. Plus, a frank discussion with an architect of our modern welfare-to-work system, former Wisconsin Gov. Tommy Thompson.
For a deeper dive into the numbers about how private welfare contractors make money and some other eye-popping data, check out the work of our colleagues at APM Research Lab.
And here is a full statement from Maximus about their relationship to the temp industry.
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Krissy Clark: 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 that temp agencies. Like this one.
Nancy Espinosa: We have first and second shift available. What shift Are you looking for?
Davidyon: I’ll do second shift.
Krissy Clark: 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.
Nancy Espinosa: I’m gonna go over the orientation with you. If you have any questions, just stop me and let me know.
Krissy Clark: 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.
Nancy Espinosa: 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 paragraphs you should keep your hands on the inside of the rack to protect your hands and fingers from being crushed.
Krissy Clark: The temp work at the sausage factory is intense.
Nancy Espinosa: 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 on layers. It’s cold in there, it’s about 30 degrees.
Krissy Clark: The temp work involves long hours.
Nancy Espinosa: So you must be flexible with working eight to 10 hour shifts and Saturdays as needed based on production. So are you okay with that?
Krissy Clark: And the temp work pays less than a permanent job would at the factory.
Nancy Espinosa: Okay, you’re at $11.75 an hour.
Krissy Clark: If you’re either late or absent or counseled on performance more than three times
Nancy Espinosa: They can and will end your assignment right then and there. Do you have any questions on the attendance policy?
Davidyon: No that’s all understandable.
Krissy Clark: The soon to be sausage factory temp worker finishes filling out the intake paperwork. Does his drug test.
Nancy Espinosa: It’s a mouth swab. So go ahead put it in your mouth, keep it in your mouth.
Krissy Clark: Some steel toed boots, the cost of which will come out of his pay without Gets issued steel toed boots.
Nancy Espinosa: You will not be able to work.
Krissy Clark: 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.
Nancy Espinosa: You will not be able to go back to get yourself okay?
Krissy Clark: 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.
Nancy Espinosa: They will ask for your attendance report. And they’ll look at your performance before they give you an offer. Are you available to start Monday?
Krissy Clark: She pulled some paperwork off her clipboard, hands it to him. He heads out the door to but then one of the temp agency staffers calls out to him wait, you forgot something. They give him a complimentary t-shirt. And a complimentary lunchbox and a complimentary water bottle. And one more thing. 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 La Du. Back then he was the Executive Vice President of this temp agency. Now he’s the president.
Davidyon: Yes mam.
Kirk La Du: There’s just a dogfight for people and so you’re doing whatever you can to get people through your doors and then use whatever avenue you can right now it’s an employee market. Then if if you just couldn’t get to work, be there every day when you’re going to be a valuable commodity.
Krissy Clark: 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 to 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 and Milwaukee, a company called UMOS.
Yolanda: So they do refer and send some of their, the people that come there, they do send them over by us at times.
Krissy Clark: And then there’s a for profit welfare company, a little south of Milwaukee that sends her people on welfare too.
Yolanda: ResCare in Racine. We have someone there, contact, she will reach out to us, Hey, 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,
Krissy Clark: Job fairs, things like that? 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 have people on welfare each year have been temp agencies. According to the most recent available data and 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 sometime 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 and 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.
Yolanda: Yes.
INTRO
Krissy Clark: Welcome to The Uncertain Hour. I’m Krissy 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 tech 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.
Krissy Clark: 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 noticed you have like a stack of cards here are those like employers that you have good relations?
Speaker: Yep.
Krissy Clark: 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 developers 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 Quanesa fix her resume and find her that custodian job. He says this pile of business cards, it’s an important tool of his trade.
Delonte Carter: These are definitely some of the top key employers that we may work with on a weekly sometimes even a 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 now at least have two to three of each sector that’s always available.
Krissy Clark: Who are some of it? Can you just go through some of your code?
Delonte Carter: Yep. So we have like Aramark The United States Postal Service Allied Bar which says security company.
Krissy Clark: 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 Adecco a temp company.
Delonte Carter: I have a lot of Adecco…Kelly.
Krissy Clark: Kelly Services, also a temp company
Delonte Carter: Employment Connections Plus, BG Multi Family, Goodwill, TalentBridge.
Krissy Clark: Temp company, temp company, temp company.
Joe Murphy: I encourage our projects to work with staffing agencies, because it becomes a force multiplier.
Krissy Clark: That’s Joe Murphy. We also met him back in episode one in this season, trim goatee in a dark pinstripe 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 our temp jobs, good options for people on welfare as a first step on the ladder of employment. He says temp companies for staffing agencies, as he calls them, are also just really helpful partners to private welfare companies like Maximus, this force multiplier.
Joe Murphy: 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.
Krissy Clark: Like I said earlier, according to state data we obtained in Wisconsin from 2013 to 2019, an average of almost 70% 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.
Joe Murphy: When you hear the term temp, temp is temporary. Okay, and in reality as a staffing firm, to get them a full time position. So when you hear that 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 is a staffing firm that offers a full time position.
Krissy Clark: 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?
Joe Murphy: The one thing that we need to mention here is that…
Krissy Clark: It took several minutes of back and forth. To get an answer on this one.
Joe Murphy: We’d have to go back and look at the data, but…
Krissy Clark: First one of Joe’s colleagues told me they needed to check the data. They didn’t have it at their fingertips, which is fine. But I just wanted to make sure. Do you actually collect information and in any kind of systematic way about whether those people are getting hired directly and getting permanent job? Joe looked around the room for a minute. And then he said,
Joe Murphy: No, we don’t.
Krissy Clark: You don’t track that. Okay. Why wouldn’t you track that? Because that seems like that would be a good if that’s the goal.
Joe Murphy: It would become an administrative nightmare to try and keep those kinds of statistics.
Krissy Clark: 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 dog fight 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. Sitting at rows of tables adorned with orals 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, Source point staffing, Ajilon staffing…
Marlin: So I’m with Life Got Better staffing services faster.
Katrina: Matterson Staffing.
Speaker: Elite Staffing.
Leticia: Early Child Staffing Solutions.
Krissy Clark: I see a woman standing looking at all the tables with a warm but worried smile. Her name is 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?
Haven: Yeah, apparently a job is something I’m more interested in.
Krissy Clark: I asked her what she made of all the temp companies that were recruiting here. Me
Haven: Me personally, right now I feel like it’s just not something for me. Because it’s like they send us in circles with jobs.
Krissy Clark: 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.
Haven: They call me whenever they have things available. So it’s like on and off when I work.
Krissy Clark: 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. They a lot of times companies will say we do temp to hire a temp to perm. Is that do you find that that usually does that work out?
Haven: I mean, say it’s assignment. They say you too. They say it’s a temp to hire. If you’re here for at least three months, then you get 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.
Krissy Clark: So there’s the circle, you just sort of-
Haven: Yeah it’s the circle that I really wasn’t interested.
Krissy Clark: 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 a sausage factory. A spokesperson from the nonprofit you most 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. Before profit company ResCare, which recently changed its name to Equus, told us in a statement that the company is 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 a 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.
Matt Gaetz: 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.
Tracy Jones: You can say hi to your dad. Hi dad.
Krissy Clark: 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’s feet. Those are so great! 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 has been tight.
Tracy Jones: To me the best things in life are free. Let me say that the best because the best things in life are free. But financially I’m poor.
Krissy Clark: Tracy’s mom had gotten welfare when Tracy was a kid to help pay the bills. When Tracy had her own son in our 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.
Tracy Jones: I said it helped you stay afloat.
Krissy Clark: But around this time this was the mid 1990s welfare reform happened caches systems for poor families went from a mostly No Strings Attached monthly check to a monthly check with lots of work requirements 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.
Tracy Jones: I didn’t even bother to apple. Because of all the strenuous stuff they was sending people through, just to get a check. People I knew I heard the horror stories from them.
Krissy Clark: Instead, one day on the bus. She saw this sign for a temp agency.
Tracy Jones: I forgot where me and my son was coming from but I roll past the sun and they say work today get paid today. Labor work, and I was like work today. Yes, like that sounds kind of smooth. I’m gonna go check them out in the morning.
Krissy Clark: 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.
Tracy Jones: I was like, I might as well get a job worked for temp agency I’ll probably come out better than 673 a month anyway.
Krissy Clark: 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.
Tracy Jones: That’s when my world of temps, me starting working for temps began.
Krissy Clark: 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 into 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 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 looked for a paycheck than a government check. But the kinds of jobs she was getting, we’re keeping her stuck.
Tracy Jones: You work a temp job and you will find out that you’re making half of what the regular staff is making. You have no benefits, no paid holidays, no sick days.
Krissy Clark: And then the job would just be over.
Tracy Jones: Temp work is too fickle, temp job, you can come in and for no reason whatsoever, you can be fired.
Krissy Clark: When we spoke, Tracy’s most recent job had been as a temp at a General Mills factory where they make Chex Mix
Tracy Jones: Chex Mix, they have different flavors, they like strawberry with Chex Mix,
Krissy Clark: Strawberry Chex Mix, who knew? Tracy’s job as a temp was to supervise other temps, one of her responsibilities there.
Tracy Jones: To make sure the temps didn’t eat. 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 gonna need you to spit that out.
Krissy Clark: Tracy worked third shift 11pm to 7am. 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 watch 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?
Tracy Jones: At least 15 to 20. A lot.
Krissy Clark: And how many different temp assignments do you think?
Tracy Jones: Oh, more than I care to count.
Krissy Clark: 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.
Tracy Jones: Then I could have finished my degree. I could have took time to find gainful and what I like to call what they call gainful permanent employment. You when you have different options, you make different choices.
Krissy Clark: If you think about it, temp companies have benefited from the way the Welfare to Work work requirements system operates today, in two different ways. They get workers like Tracy, who turned to them because they’ve opted out of the owner-esness 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 were 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’s doing a lot of this pushing is the company run by this guy.
Bill Stoler: Well, I’ll I’ll start with this getting paid for not working can become a habit. You know, it’s almost like an addiction.
Krissy Clark: Bill Stoler has positioned himself as the guide 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 US 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 and cash welfare and food stamps even more strict. So, I asked Bill, why is that a goal?
Bill Stoler: 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 is important for their their ego. I guess I just wonder when when people don’t have that desire, are they supposed to be taken care of on an ongoing basis.
Krissy Clark: 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 Hearne. 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 to 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 one of the top employers, at least in Wisconsin, of people who receive that?
Bill Stoler: Well, I’m thrilled to hear that because I think everybody deserves an opportunity everybody deserves deserves a chance. I’m delighted that that we’re able to help people that that truly do need the help in finding work.
Krissy Clark: Bill was telling me a version of what the folks that 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 indirect 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 looks 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 or in in temp jobs that they don’t seem like particularly good jobs.
Bill Stoler: 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.
Krissy Clark: Have you ever been a temp?
Bill Stoler: Have I? Well, I always consider everything being temporary if I don’t do my job.
Krissy Clark: But I guess it worked for work that have you ever worked for?
Bill Stoler: Sure. Well, no, I haven’t.
Krissy Clark: Some of the concerns that I’m bringing up are actually from people who are on government assistance and have worked for 10 companies and so I’m speaking from firsthand experience that they feel like you know, this is the job I’m taking because it is it’s the easiest fastest job to get. And I know that I need to get a job because of work requirement. And so to folks who do have first-hand experience are saying, Listen, this is not a job I want, but it’s the job that that I feel kind of forced into. And I don’t see a lot of opportunities here. What do you say to them?
Bill Stoler: Well, again, I think you need to find you need to have several experiences, and then you need to find the company that that you do want to work for. Because I do believe that it’s a two way street. It’s not just the company that makes the decision. It’s the worker that makes the decision too.
Krissy Clark: 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 1000s of dollars in tax credits for every person they hire, that’s recently been on welfare.
Kitty Leggieri: And the reason that you do that if two people are equally qualified, the federal government wants you just stop and consider. If you hire the WOTC eligible person, you’re gonna get a tax credit. Employers are using this as a windfall.
Krissy Clark: This is Kitty Leggieri, 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 accompany employees 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.
Kitty Leggieri: It’s a big deal. Yeah, it’s a big deal. Like if you’re a company that hires 5000 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 whatever’s to get $500,000 in this day and age, right.
Krissy Clark: 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 I 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 Pro Publica 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 Stoler’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-employ people, including welfare participants and food stamp recipients jobs that by definition, mean the person will be out of a job in the future.
Kitty Leggieri: As long as they worked 120 hours you get credit.
Krissy Clark: 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 pay paperwork and screening to get accompany a WOTC credit.
Yolanda: And then if you get a credit, then we get a percentage of the tax credit somewhere between you know, 12 and 15%.
Krissy Clark: Job developers at Maximus include flyers about this tax credit processing service they provide when they approach employers, they’re trying to get to higher welfare recipients. And in recent years, Maximus has attended and sponsored temp industry trade conferences to peddle this service they offer. So just a pause on this. This means that for every welfare recipient that gets a job, and that accompany claims a WOTC credit on Maximus can essentially triple dip into the benefits of taxpayer dollars. They get taxpayer dollars for managing that welfare recipients’ case, bonus payments and taxpayer dollars for getting a welfare recipient into a job. And then another bit of money for processing on employers’ 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 and 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 is 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 are facing labor shortages.
News Footage (1996): 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, one will be on mechanics.
Krissy Clark: 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”.
Tommy Thompson: Get a job and stay off of welfare. And that’s 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.
Krissy Clark: 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.
Tommy Thompson: 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 offering movie tickets, gifts, and even car loans as lures to potential employees. The jobs are there.
Krissy Clark: Hello.
Tommy Thompson: Hello Krissy. How are you?
Krissy Clark: 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.
Tommy Thompson: A shortage of teachers of welders of X ray technicians, a laboratory technician so 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.
Krissy Clark: And how do you think that has panned out now because we do have data from 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 those are very low wage jobs. So so help me square that.
Tommy Thompson: 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 in continues to be a mistake.
Krissy Clark: Right, because I have spoken with some welfare recipients who you know that their experience has been, I had a low paying service job, then I turned to W-2, to welfare. And then I got the same kind of low paying job, low paying service job that sort of kept me in this, this poverty cycle.
Tommy Thompson: 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 got to provide the vocational education for him. 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 the training on the job. And I think that’s the mistaken 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.
Krissy Clark: 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, we’re 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,
Tommy Thompson: 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 and your fee.
Krissy Clark: Why? Why that? Why 80%?
Tommy Thompson: Just because. I mean, you don’t want to you don’t want to waste taxpayers’ money first, to Pam. And number two, you don’t want to waste the time of 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.
Krissy Clark: 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 and 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.
Tommy Thompson: Well because everybody everybody hates every each other. We’ve never been so so broken. So partisan. So political, so divided. We haven’t been this divided. I don’t think since the Civil War. We’re, we’re our country’s truly divided and the more harsh you can become, the more apt you are to be picked up in social media. So as a result of that it’s spreading and it’s easy to polarize people very easily in society, today.
Krissy Clark: As Tommy Thompson once said himself, welfare is a great campaign issue. And history has 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.
Matt Gaetz: I actually think we should have work requirements. If we impose work requirements on food stamps and on Medicaid, we would have the ability to save $1 trillion.
Krissy Clark: And these lawmakers are explicit about how they want to use work requirements to fill plenty of low paying precarious jobs.
Speaker: Get those people back to work.
Rep. Shannon Zimmerman: Retail.
Rep. Patrick Snyder: Fast food.
Krissy Clark: 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 busy work 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 requirements 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.
Vox: I want to be a nurse.
Darnetta Harris: To have my own restaurant.
Speaker: My dream is to go to college and put the position behind myself for my baby will always have something to fall back on.
OUTRO
Krissy Clark: 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 app. that form. It seriously helps us continue the work we do. This episode was reported by me, Krissy Clark, and written by me and Peter Balonon-Rosen. It was produced by me, Peter Balonon-Rosen and Grace Rubin. Michael May is our editor. Data wrangling by Elisabeth Gawthrop 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 dot org. Research and production assistance from Muna Danish, Marque Greene, Daniel Martinez, and Tiffany Bui. Betsy Towner Levine provided fact-check support. Scoring and sound design by Chris Julin. Jayk Cherry mixed our episode. Caitlin Esch is our Senior Producer, Bridget Bodnar is Director of Podcasts at Marketplace. Francesca Levy is the Executive Director of Digital. Neal Scarbrough is Marketplace’s VP and General Manager. Special thanks to Curtis Gilbert, Ellen Rolfes, Nancy Farghalli, Catherine Winter, Donna Tam, and Rosten Woo. We learned so much about the temp industry from the academic research of George Gonos, Susan Houseman, and David Autor. And about Work Opportunity Tax Credits from Sarah Hamersma, and journalist Emily Corwin. And to all the people I talked to who have gone through the welfare to work system in Wisconsin thank you so much for sharing your time, your insights, and your stories.
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