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0:47

For a while now, I've been listening to

0:49

shareholder earnings calls from a

0:51

multinational, multibillion dollar

0:53

for profit welfare company called

0:56

Maximus. Greetings and welcome to the

0:58

Maximus fiscal 2018 first

1:00

quarter conference call. At this time, all

1:02

participants are in a listen only mode.

1:04

Maximus is one of a few for

1:06

profit companies that operate welfare

1:08

offices in Wisconsin and throughout the country.

1:11

It's the company I visited at the start of this

1:13

season. Shareholder earnings

1:15

calls are not the most edge

1:17

of your seat listening unless

1:20

you know what to listen

1:21

for.

1:22

Thank you, Miss Miles. Like this earnings

1:25

call from 2018. It started

1:27

with the normal stuff. A lot of numbers. The

1:29

CFO talking about their revenue projections.

1:32

We now expect revenue for fiscal 2018

1:35

to range between two point four billion and

1:38

two point four four billion dollars.

1:40

But then the mic goes to Maximus's

1:42

CEO, a man named Bruce

1:44

Caswell. He earned more than

1:46

six million dollars in compensation

1:49

last year. And here's where

1:51

my ears start to perk up. I

1:54

knew Maximus was already making a lot

1:56

of money managing and enforcing

1:58

work requirements in certain.

1:59

welfare programs around the country. But

2:02

on this call, Bruce wants to tell investors,

2:05

get ready to make even more money

2:08

because they're at the vanguard

2:10

of what he calls a

2:13

movement. If you think about

2:16

what's being called welfare reform 2.0 domestically

2:19

and the movement to add work requirements,

2:21

not just to the Medicaid program, but other

2:23

programs like SNAP, which

2:25

is the food stamp program and

2:28

other similar programs, it's a competency

2:30

that no other company in the market has

2:32

like Maximus.

2:34

Work requirements for welfare programs,

2:36

they're not just a competency for Maximus,

2:39

they're a policy the company was largely

2:41

built on. It

2:42

went public the year after welfare

2:44

reform 1.0 was passed in 1996. And

2:47

since then,

2:49

work requirements are a policy that

2:51

the company has tried to shape, perpetuate

2:54

and grow by spending millions

2:56

of dollars in lobbying and political donations

2:59

to both Democratic and Republican

3:01

parties and elected officials. Like

3:04

I said, this investor call I just

3:06

played you a bit of, it happened in 2018.

3:09

Momentum for adding work requirements to

3:12

more government benefit programs. Good afternoon.

3:14

It's only kept building

3:15

since then. I want to thank

3:17

everyone for joining us today on this important

3:19

hearing and how we can restore work requirements

3:22

to lift more Americans out of poverty.

3:24

In

3:24

recent months, House Republicans have

3:27

held hearings on work requirements, sent

3:29

letters to the White House about it, taken to

3:31

the

3:31

airwaves, sounding the call. I

3:33

actually think we should have work requirements. If

3:35

we imposed work requirements on

3:38

SNAP and on Medicaid, we would

3:40

have the ability to save $1 trillion.

3:43

Across the country from Georgia to

3:45

Iowa to Wisconsin, state lawmakers

3:48

are pushing for more work requirements in

3:50

their states. What

3:51

happens when you pay people to stay home? They

3:54

stay home. Get those people back

3:56

to work. Work requirements, work requirements,

3:59

work requirements.

4:01

And a

4:01

few years ago, back when this welfare reform 2.0

4:04

movement was just beginning to bubble up, Maximus,

4:07

the for-profit welfare company, was

4:09

already starting to see new business rolling

4:12

in. Here's CEO Bruce Caswell

4:14

again on that 2018

4:15

shareholders call. In

4:17

fact, I'm thrilled that we were recently awarded, I

4:19

won't name the state, but we were recently awarded some

4:21

business to provide employment

4:23

and training services to the food stamp

4:26

population, which has been a requirement

4:28

under federal law for, I think, 33 states.

4:31

And in earnings calls over the next several

4:33

months and years, Bruce is back

4:35

on the phone with investors, hyped

4:38

about how things

4:38

are unfolding. Well, hyped

4:41

by corporate CEO standards. Maximus

4:43

is in the process of launching a new contract in

4:45

Wisconsin.

4:46

A new welfare-to-work contract

4:48

where Maximus will be assigning and

4:50

enforcing work rules for even more people

4:53

enrolled in the food stamp program

4:54

in Wisconsin. So they can gain employment,

4:57

avoid reliance on benefits, and

5:00

meet federally mandated work requirements.

5:02

But as I've been listening to these Maximus

5:05

earnings calls over the last few years, I've

5:08

also been listening to people on the other

5:10

side of that equation. People

5:13

on welfare who are subject to

5:16

work requirements, who for-profit

5:18

companies like Maximus are ultimately

5:21

earning money off of.

5:23

I'm a big dollar sign for them.

5:25

This is Maya Miller.

5:28

Like a lot of women I've talked to who've been on welfare,

5:30

she first turned to the system right after she'd

5:32

had a baby. The daycare job she'd

5:35

had for years until then didn't pay

5:37

much and didn't have paid maternity leave,

5:39

so welfare helped her make ends meet in those

5:42

early newborn days. And

5:44

like a lot of women I've talked to, when the program's

5:46

work requirements kicked in on her case, she

5:49

didn't feel like they helped her get the kind of

5:51

training she needed to actually advance

5:53

her career.

5:55

After a few months, she left welfare

5:58

for another low-paying daycare job.

7:59

Erin Reich warned of perverse incentives.

8:03

She wrote that the question of how welfare privatization

8:05

will work, quote, hinges ultimately

8:08

on that great mathematical mystery.

8:10

Where will the profits come from? Her

8:13

fear? We might never know, because

8:15

the answers might be deep in contracts

8:18

and subcontracts, kept hidden from

8:20

view by private companies.

8:24

Decades later, through our reporting, we're

8:27

trying to get to the bottom of this mathematical

8:30

mystery.

8:31

We've talked to company insiders, watchdog

8:33

groups, and welfare participants combed

8:36

through government contracts to try

8:38

and answer how do these companies

8:40

make money

8:41

and at whose expense?

8:44

Chapter five, profits and

8:46

perverse incentives.

8:49

Antoine

8:51

Dukes is a natural born salesman.

8:54

He sold mortgages. Second mortgage

8:56

is Carlon. Aluminum society. I was a manager

8:59

over a sales force, self-stain. Pretty

9:01

much most of my life I did sales.

9:03

Back in 2015, Antoine

9:05

pivoted to doing sales for a whole new

9:08

industry, welfare. Antoine

9:11

became a, quote, job developer for

9:13

a couple of for-profit companies that run welfare

9:15

to work programs in Wisconsin. First,

9:18

a company called Rescare, where Maya

9:20

Miller, who we heard from at the top of the show, was

9:23

enrolled. Then Antoine worked

9:25

at Maximus, that company whose shareholder

9:27

earnings calls I've been listening to. Antoine's

9:30

task at Rescare and Maximus was

9:32

basically

9:33

to sell local employers on the

9:35

idea that they could fill some of their positions

9:38

with people on welfare and to sell

9:40

people on welfare on the idea that they

9:42

could climb

9:43

out of poverty if they took one of those

9:45

jobs. And for Antoine, this

9:47

wasn't just another sales pitch. It

9:49

was a calling.

9:53

I thought I could put more effort into

9:55

helping people. It was a good film, you know, to help people.

9:57

And help people come back and say, hey, you know, I appreciate you giving me

9:59

this.

9:59

You don't get these type of opportunities a

10:02

lot. Especially for Black and brown

10:04

people, they don't get those type of opportunities a lot where you

10:06

just might, who's truly trying to help you not

10:08

play games and they just,

10:10

you're a number. Now you want a number to me, I wanted to make

10:13

sure you got the job and make sure it was sustainable.

10:16

Over the years at Rescare and Maximus, Antoine

10:18

says he worked to develop relationships

10:21

with local employers, invited them

10:23

to job fairs he'd organized at the welfare

10:25

office, where they would set up tables and

10:27

try to recruit. One company he

10:30

worked with was General Mills. They

10:32

have a cereal factory in Milwaukee and

10:34

Antoine says they seem to constantly

10:37

have openings.

10:37

They need the bodies. They were desperate

10:40

because they had a high turnover, because they had

10:42

a real, they explained to me, listen, we need

10:44

help. We need the help because we

10:46

got to pump out cereal. We got to get boxes

10:48

stacked, we got to get stuff out, but we don't

10:50

have the manpower. And I kept telling them, hey, come to my job

10:53

fairs and I'll fill out your position.

10:55

It wasn't always easy. A lot of people

10:57

on welfare face real barriers to employment.

11:00

Didn't finish high school, had criminal records,

11:03

but Antoine's a believer in second and third chances,

11:06

like this one guy he worked with, a war vet

11:09

who'd struggled with addiction.

11:10

He said what happened was he got

11:12

shot. Oh, he's an army. And then

11:14

he got started taking, I think it was Viking and one of those

11:16

trucks, he got hooked on.

11:18

He'd serve time in jail. And with that on

11:20

his record, he was having trouble finding a job.

11:23

Antoine immediately thought of General

11:25

Mills.

11:25

Because they need a body. They ain't got nothing with your

11:27

background. The job Antoine could get

11:29

him only paid $10 an hour. But

11:32

he told the guy, if you can prove yourself

11:34

and hold on to the job for six months, I'll

11:37

get you something better.

11:38

Six months later, the army vet still

11:41

had his job. So Antoine made

11:43

good on his promise.

11:46

He called up another company, FedEx.

11:49

So he hired him at 15 bucks now. And

11:51

then about five

11:53

months in, he came back to me and said, hey, guess what? He

11:56

made me supervisor. Five bucks. He made

11:58

him supervisor. Hey, hey.

11:59

I want to thank you. And he gave

12:02

me a car. He gave me a Walmart

12:04

gift card for $100. He said, listen, you

12:07

saved me.

12:09

This is

12:09

the best case scenario. Someone

12:12

on welfare gets an entry-level job

12:14

that leads to a higher-paying

12:15

job down the road. An employer

12:18

looking to hire finds a worker to help

12:20

their company meet its bottom line. And

12:22

the state has one less person on

12:24

its

12:24

welfare rolls. Everybody wins,

12:27

including Antoine. He says

12:30

Maximus and Rescare offered bonuses

12:32

to their staff for getting people jobs. After

12:35

Antoine got 30 people hired in one

12:37

month, he says Maximus gave him

12:39

a $500 bonus.

12:40

And then after

12:42

I got 100 people hired, I

12:44

got 1,000 out of loans.

12:46

But as Antoine got people into

12:48

jobs and made his bonuses, he

12:51

started to realize something. The

12:53

system rewarded people like him for the number

12:56

of jobs they were getting welfare recipients.

12:58

But the quality of those jobs

13:00

was another thing altogether. Antoine

13:05

says he came to this realization about

13:07

four or five years ago when

13:09

he got a call from the owner of a local

13:12

McDonald's franchise. He says, you

13:14

know, I'm looking forward to coming on your job fair. Sorry,

13:16

did you guys see people? I asked, well, what's your pay?

13:18

And he said, well,

13:19

my pay is

13:21

minimum wage for my employees. My manager, I think, $950.

13:25

This did not meet

13:27

Antoine's standards for a sustainable job.

13:29

I says, no, I'm not working for that. Because if I

13:31

get a person a job at

13:34

McDonald's, then they got to get another job just to

13:36

sustain. You know, who

13:38

can live off that? You know, you're going to have

13:40

to have two jobs. So I said, you know what?

13:43

It's just not worth it to see anybody achieve because

13:45

I still got to get him another job.

13:47

So he hung up on me.

13:49

About a month later, Antoine

13:50

says his boss told him to come

13:52

into her office. She said that

13:55

after Antoine had told the McDonald's franchise

13:57

owner he wasn't going to send people to fill his

13:59

jobs.

13:59

the franchise owner had called

14:02

her. She was like, he said that you

14:04

won't work with him. He said, she was really rude to him. I said,

14:06

no, I wasn't rude to him. I explained to him that

14:08

I cannot send him people to

14:11

work for him, make a minimum wage. I wouldn't work

14:13

with him because their pay was horrible. And

14:17

she was like, I understand that, Twyane, but we have to use

14:19

them. Cause he's a pillar in the community that

14:21

said, you know what, I understand that. So

14:23

then my boss says, well, I'll tell you what,

14:25

anybody that has a really bad background that you

14:27

can't place,

14:29

we'll just use McDonald's for that.

14:33

As far as Antoine could tell, what Antoine's

14:35

manager seemed to be telling him was that

14:37

for some people on welfare, his role

14:40

was just to get them into jobs, not

14:42

to get picky about what kind

14:44

of jobs they were. Antoine

14:47

wasn't really in a position to argue. I

14:49

said, okay, I was never gonna send anybody there. We

14:52

asked Maximus about this conversation.

14:55

They had no comment. The McDonald's

14:57

franchise owner told us he doesn't remember

14:59

the calls Antoine is describing, but that

15:01

even a few years back, those wages Antoine

15:04

quoted would have been for entry-level positions,

15:07

often for high schoolers. He said

15:09

McDonald's can be a great first step in a career,

15:12

gives adults opportunities to work

15:14

their way up to better pay, and that his

15:16

franchises currently have no formal

15:18

relationship with Maximus. But

15:21

plenty of people at Maximus have

15:23

gotten sent to McDonald's in the last few

15:25

years. According to data we got

15:28

from the state, McDonald's has been one

15:30

of the top 10 employers of people

15:32

who are enrolled in welfare through Maximus in Milwaukee

15:35

since 2019. And across

15:37

the state of Wisconsin, among people enrolled

15:39

in welfare through any private agency, McDonald's

15:42

is the fourth top employer.

15:45

When Antoine came home from work the day his

15:48

manager talked to him about McDonald's, he

15:50

was upset. But he also

15:52

had a pretty clear idea why

15:54

his manager was pushing him to work with companies,

15:57

even if they were low paying. Because...

15:59

Even if a near minimum wage

16:02

job at McDonald's wasn't enough to

16:04

bring a person above the poverty line or support

16:06

a family, even if it wasn't enough to get

16:08

them off welfare, that job

16:10

was valuable in other ways. Not

16:13

just for individual job developers like

16:15

Antoine, who got bonuses if they got people

16:18

into

16:18

a certain number of jobs. But

16:20

these jobs were also valuable to

16:22

Maximus, the company as a whole. Because

16:25

of the way the state of Wisconsin has structured

16:27

its contracts

16:28

with private companies who run

16:30

welfare offices. They get paid

16:32

based on how many people got hired for the month. They had to

16:35

get a paying job in order to get paid.

16:37

That's what paid performance was.

16:41

Remember those performance outcome

16:43

payments that I mentioned earlier in the series?

16:46

Those special rewards I learned about?

16:49

Payments from the state that contractors like Maximus

16:52

can claim when someone on their caseload gets

16:54

a job? Well,

16:55

connecting people with low-paying

16:58

but often plentiful jobs at places like McDonald's,

17:01

that has over the years brought Maximus

17:03

and other private welfare contractors tens

17:06

of millions of dollars collectively

17:08

from the state of Wisconsin.

17:10

And again, those jobs didn't have to

17:12

keep you out of poverty. They just had to

17:14

last more than one month and

17:17

earn you at least $870 in that month, or

17:21

involve at least 110 hours of work.

17:24

And a yearly salary that would equate

17:26

to about a $10,000 a year job, if the job even

17:28

lasted

17:31

that long. Antoine says

17:33

when he was working at Maximus and Rescare, the

17:35

for-profit welfare companies, management

17:38

kept close tabs on these payments.

17:40

And they had to make a profit. That's what it's about, you

17:43

know? You got to get so many people hired, but it

17:45

was all a numbers game. It is. It's

17:47

a numbers game. These performance

17:49

outcome payments are not something that

17:51

private welfare companies or the state of Wisconsin

17:54

talk about much to the general public. They're

17:57

not something that's mentioned on the website you go

17:59

to.

17:59

signing up for welfare.

18:02

But if you file a public records request for

18:04

all the contracts that private welfare companies

18:06

have with the state of Wisconsin, which we

18:08

did, and if you dig deep into their

18:10

clauses and tables and appendices, you

18:13

will find a few paragraphs that get into

18:15

them.

18:16

And these incentives make some sense in

18:18

theory.

18:19

Rick Ibarra, senior manager for

18:21

business services at Maximus in Milwaukee,

18:24

he says even jobs that are low-paying

18:27

entry-level jobs can help build employment

18:29

skills for a person who doesn't have much job

18:32

history. Rick says these

18:34

performance outcome payments, or what

18:36

he calls by their fun sounding acronym

18:39

POPs, they incentivize his

18:41

company in the right direction. We

18:43

are always working to

18:45

get as many, you know, POP claims as we possibly

18:48

can. It is about the incentive, but

18:50

more importantly it's about

18:52

the

18:53

success on the participant side. So,

18:56

you know, when you're getting a POP claimant,

18:58

that means that you have done something

19:00

very good, right, for the program participants

19:02

that you're working with. If you get

19:04

the POP claim, that means that your

19:07

program participants have done

19:09

well. But

19:10

based on what I've been told by company insiders

19:13

like Antoine and participants like

19:15

Maya, and based on the state data

19:18

we obtained, we found that just because

19:20

a company is making money from performance

19:22

outcome incentives,

19:23

it does not mean that their participants

19:26

have necessarily done well.

19:29

In the last couple years, the median wage

19:32

for people who found jobs while enrolled in welfare

19:34

in Wisconsin has hovered around $11 an hour,

19:36

which even if you're working

19:39

full-time would put you below the poverty

19:42

line for a family of three. All

19:44

the same, in the last 10 years, the

19:47

state has paid companies like Maximus,

19:49

Rescare, and other for-profit and nonprofit

19:51

companies tens of millions of dollars

19:54

in these kinds of 30-day job attainment

19:56

payments. This is not to

19:58

cover the costs

19:59

of

21:49

And

22:00

yet he says these performance outcome

22:03

payments were a driving force

22:05

among the companies he worked for, in

22:07

terms of how they ran the welfare programs. Not

22:10

just because of the money they got out of them,

22:12

but because it was part of how the state

22:15

measured the company's success.

22:17

I mean, because the state, when we used to

22:19

do a meeting with the state and Maximus,

22:21

they wanted to know results. They would always say,

22:24

if you don't hit numbers, you will lose the contract to

22:26

another agency. They would say that. They would

22:28

threaten it a lot. Hey, if you guys want

22:30

to keep the contract, you have to start hitting your numbers. Don't hit your numbers,

22:32

you don't have a contract. They say that every meeting.

22:35

So then the managers will go back to the supervisors. Hey,

22:38

we want to make sure we keep the contract. Now

22:40

is the main goal, keep the contract.

22:42

Antoine says he eventually got

22:44

tired of playing what felt to him

22:46

like a numbers game. As much of a

22:48

salesman as he is, making money

22:51

off low-wage jobs for welfare participants,

22:54

it didn't feel like a sale worth making. He

22:56

got out of the welfare to work industry.

22:59

Near the beginning of 2020, a few years

23:01

after his boss at Maximus told him he had

23:03

to send people

23:04

to McDonald's, Antoine quit

23:06

his job. He started his own

23:08

job placement company. Not through

23:11

any welfare program. He just helps

23:13

local employers

23:13

that he gets to choose fill

23:16

jobs.

23:18

To find recruits, he still looks

23:20

to communities where people might be on welfare.

23:24

I posted this on Facebook in 2021. If

23:27

you know anyone tired of being

23:29

on programs like W2, i.e. welfare,

23:34

and is frustrated about filling out tons of paperwork

23:37

to get a job and still can't work, have

23:40

them contact me. I will put them to work

23:42

without sending all that paperwork or filling

23:44

out job logs for a job.

23:47

It's now time to move away from programs like

23:49

W2.

23:50

If the goal of a

23:52

program or an agency like

23:55

Maximus, a program like W2, if the

23:57

goal is to help parents

23:59

who are suffering, struggling financially, if the goal

24:01

is to help them

24:03

get out of poverty, get a better life, was

24:05

Maximus succeeding at that? Nope. I'm

24:08

going to say no to that. I'm going to say

24:10

because of the fact that they

24:14

really don't want to help everybody. And

24:17

over the years I've learned that, but working

24:19

in Rescare and Maximus, they

24:21

didn't want me to help everybody.

24:24

They just didn't. Something

24:27

for-profit companies do seem to want when

24:29

you listen in to their investor calls, like

24:31

this one from Maximus,

24:33

is more work requirements.

24:39

Which could get them even more business.

24:43

There's obviously a lot of energy right now at the federal

24:45

level on the topic of work requirements

24:48

and what they call consumer engagement and

24:50

personal responsibility as it relates not

24:52

just to the Medicaid program, but to the SNAP

24:54

program and even extending into the housing

24:57

program as administered by HUD.

24:59

Private companies have a vested

25:01

interest in perpetuating the welfare

25:03

to work work requirement system. They've

25:06

spent many millions of dollars in

25:08

lobbying and campaign contributions over

25:10

the years trying to influence policy.

25:16

We asked the state of Wisconsin to comment

25:19

on these private companies' track records. A

25:21

spokesperson from the agency that oversees

25:24

welfare wrote that performance outcome

25:26

payments aren't just to reward a

25:28

private company for a job a participant

25:30

gets, but to recognize services

25:33

the company provides that might improve

25:35

a person's employability. And

25:38

in recent years, the state has added

25:41

a new category of performance payments

25:43

to incentivize companies to connect people

25:46

with higher-paying

25:46

jobs. So to

25:49

qualify for those payments, the job only

25:51

needs to pay $16.40 an hour in Milwaukee. Still

25:55

not a living wage for a parent with

25:58

one child.

25:59

pretty rare for companies to claim

26:02

one of these payments.

26:06

I got a more blunt assessment of

26:08

Wisconsin's welfare to work program in a

26:10

brief phone call I had with Maggie Renno,

26:13

the director of analytics and research at

26:15

the state agency that oversees welfare. She

26:18

says there are clear challenges

26:20

facing the program, which again,

26:22

the state calls W-2. We're

26:24

keenly aware that a lot of folks end up

26:27

back on W-2 and that's something

26:29

that we're really keyed into. We

26:32

know our participants land in

26:34

low wage jobs.

26:35

It's a little hard to hear, but she's saying they're

26:38

keenly aware that a lot of folks who go

26:40

through the welfare to work program end up back

26:42

on welfare or in low wage jobs.

26:45

And what do these for profit

26:47

welfare to work companies have to say for themselves

26:50

about their track record?

26:54

Maximus told us in a statement that they're

26:57

proud of the work they do in Wisconsin and

26:59

that on top of helping people find jobs, they

27:01

often help people on welfare secure childcare,

27:04

transportation and other

27:05

services.

27:06

We also reached out to Rescare, one

27:08

of the other places Antoine worked, which recently

27:11

changed its name to Equus. In

27:13

a statement, that company said that they're

27:15

dedicated to assisting welfare participants

27:17

gain access to employment based on

27:20

their experience and available training opportunities.

27:23

Of course, written comments from company

27:26

spokespeople can only communicate

27:28

so much after the

27:30

break. I finally get to talk

27:32

to the founder of one of these companies who

27:35

helped shape this whole

27:36

privatized model, built

27:38

his wealth off of it. And he

27:41

is surprisingly frank about

27:42

it all. That's

27:46

after a break.

27:48

At the grand old age of 59, I hit

27:50

rock bottom. So

27:53

I went to Brooklyn, sat in a little

27:55

tiny apartment in front of a panel of very serious

27:58

coaches.

27:59

and said show

28:02

me how i can do better than

28:04

told that you had was

28:06

very similar to somebody students that

28:08

i do work when i'm in that's what i teach

28:10

them not to do not coming

28:12

soon on revisionist history listen

28:15

wherever you get your podcast

28:20

may i ask

28:21

when's the last time you took an economics

28:23

class i never brancaccio host

28:25

of the marketplace morning report for me

28:28

it had been a while so

28:30

that's why i love our new email

28:32

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29:03

i really wanted to talk with someone high up

29:05

in one of these major for profit welfare

29:07

companies to ask them more about

29:09

their business models and the his performance

29:12

outcome payments and what they had to show

29:14

for their welfare to work programs i

29:16

spoke with a maximum vice president

29:18

early on but the company declined

29:21

to my requests for a follow up interview with him

29:24

rez care also declined

29:25

my interview requests i

29:27

had better luck with america

29:29

works it's a privately held for

29:32

profit welfare to work company that operates

29:34

in milwaukee and altogether

29:36

runs about thirty welfare offices

29:38

and seventeen states the founder

29:41

of america works a guy named peter

29:43

cove agreed to talk

29:44

to me of zoom up there you are

29:47

nice to meet your chrissy oh

29:49

you're such a pretty face or whatever that

29:52

a thinker while before we go

29:54

any further i caught a glimpse of you before

29:57

you turn off your video tell me about

29:59

the

29:59

Well, I've had it for about 60 years. 60 years,

30:03

wow. At least that. Peter Cove

30:06

has long been a firm believer in

30:08

the power of work and the

30:10

power of facial hair.

30:13

He's got quite the prominent mustache

30:16

of the handlebar variety, kind of a salt

30:18

and pepper version of the Monopoly man. He's

30:21

also fond of bow ties. Today,

30:24

Peter lives in a quaint town in Connecticut, in

30:26

a big white house neatly landscaped, a

30:29

vintage British motor car sits in the three-car

30:31

garage. It's a lifestyle he's

30:33

funded by founding the company, America

30:35

Works. Which

30:36

is the first for-profit

30:39

welfare-to-work company in the United

30:41

States. And you

30:43

put the for-profit right

30:46

in that sentence. Why is that important to

30:48

highlight?

30:48

Because, number one, we were the first

30:50

to do that, and number two, we

30:53

are the best. The

30:55

mission statement of America Works, it,

30:57

quote, changes people's lives by

30:59

lifting them from government dependence into

31:02

the productive world of employment.

31:04

Pope John Paul II had

31:06

an encyclical on work

31:08

that if you deny a man a job,

31:12

you deny them part of their spirituality.

31:16

Work really does allow you

31:18

to prepare and present who

31:21

you are to the world.

31:23

You're quoting the Pope. Are

31:25

you religious? I'm Jewish.

31:28

But that doesn't mean I can't quote the Pope. I

31:33

mean, they don't make Jews like Jesus any longer.

31:40

Peter started America Works in the 1980s,

31:43

before cash assistance had mandatory

31:45

work requirements or was allowed

31:47

to be run by private companies.

31:50

At first, America Works helped

31:52

government welfare offices find jobs

31:54

for participants who were looking. But

31:56

then, that idea started bubbling up

31:59

early on in West Virginia.

31:59

Wisconsin, soon in other parts of the country,

32:02

that work should be required to get welfare,

32:05

and that private companies could land contracts

32:07

administering and enforcing welfare-to-work

32:10

programs.

32:11

Peter liked this idea.

32:13

It reflected his ideology, and

32:15

as a businessman, he smelled a business

32:17

opportunity.

32:20

He was eager to be at the table, influencing

32:22

policymakers to lean into the thing he'd

32:25

already made a business out of. In

32:27

the mid-1990s, Peter got

32:29

that chance. Vice President Al

32:31

Gore invited Peter to the White House

32:34

to sit on a panel about reforming welfare

32:36

across America. At the time,

32:38

the culture was rampant with fears about

32:40

so-called welfare queens and unshakable

32:43

government dependency. The Clinton

32:45

administration was on a mission to, quote, end

32:48

welfare as we know it.

32:51

And Donna

32:51

Shalala, who was then

32:53

Secretary of Health and Human Services, said,

32:57

you know, we can't have welfare reform in this country

32:59

until we solve transportation

33:02

and daycare and education and health. I

33:05

said, can I speak? And I said,

33:08

Madam Secretary, have you noticed that

33:11

we have, for the last 40 years,

33:14

said we need all these things and

33:16

nothing's happened. What we need to

33:18

be doing is moving people

33:20

into jobs.

33:21

Work

33:24

was really the key in the cornerstone

33:27

of what we should be doing in our country as

33:29

a policy.

33:31

In an early example of private welfare

33:33

companies trying to influence welfare

33:35

policy, Peter evangelized

33:37

this idea to folks in the Clinton administration

33:40

and people in Republican Speaker of the House

33:43

Newt Gingrich's

33:43

camp. At that point, Republicans

33:46

didn't really believe that people on welfare

33:48

wanted to work. And Democrats,

33:51

liberals, didn't believe that they could

33:53

work, that there were too many barriers they had

33:55

to be able to go to work.

33:58

came

34:00

together for a full-blown retooling

34:02

of welfare in America in the form of new

34:04

legislation passed in 1996,

34:07

Peter says he was right there, helping

34:10

shape policy.

34:11

So you'd see our fingerprints

34:13

in the bill on the fact that training

34:16

programs were not what were going to be supported. They were

34:18

going to support getting people into jobs.

34:21

And you would also see our fingerprints

34:24

on the work requirements. That

34:26

meant that if you were able-bodied

34:29

and you were on welfare,

34:31

you had to go to work.

34:37

Under this brand new version of national welfare

34:39

policy, welfare recipients would

34:41

generally be required to start searching

34:43

for work right away. And private

34:46

business could be enlisted to run

34:48

the welfare to

34:49

work programs. So to me, that's how

34:51

we changed the whole dynamic of

34:54

welfare to work in this country.

34:56

And so began a wave of privatizing

34:59

government welfare offices. The new welfare

35:01

reform law allows states to contract

35:03

with private for-profit companies to

35:05

run their welfare systems. We can speak

35:07

to the business community because we're a private

35:10

company ourselves. The push for privatizing

35:13

welfare systems has already spread across

35:15

the country. Here in Texas, private

35:17

companies are competing for a contract which

35:19

could be as much as $2 billion to

35:22

run the state's welfare services.

35:24

As one speaker at a welfare privatization

35:27

conference put it at the time, yes, they

35:30

had one of those, privatizing welfare

35:32

offices was probably the, quote, hottest

35:34

privatization trend

35:36

in the country. Companies

35:38

that already had other contracts with the government

35:40

started eyeing welfare as a new

35:42

money-making venture. Big companies

35:44

like the weapons manufacturer Lockheed Martin,

35:47

the computing giant IBM, and

35:50

smaller fries like America Works.

35:54

I asked Peter Cove what his elevator

35:57

pitch was to lure governments to contract

35:59

with him.

35:59

All right, we're going up on an elevator

36:02

and I got a minute. Exactly.

36:05

What we basically say to government is

36:08

we will charge you for

36:11

getting someone off welfare and

36:13

keeping them off welfare for let's

36:15

say six months, in which time

36:18

you're going to make back much of what would

36:20

have been put out for keeping

36:22

them on welfare. And to the private

36:25

sector, we say, we're going to bring you

36:27

a worker who's going to save you a lot

36:29

of money.

36:30

Right. And so do you think of yourself as

36:32

serving, like who is your customer?

36:34

Is it government? Is it employers? Both

36:37

government and employers. We need the government

36:40

to give us the money at some point. We

36:42

just said, the way you pay us is you

36:44

pay us for getting the person off

36:47

of welfare and a job and staying in

36:49

a job. And we say to the company,

36:52

here's somebody you can take

36:54

who more likely than not is going to make it. And

36:57

we're going to help you with our corporate representatives and others

37:00

to be sure that the person stays in the job.

37:03

Government is one of your customers. Businesses

37:05

are another. What about the welfare

37:08

recipient? Are they? I think of them

37:10

more as the product of our company rather

37:12

than customers. So

37:14

people are the products? Well,

37:16

there are, I mean, yeah, of course.

37:19

I mean, they're inventory for us. They're

37:22

our raw product, our inventory. They

37:24

come in and we have to do something

37:27

with them. A terminology may bother

37:29

some people, but that's in fact what we do. And

37:34

how much do you make off your inventory,

37:36

off of your products? We make enough

37:38

to stay in business. Our revenue

37:41

runs between $40 and $50 million a year.

37:45

It's all part of the pitch that America Works

37:47

brings to state and local governments whose welfare

37:50

offices it wants to run. For us as

37:52

a private for profit company, we

37:54

had a bottom line.

37:56

And so we said, if we don't succeed,

37:59

we go out of business.

37:59

That's not true of government.

38:02

If government doesn't succeed, it just gets

38:04

funded at a higher level. If we

38:06

don't succeed, we go out of business.

38:09

But

38:09

how do you measure that success?

38:13

I ran Peter through some of the results we found

38:15

in our analysis of data from the state of

38:17

Wisconsin. From 2016 to 2021,

38:21

America Works, the company he founded, got

38:23

on average $6.3 million each year from Wisconsin.

38:28

That includes the money the company gets in exchange

38:30

for managing various parts of the welfare program

38:33

in the eastern central part of Milwaukee, and

38:35

all the performance outcome payments it gets.

38:38

During that time, America Works had an

38:41

average of 2,700 people

38:43

enrolled in their cash welfare program each year.

38:45

And based on our analysis of state data,

38:48

an average of about 1,700 of

38:50

those enrollees were considered

38:52

job-ready, according to the state. What's

38:56

realistic, or what's a good number

38:58

for how many people would actually

39:00

be getting jobs through America Works

39:02

in

39:02

that? I would say about two-thirds.

39:06

So two-thirds is almost 70 percent.

39:10

I'll do a little quick math for you. That would be

39:12

about 1,100 people.

39:12

But according

39:15

to state data, in that time,

39:17

America Works claimed job attainments

39:20

for way less people than that. An

39:23

average of just 450 people each year. That

39:26

means that at America Works, roughly

39:28

just 27 percent of

39:31

the number of people deemed job-ready got

39:33

jobs that lasted more than 30 days. 27 percent.

39:40

So much less than

39:43

two-thirds. Not

39:46

even one-third. What

39:48

do you make of that? What

39:53

do I make of that? That we're not doing as well

39:55

as I would hope we would be doing. That

39:58

I would hope that we would be getting more people into jobs. and

40:01

that it's not easy in Milwaukee. We

40:04

have a very entrenched welfare population

40:06

there,

40:07

and moving them from the

40:10

world's an off is not easy. And

40:14

all I would say to you is we've got to do a better job

40:16

there.

40:18

And don't forget, those jobs

40:20

that America Works did claim an average

40:22

of 450 people got each year, none

40:25

of them are necessarily even jobs

40:27

you can support yourself or a family on.

40:30

In order for a company to make a claim on these

40:32

jobs, it only needs to earn you about $800

40:34

for a month.

40:37

Meanwhile, America Works earned

40:39

an average of a million dollars a year

40:42

in rewards from the state for the fact

40:44

that people on their caseload

40:45

got those jobs. I

40:47

should say, other private contractors

40:49

besides America Works fared just about the

40:51

same in terms of the number of job-ready

40:54

people who actually got jobs. From 2016

40:56

to 2021, not a single welfare company, for-profit or non-profit,

41:02

in Milwaukee County claimed more

41:04

than a third of job-ready welfare participants

41:07

got a job that lasted more than 30 days. We

41:11

also looked at how many people contractors

41:13

claimed had gotten jobs that lasted

41:15

longer, at least 90 days. According

41:18

to our analysis of state data, America

41:20

Works claimed that on average only 16 percent

41:23

of job-ready people on their caseload got those

41:26

longer-lasting jobs. Other

41:28

private contractors in Milwaukee fared about the

41:30

same.

41:32

And then the kinds of

41:34

jobs, how do you approach that? How

41:36

do you think about, like, should

41:39

it just be literally the first job that

41:42

somebody can get and then it's sort of

41:44

ideally a ladder from there? At

41:46

this point, you can hear Peter fidgeting a bit,

41:49

clicking his pen over and over. Or

41:52

does it make sense in some cases to,

41:54

okay, you got this McDonald's job, but don't

41:56

take it. Let's see if we can get you a job with

41:58

a... slightly higher

42:00

wage. How do

42:03

the programs approach that question? What was your first job?

42:06

My first job

42:08

was babysitting. Would

42:10

you think as a company that I

42:12

should have told you don't take that, you can get a better

42:15

job than that? Well,

42:18

when I was 12, no, because I probably

42:20

couldn't have gotten any other jobs. I'm

42:25

trying to make a point. My point is

42:28

that I believe in the dignity of work and

42:30

I believe that you get into the

42:33

job and then you move up

42:35

from that job. A lot of the people

42:37

that we place don't even know how

42:39

to present themselves in a job. That

42:42

first job gives them the opportunity to

42:44

learn what the work is like, how

42:46

to behave in the job. What do you do

42:49

when someone asks you to do something you don't want

42:51

to do? How do you handle coming

42:54

in late? What do you say to the person? There

42:57

are all kinds of work issues

43:00

that people don't really understand

43:03

because they haven't really worked. And consequently,

43:05

I want to see people take any

43:07

job they can get and then we'll help

43:10

them move up.

43:13

We reached out to current management

43:15

at America Works about how many jobs

43:18

people on their caseload have gotten. They

43:20

didn't respond to repeated requests for

43:22

comment. We asked the state

43:24

of Wisconsin about it, too. A

43:26

spokesperson told us that the company has, quote,

43:29

met or exceeded the required number

43:31

of performance outcomes. But

43:33

are those requirements good enough? If

43:36

the company has, in many recent years, according

43:38

to our analysis, been making claims that

43:41

on average less than a third of the

43:43

number of job-ready

43:43

people on their caseload got

43:45

jobs that lasted more than 30 days.

43:49

To be fair, not all jobs may

43:51

turn into one of those claims. There's

43:53

lots of documentation needed to submit a claim

43:56

and some jobs don't pay enough or give

43:58

people enough hours to count.

44:00

But the state also keeps track of a broader

44:03

metric with a lower standard. How

44:05

many quote full-time jobs, meaning

44:07

at least 30 hours per week, do

44:09

people in America works get? This

44:11

includes jobs that don't even last

44:14

a month. According to that much

44:16

lower standard, data still shows

44:18

that less than a third of job-ready people

44:21

got those kinds

44:21

of jobs at America works. And

44:24

we know from studies of welfare-to-work programs

44:27

more broadly that people do

44:29

not usually end up getting jobs that

44:31

help them climb out of poverty in the long run. But

44:34

the thing is, even if America works

44:37

and other private companies aren't showing

44:39

huge results in Wisconsin for getting people

44:41

into jobs, let alone jobs that last

44:44

very long or get them out of poverty, most

44:46

of their money comes from all

44:48

the other stuff they get paid to do to run

44:50

a welfare-to-work system. Like

44:53

enforcing time limits for welfare and

44:55

enforcing work requirements. All

44:57

the job searches, job fairs, job

45:00

training classes that welfare recipients

45:02

are required to document they've actually done.

45:05

All the stuff that was so aggravating to Darnetta,

45:07

Maya, and so many other people

45:09

I've talked to on welfare. I've

45:11

heard people tell me that they felt that the requirement

45:14

part felt demeaning

45:16

or condescending, that they have said, you

45:18

know, of course I know that work is important

45:20

and I want to work and I've worked in my

45:22

life. But actually the bureaucracy

45:26

and kind of enforcement

45:28

around the work requirements, the

45:31

job logs and the whole paper trail

45:33

around it,

45:34

I have heard some people say that starts

45:36

to feel like it's getting in the way

45:38

of actually getting in the way of doing it. You're right. You're

45:41

absolutely right. I would not disagree with that. My

45:43

wife calls it administrativeia and there's a lot

45:45

of it. And sometimes

45:48

the work requirements are done

45:50

in a very onerous way,

45:52

which is wrong. That's wrong. But

45:55

the idea that in any

45:58

way it's demeaning to ask a person. person

46:00

to work in

46:03

order to get benefits, to me

46:05

is not the meaning. What's the meaning is to

46:07

keep the person from working.

46:10

Just to play devil's advocate

46:12

with that, I mean, doesn't a system

46:14

that is requiring work,

46:17

as soon as you bring in the requirement

46:19

piece, aren't you ensuring that there's going to

46:21

be a lot of that? What did your wife call

46:23

it? A ministry of you. A ministry of you. A

46:25

ministry of you. Isn't that necessary?

46:28

If you're going to say, this is a requirement

46:30

and we're going to enforce it, you're opening up the floodgates

46:33

to a lot of paperwork and a lot

46:35

of monitoring and a lot of stuff that

46:37

maybe does. Yes, that happens with government, absolutely.

46:40

And I agree that

46:42

that can happen. But

46:45

what also can happen is the people can go

46:47

to work.

46:48

Some critics say with all

46:50

of these private companies dependent

46:53

on

46:54

welfare to work programs,

46:56

have we started a new welfare industrial complex?

46:59

These for-profit companies

47:01

that are dependent upon these

47:04

work programs? The fact is, it's

47:07

not the providers

47:09

that need the government. It's the government that needs the

47:11

providers because they are not good at

47:14

getting people into jobs. So

47:16

I see it not as a welfare industrial complex.

47:19

I see it as a marketplace

47:22

where people can buy to

47:24

do things for the government that

47:26

the government is not capable of doing

47:28

itself. But

47:31

like I said, even if private

47:33

companies are not that good at getting

47:35

people into jobs or good jobs, these

47:38

companies still get paid by the

47:40

state.

47:41

For every person that just walks into

47:43

an America Works office in Wisconsin and

47:46

says, hi, I need help, and

47:48

gets enrolled in welfare, for every

47:50

one of those cases that America Works manages,

47:53

the company takes in money,

47:55

regardless of whether that person actually

47:58

gets a job or gets out of poverty.

47:59

property.

48:03

For-profit contractors love to

48:05

say that they only get paid for how

48:07

well they perform. But

48:10

a lot of the money these companies get is

48:12

for administrativia. Last

48:16

year, in 2022, the state paid America

48:18

Works almost $5 million

48:20

for managing about 2,000 welfare

48:23

cases. Assigning participants

48:25

required work activities, making

48:27

sure they were doing them for the required number

48:29

of hours, providing them with required

48:32

motivational classes and

48:33

work placements, monitoring and

48:35

sanctioning them. One way or another,

48:38

these agencies are earning money.

48:41

Many of them are for-profit companies. Their

48:44

goal is to make money. There's

48:46

that old joke about the couple who complains

48:49

about a restaurant. The wife says, the food

48:51

is horrible. And the husband adds, and

48:54

they have such small portions. If

48:56

you look at the track record of the welfare-to-work model,

48:59

private contractors seem to be getting people into

49:01

pretty bad jobs, and not

49:03

that many of them. But

49:05

if we're paying these companies millions of dollars

49:08

in taxpayer money to help people climb out

49:10

of poverty, shouldn't what's being

49:12

served up be good and

49:14

plentiful?

49:22

That's it for this episode of The Uncertain

49:24

Hour. Next

49:27

week, we look at how the privatized welfare-to-work

49:29

system shapes jobs everywhere,

49:32

even for people who aren't on welfare.

49:35

I didn't want to get on W-2 because of all the

49:37

strenuous stuff they were sending people through

49:40

just to get a check. So I didn't even bother to apply.

49:42

I was like, work for a temp agency. I'll probably

49:44

come out better than 673 of money anyway.

49:47

How many different temp agencies do you think you've

49:49

worked for? At least 15 to 20. A

49:52

lot. And how many different temp assignments?

49:54

Woo! More than I can count. That's

49:58

in the next chapter of the book. of this season

50:00

of The Uncertain Hour. This

50:03

episode was reported by me, Chrissy

50:05

Clark. It was written and produced by me,

50:07

Grace Rubin, and Peter Balanon-Rosen.

50:10

Michael May is our editor. Data

50:13

Wrangling, so much data wrangling,

50:15

by Elizabeth Gothrop and Ben Clary

50:17

from APM Research Lab. If you want

50:19

to read more about Maximus, Rescare, and

50:22

other for-profit welfare companies, check

50:24

out some great articles by Tracy McMillan

50:26

and Mother Jones and H. Claire Brown

50:28

at the counter. Research and production

50:31

assistance from Marquet Green and Tiffany Bowie,

50:33

Betsy Towner Levine provided fact-check support,

50:36

scoring and sound design by the amazing

50:38

Chris Julin, Jake Cherry, mixtar

50:40

episode. Caitlin Esch is our senior

50:42

producer. Bridget Bodner is director

50:44

of podcasts at Marketplace. Francesca

50:47

Levy is the executive director of Digital.

50:49

Neil Scarborough is Marketplace's VP

50:51

and general manager. Archival Sound

50:54

from the American Archive of Public Broadcasting,

50:56

Wisconsin Public Radio, C-SPAN,

50:59

and PBS Wisconsin. Special

51:01

thanks to Nancy Fargali,

51:02

Donna Tam, Katherine Winter, Tom

51:05

Scheck, Carolyn Heinrich, and Hailey

51:07

Hirschman.