July/August 2007

Court Nixes W-2 "Job Ready" Policy

by Pat DeLessio, Legal Action of Wisconsin

The promise of the Wisconsin Works (W-2) program is that all parents will have the opportunity to work and the means to support their children. Yet as soon as the program began, this promise was broken. It was broken by the creation of the W-2 "job ready" policy, a policy not found in state law. On June 19, 2007, the Wisconsin Court of Appeals for District 1 issued a decision striking down the state's job ready policy.

The job ready policy allowed W-2 agencies, which contract with the Department of Workforce Development (DWD) to operate the W-2 program, to deny eligible parents the opportunity to work in a W-2 subsidized job. These "job ready" parents had applied for W-2, satisfied the extensive eligibility requirements set out in state law, and looked for employment, but had been unable to find a job. DWD policy denied these parents, who were willing and able to work, the opportunity to do so. Instead of a job, they were offered "case management" services, which generally consisted of structured job search and, if needed, child care while looking for work. The parent received no cash assistance to pay rent or other living expenses. In one of the two cases considered by the Court of Appeals, the family was homeless; the other family was facing eviction. The Court found that denying these parents the opportunity to earn wages or a W-2 payment by working in a W-2 subsidized job violated state law.

State law governing the W-2 program is detailed and prescriptive. It sets forth the design of the program and the eligibility requirements. As part of the application process, parents who are able to work can be required to look for employment. Job search during the application process usually lasts 14 days and is commonly known as "up-front" job search. Once the W-2 agency finds that the parent satisfies all W-2 eligibility criteria, including completion of any assigned "up-front" job search, state law directs the agency to place the parent in an "employment placement." Under state law there are only four such placements:

(1) Unsubsidized employment, which is defined as actual employment with a private employer.

(2) Trial jobs, which are jobs with a private employer but which are subsidized, in part, by the W-2 agency. The parent is paid directly by the employer, and the employer receives a stipend from the W-2 agency.

(3) Community service jobs (CSJs) which are W-2 subsidized jobs that pay a monthly W-2 grant of $673 a month. Generally, the parent is assigned to work experience for 20-30 hours a week while continuing to look for unsubsidized or private employment. The parent may also be assigned to an educational or training program.

(4) Transitional placements (W2-T), which pays a monthly W-2 grant of $628 a month. These placements are for parents who have disabilities or barriers to employment or are caring for a disabled child or co-parent. These parents can be assigned to a work activity, training, education and/or treatment activities such as substance abuse programs and mental health counseling. (1)

Despite the clarity of state law, DWD expanded the unsubsidized employment placement to include parents who are not employed but who are found to be "job ready." DWD, in effect, created another employment placement. Job ready is defined in the state's W-2 manual as someone who has the "capability of obtaining full-time employment" and who has the following characteristics:

(1) has no barriers to work which cannot be addressed through supportive services,

(2) is capable of working or has a willing attitude,

(3) has a steady and/or recent work experience, and

(4) has an education or training background that allows the individual to compete for available jobs in the unsubsidized labor market.

Parents who are found to have these characteristics are placed in the W-2 unsubsidized employment placement. Many of the parents have little more than intermittent unskilled employment. Yet because they want to work, have been employed, and are capable of working, they are job ready. Many other parents simply give up, not bothering to pursue W-2 assistance after being told they are job ready and will receive no assistance to pay rent and other necessities. These parents are not even counted by the W-2 system.

In support of its policy DWD argued that because "job ready" parents have the skills, education and work history to immediately enter the work force they can be placed in unsubsidized employment.(2) The Court rejected this contention, stating:

We are unable to find support for this argument based on the plain language of the W-2 statutes, which make no mention of "job readiness" as a factor that is to be considered when making an unsubsidized employment placement. Furthermore, while Weston and Nelson (the plaintiffs in the cases before the Court) agree that they are "job ready," they nevertheless were not able to immediately enter the workforce. Both women remained jobless and without means to provide for themselves and their families, even after being deemed eligible for participation in the W-2 program due to their placement in unsubsidized employment. This placement policy defeats the purpose of W-2 which includes assisting needy families, and is not consistent with controlling state law requiring that unsubsidized employment placements involve actual employment.

In response to the opinion of the dissenting Judge who maintained that the Court's decision would make Wisconsin a welfare magnet, the Court's two-judge majority stated further:

The dissent characterizes the W-2 program's services and benefits as "welfare-like payments or assistance." This characterization overlooks that W-2 is a work-based program. W-2 program participants do not receive handouts; rather, they are required to engage in a variety of work-related activities. Individuals placed in trial jobs and community service jobs are generally expected to participate forty hours per week. Similarly, participants in W-2 transition placements are placed in full-time activity whenever possible.

There is nothing in the record that would indicate that Weston and Nelson are seeking welfare and unemployment. Rather, the record reflects that these women sought employment so that they could earn money to support themselves and their families. Their placement on the unsubsidized employment "rung" of the W-2 employment ladder left them without any employment, subsidized or otherwise. We cannot see how such a placement fulfills the goals of W-2 and it certainly cannot be said that unsubsidized employment under these circumstances "is the highest and most desirable rung on the W-2 employment ladder."

The decision of the Court of Appeals is well supported by legislative history. Legislative history includes hundreds of pages of documents describing and analyzing the W-2 program at the time of its enactment. First and foremost is Governor Thompson's 1995 veto message. The Governor states:

Working together to implement the provisions of AB 591 (the new W-2 program) we can change our state forever to one where those who are able to work do so, and where those who are not are given the incentives and supports their need to enable them to do so. We will be a state where all citizens are educated and trained to work and expected to do so, where communities work together to provide temporary help to those who need it, and where the government of the state acts to enable persons to work, instead of simply providing cash to individuals who are not working.

Governor Thompson, who has built a national reputation on his welfare reform programs, focuses on enabling parents to work, never mentioning a plan to deny parents the means to earn a living. He clearly envisions rewarding all those who are willing to work and play by the rules with sufficient income to support their families.

In both an early 1995 draft of the program and later legislative analysis there is no mention of job ready as a W-2 category. Instead there are the four work placements. In each placement the parent has income to support his or her family. Parents who have obtained unsubsidized employment are always the best off. It is assumed that they will work 40 hours a week, earn at least $6 per hour and, in addition, be eligible for the federal and state earned income tax credits. In contrast, creation of a "job ready" group of parents without any income creates a group who are the worse off. This was not the vision of the original legislation.

The early designers of W-2 assumed that most people who are on welfare don't work and don't want to work. This was and continues to be a mistaken assumption. In fact, even in the days of AFDC, many recipients worked, usually at low wages, and often in temporary and/or part-time jobs. For many, AFDC operated as an unemployment compensation system between jobs, or as a supplement to meager wages. Many others used AFDC, and now use W-2, because of barriers to employment, including significant cognitive, mental and physical disabilities, domestic violence issues, and the need to care for children with emotional, behavioral or physical disabilities. For these parents immediate employment is simply not realistic.

Despite its flawed assumptions, W-2 offered the potential for real change in moving families out of poverty. But the program has failed in many respects. The "job ready" policy has been one of those failures. The job ready component resulted in a program designed to limit placement in W-2 subsidized jobs and to deny services.

Where do we go from here? In the Assembly version of the current Budget Bill, a provision has been added amending state law to specifically allow use of the job ready placement. If enacted, this would allow the state to continue a program that spends millions in taxpayer dollars to keep people off assistance with no positive long-term results. A better alternative would be to get serious about jobs. We could, as a state, take the Court's decision as a starting point to examine and improve upon our job development and training efforts, to examine and refocus the W-2 program, and to make sure that no parent who is willing to play by the rules is without income to provide for his or her children. When W-2 was first enacted, Governor Thompson promised a program that would allow a parent to step off the cycle of low-wage jobs and unemployment and obtain training in a CSJ that led to a trial job and work experience, and eventually to long-term employment and self-sufficiency. After 10 years of W-2, it is finally time to live up to that promise.

 

Notes:

(1) There is also a category called caretaker of a newborn for parents who have infants 12 weeks or younger. These parents receive a grant of $673 a month.

(2) At oral argument before the Court, the state also took the position that parents who are hungry and, in effect, desperate, will be more diligent in their job search efforts.