While W-2 brought special opportunity, it also posed a special challenge. The other W-2 agencies had run local programs for years; Maximus had to start from scratch, in a place where grassroots opinion ranged from suspicion to hostility. To lead the effort, the company hired a local Goodwill executive named George Leutermann, who had gained some national prominence a few years earlier with an employment program in nearby Kenosha. Leutermann brought Maximus instant connections: his family had run a Milwaukee grocery store for one hundred years, and he had spent a quarter century working in Wisconsin social services. For Leutermann, Maximus had an equal allure: one day, he was a cog in a bland bureaucracy, the next he was checking on his stock options as a corporate VP. With the chance to set up W-2, Leutermann, at fifty, wasn’t just running a program but launching a new product line. “Over the next two years, we plan to replicate many of the systems we are testing in Milwaukee for use in other markets,” he told the Milwaukee Business Journal.
Leutermann made a splash. Though his face sagged in a hangdog look, he held forth with the quick, glib rap of a man born to sell. Knowing the knock that Maximus faced—rapacious profiteers—he set out to soften the corporate image with an aggressive marketing campaign; there were billboards, bus ads, and CD-ROMS, even Maximus fanny packs. A succession of minority fetes and fairs wound up with a Maximus check. A team of “community outreach” specialists came on board, most of them local minority women, with generous salaries and vague promotional duties. Spin to the smooth jazz station, and you could hear the Maximus jingle:
People helping people
That’s us
We’re here at Maximus
In theory, the thing that made W-2 different was its stress on community service jobs: everyone was expected to work. But the heart of the program that Leutermann designed was another motivation class. Grandly reincarnated as “MaxAcademy,” it grew into a weeks-long festival of assessment tests, Successory posters, and inspirational speakers, distinguished above all by empty seats. Attendance, though mandatory, was wretched. Leutermann called the class a way to polish the so-called soft skills, like punctuality and grooming, while getting to know clients more deeply than the usual office visits allowed. His detractors suspected he was equally drawn to its promotional qualities. Every visiting dignitary was routed to the class, and if enough clients didn’t show up, employees would pose in their place. When Nightline came to town, MaxAcademy supplied the lead.
NIGHTLINE: “You are watching a revolution in progress.”
INSPIRATIONAL SPEAKER: “You have to be aggressive when you’re out in the workforce. . . ! You gotta want it!”
NIGHTLINE: “Twice a week, employers are here interviewing.”
Cut to George Leutermann. For a VP looking to scale the ranks, it doesn’t get much better than that. But no sooner was the program up and running than a group of disaffected managers began voicing a common complaint: the clients weren’t doing anything. W-2 was built around the theory of “full engagement.” As state officials described it, the average client would perform forty hours of weekly activity, of which thirty would involve real work. But the W-2 policy manual cast things in looser terms, demanding “up to” thirty hours of work. Or, actually, up to thirty hours of “work training activities,” which could include the old job-search routine. The manual writers said that they were just trying to accommodate the occasional need for discretion, not create a big loophole. But the real-world practice of W-2 became much looser still. Many clients waited months for assignments. Others ignored them and got paid anyway. While Opal’s ability to keep drawing a check may seem like a strange aberration, Maximus managers were busy swapping written complaints about clients in similar straits: “Job-seekers are essentially in limbo.” “[M]any job seekers with W2 placements are not assigned activities.” “The no show rate is high and we are losing people.” “Today, Northwestern Mutual Life, a very important employer, is on site. . . . However there is one critical element missing, JOBSEEKERS.” Six months after the program’s start, Steve Perales, the second in charge, warned that “virtually no referrals are being made to the CSJ unit,” the one that assigns community service jobs. While about 1,100 clients were supposed to have community service jobs, just 507 had gotten assignments, and “only about 88 are actually participating,” he wrote. That is, in the country’s most famous work program, only 8 percent of the clients were working. “What they were doing, I don’t know,” Leutermann later told me. “They were doing nothing.”
One reason for the disarray was a shortage of caseworkers. Under state rules, each caseworker—a Financial and Employment Planner, or “Fep”—was supposed to manage no more than fifty-five clients. Some Maximus Feps had more than twice as many. The woman who would next handle Opal’s case had 108. Four months after the program’s launch, Mona Garland, a senior manager, wrote a memo warning that Maximus had thirteen caseworkers and needed twenty-eight. Leutermann argued that the state had placed too much emphasis on Feps. While W-2 had cast them as centralized problem-solvers, Leutermann pictured them as traffic cops, routing clients to more specialized services. But Garland, who became an embittered critic, suspected Leutermann had another thought in mind: caseworkers, unlike inspirational speakers, don’t get you on Nightline.
In June 1998, ten months into W-2, the state produced its first quantitative look at the agencies’ performance. The computerized audit, called a 740R report, examined what activities clients had been assigned. Of interest as a midterm report card, it also hinted at the criteria the state would use for contract renewals. A follow-up report would cover similar ground, and those who passed would gain the “right of first selection,” a chance to keep running the program without another public bid. Agencies that failed could reenter the competitive fray, but they would be doing so under a cloud and could find themselves losing a lucrative contract in a particularly humiliating way. Since Maximus was using W-2 as a national exhibit, that would wreck the whole business plan. Failing wasn’t an option.
Most of the Milwaukee agencies performed poorly, and Maximus looked especially bad. Sixty-seven percent of its clients had no work assignments. An internal Maximus analysis, a few months later, found that 46 percent of the clients had no assignments at all, work or otherwise. “I had no clue that we were in that kind of shape,” Leutermann later said. “We were just out of whack all over the place.” At the time, he exploded and blamed Garland. “[O]ur dismal performance” is “a major setback,” and “our track record portends continued problems,” he wrote. Garland responded with a blizzard of old memos, e-mails, and reports to say she had been warning him. The evidence of idle clients was kept from public view—neither Maximus nor the state had a motive to vet their failures—but amid the finger pointing, one issue got resolved. Maximus would hire more caseworkers.
As Opal lay around smoking Primos, Michael Steinborn sat at home, drinking vodka for breakfast. Sometimes he thought he needed a social worker. He had no clue he was about to become one. Some social-work careers begin in flights of youthful idealism; Michael’s began at Ladies Night at a Milwaukee pickup joint. He was out with a high school friend, Jose Arteaga. They had both grown up in the inner city, sons of small-time landlords, and as classmates at the Jesuit high school, they used to have long, philosophical talks about how the ghetto had gotten so screwed up. Now at thirty, Michael was poor and screwed up himself, and Jose was a rising star at Maximus, director of case management. By the end of the night, Jose had an inspiration: Michael should come aboard as a Fep. Yeah, Michael thought. Right.
It was late and they were drinking, but they each had a reason to act like they were serious. Michael’s reason was simple enough: he needed a job. In the decade since he had dropped out of Marquette, he had driven a taxi, delivered pizzas, swabbed toilets, attended fire fighters’ school, rushed into a marriage, had a son, and gone through a bitter divorce. Joining a friend on the crew of a landscaping firm, Michael spent a few years mowing city lots, and then had a bet
ter idea—they should start a landscaping firm of their own. Michael’s friend Alvin was black, so his 51 percent share gave them minority contractor status. It also gave Alvin the ability to cut Michael out, which he did, unsentimentally, once the business took off. Michael was devastated. It took a tackle from his sobbing girlfriend, Jai, to stop him as he tried to run after Alvin with a butcher knife. In the two years since, Michael had done some sheetrock and roofing jobs, but mostly he brooded and drank. By the summer of 1998, he owed ten months’ worth of back child support and Jai was pregnant, due in a week. He needed some cash.
Jose’s motives were more complex. In part, he wanted to help a friend, and as the chief of Feps he needed bodies. But he also thought that Michael would bring something to the job. Like all the agencies, Maximus had drawn most of its Feps from the old welfare program, prizing the veterans above all for their familiarity with the state computer system. Jose thought too many acted like data entry clerks, tidying their software screens but forgetting the client. “Their people skills weren’t there,” he said. Michael, on the other hand, had been doing protosocial work since his preteens, when his father first sent him out to collect rents. Jose saw him as a no-bullshit kind of guy, tough but empathetic. The kind the system needed. A few nights later, he showed up in Michael’s kitchen with a bottle of tequila and a sheaf of paper. Taping flowcharts to the wall until 1:00 a.m., he offered a crash-course on W-2 as it existed in theory:
Point Number One: Only Work Pays. Free money was gone. Clients had to earn their checks in a simulated workweek. The bulk should be spent actually working, while the rest could be devoted to activities like training, treatment, or classes. For every hour clients missed, their checks got reduced by $5.15, the equivalent of the minimum wage. The idea was to model the workaday world.
Point Number Two: W-2 Provides the Jobs. The jobs progressed along a four-part ladder, with each a step up in difficulty and pay. At the bottom rung, W-2 Transitions, even the physically or mentally impaired might, say, perform light assembly tasks in a supervised setting. At the top was the ultimate goal, regular, unsubsidized employment. In between, most clients would be assigned to community service jobs—answering the phone at a food bank, perhaps, or sweeping a school. The bottom rung paid $628 a month, while regular community service paid $673. Grants no longer grew with family size, though for all but the largest families they paid more than the old system. In addition, the state provided child care, health care, and transportation, the support services that workers needed.
Point Number Three: Casework Is the Key. There was no casework in the old system, just a stream of checks. W-2 promised every client an individualized employment plan and a caseworker to help see her through. Quarreling with the boss? Drinking too much? Part sheriff, part shrink, the Fep was supposed to monitor progress and get to the bottom of things.
As the kitchen course came to its inebriated close, Michael liked the theory: he hadn’t hung around the ghetto all his life without accumulating some disdain for welfare. But he wondered if the bureaucracy could pull it off. And for his own role as an agent of reform, he had no enthusiasm at all. As a high school student, he had taken a test of occupational interests and scoffed when it cast him as a future social worker. “You think I’m gonna be some underpaid, overworked social worker?” he had said. Office work dealt a blow to his muscular self-image. Office workers had soft hands. Still, though it pained him to admit it, the $28,000 salary was more than he had ever earned. Leaving for the first day of work, he kissed his baby, Christian, good-bye and headed off to log an office worker’s day. “Your daddy’s going to make some money,” he said.
It started poorly and went downhill from there. His first battles - weren’t with clients but rather with the computer system that tracked them, a befuddling institution called CARES. The central nervous system of W-2, CARES had more than five hundred screens, each known by an opaque four-letter code. There was no doing the job without knowing the program, and despite three months of training, Michael thought he never would. Need to change someone’s work assignment? Go to WPAS. Check her living arrangements? That’s ANLA. Issue her check? Type “Y” in AGEC, but change the date in SFED, otherwise the check may not go out, even when AGEC said it did. For all the talk of making Feps bold new problem solvers, fluency in CARES was particularly prized, since it was the sole repository of the data that would govern contract renewal. It didn’t matter when Michael used his lunch hour to drive clients to job interviews; there was no CARES screen for that. (He pictured one: SCKR, for “sucker.”) What mattered was whether he had correctly coded their employability plans.
Facing a parade of addled clients, Michael found himself thinking more about keystrokes than the substance of what they said. Disabled child? Dying mother? “Shut up!” complained a voice in his head. “I’m trying to remember the transaction code!” His befuddlement reached its dark apogee with the arrival of a large, sobbing woman free-associating about her troubles. Michael entered the driver flow and dutifully posed the questions on his screen.
SOBBING WOMAN: I got into it with my sister’s boyfriend. . . .
MICHAEL: What are your employment goals?
WOMAN: . . . he hit me in the head with a two-by-four . . .
MICHAEL: Foreign languages? Written or verbal?
WOMAN: . . . my brother’s retarded . . .
MICHAEL: Distance from the nearest bus line?
WOMAN: . . . we’re out of food . . .
MICHAEL: Volunteer work or hobbies?
Volunteer work or hobbies! “No, I don’t want to hear that you’ve been at food pantries for the last two months,” he thought. “What I want to know is whether you play volleyball!” A coworker suggested the information might help him guide clients to the right job, but Michael kept picturing a gnome in Madison darting out of the computer room: “A knitter! A knitter! We’ve got a knitter, folks!”
In its pitch to investors, Maximus had promised to outdo government with “a professional work environment that is more conducive to employee productivity.” Michael had a different view: half the place was coming unglued. At least two of the caseworkers he came to know were addicted to crack. Another was hospitalized for job-related stress. A Fep with whom he shared an office went off on gambling jags, staying out at a casino all night, then sleeping at her desk. “Baby, I gotta take a little nap,” she’d say as she locked the door. Another Fep walked off the job with a message on her screensaver: “God has something bigger and better for me than this place.” Michael thought he might just be a magnet for office misfits. But the memo traffic inside the agency showed broader disarray. Leutermann warned that one caseworker was “going off the deep end lately,” causing “all kinds of problems about his behavior in the bathroom.” Another Maximus worker chased his supervisor from his office when she told him to clean up his files. “I am a Marine combat veteran that deals with Post Traumatic Stress Disorder,” he wrote. “I lost my head.” A flirtatious caseworker, rebuffed by a colleague, walked into his cubicle and bit him. As the incident report noted dryly: “He then told her to get her Monkey Ass away.”
Given the power that caseworkers exert over poor, troubled women, welfare offices need to use special caution; predatory workers may pressure their clients for sex or drugs. Sometimes no pressure is needed. After Michael drove a client to a job interview, she sent him a card with a smiley face. “If you give me the chance, I’ll ride you like a horse,” she wrote. “Your voice just makes me melt!” Not everyone summoned Michael’s self-control. A MaxAcademy teacher was quietly pushed out the door after a client complained that he was urging her and others to join a drug-peddling scheme. An internal report explained: “She said some of these women have told her that they have had sex with him because they are afraid he will cut off their benefits.” A different caseworker resigned when his client announced she was carrying his baby. “Dumb ass . . . should have paid for the abortion like I asked him too!” she announced in the Maximus office. She wen
t public only after another client told her MaxAcademy class that she was sleeping with him, too. Maximus kept the story out of the press, and the mordant office joke had it that the women were enrolled in “W-3,” a program of lifelong checks for clients who kept their mouths shut. “Mike, you’re a bright guy,” one colleague said. “Get out while you can.”
Maximus encouraged the hiring of family and friends, calling it an effective way to lure and keep talent. As head of the office, Leutermann certainly practiced what he preached. He put his wife, his son, and his niece on the payroll, along with his mistress and his mistress’s mother. The gossip about the boss’s affair reached the point that Leutermann urged subordinates not to mention it in front of his wife. In a memo titled “Rumors and Soap Operas,” he wrote: “Our office continues to suffer through a problem of useless, superfluous, and often insidious rumormongering. . . . MAXIMUS does not have time to fixate on this type of drivel.” Leutermann’s girlfriend, a senior Maximus manager, was pregnant with his child when he hired her; at the time he circulated the memo, they had an eight-month-old son. The woman who rose to the number-two job in the Maximus office, Paula Lampley, had her son on the payroll, too, until he drew thirty years for reckless homicide; Romell Lampley, an employment counselor, got angry at his girlfriend’s stepfather and ran him over with a car. “This project has had more than its share of complaints,” wrote David Mastran, the CEO, ordering an investigation. “If we are doing nothing wrong, why are we receiving complaints?” The incident at hand involved an employee’s complaint of racial discrimination, but Beverly Swann, the Maximus executive sent to the scene, warned that the problems went deeper. “I asked the question what message would you like to send the CEO and the response was clearly ‘things are not what they appear to be,’ ” she wrote. “There is a perception that management are [sic] hiring friends, relatives, and former displaced associates.” Years later, Mastran told me, “In all of our projects, we never had personnel problems like we had up there. It got out of control.”
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