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• Employers must get your permission before they use a third-party company to run a background check. 
• Employers can use your credit history to make employment decisions, but experts say it’s important to know your rights. 
• If there’s false or inaccurate information on your credit report, notify the consumer reporting agency that generated the report. 
• Experts say you can protect yourself by checking your credit report annually and placing a freeze on your credit report to reduce the risk of identity theft.

When you apply for a job, you probably know that your potential employer will check your criminal record. But what about your credit history?

Employers in most states, including Wisconsin, are allowed to run background checks that show your debts, available credit and payment history. Wisconsin Watch asked experts what job seekers and employees should know about this process and their rights. 

We spoke to:

• Nick Raef, employment attorney at law firm Hawks Quindel. 
• Jeff Palkowski, state director of the Wisconsin State Council of the Society for Human Resources Management.
• Adriana Peguero, assistant city attorney for the city of Madison.

What kind of credit information can employers see?

Not all types of background reports show financial information. Those that do typically show your credit accounts, payment history, available credit, bankruptcies, liens and self-reported work history, NerdWallet reports.

The reports do not show your credit score, the three-digit number that lenders, landlords and insurers use to assess how creditworthy you are. They also don’t show your income, birth date, marital status or medical debts. 

Unlike when you apply for a credit card or a loan, this is a “soft inquiry,” meaning it won’t affect your credit score and it won’t be visible to other employers or lenders. 

Can an employer run a background check without my permission?

No. If employers want to use a third-party company to run a background check, they need written permission. That’s because of the Fair Credit Reporting Act, a 1970 federal law created to protect consumers from false information being included in their credit reports. The law requires that an employer provide “clear and conspicuous” notice in a stand-alone document. 

“That means that if they throw the language into the boilerplate of an application, or scribble it in the margins of the position description, or fail to get your consent before pulling the report, then they are in violation of the law,” Raef, the employment attorney, said in an email. The employer can run the background check only if the employee or job applicant signs the document.

If employers want to run a background check later, like if they’re considering you for a promotion, they have to get permission again.

“It’s not the case that if you’re hired by a company that five years later they can go back and use the same acceptance of disclosure from when you were hired,” Raef said.

Notably, the protections of the Fair Credit Reporting Act apply only when employers use another company to run the background check, not when employers use the Wisconsin Circuit Court Access Program (CCAP) or other tools to check a person’s history themselves.

Can an employer use my credit history to make employment decisions?

Yes, though additional restrictions apply in the city of Madison.

If employers see something in the report that makes them choose to take an “adverse action” about your employment (for example, fire, demote or simply not hire), they must give you a “pre-adverse action notice,” along with a copy of your background report, details about the Fair Credit Reporting Act and an explanation of your rights, including the right to dispute the accuracy of the report and get another free report within 60 days. 

“The notice must inform an individual that their decision was influenced by the report, but does not have to clarify what exactly within the report has led to the employer’s adverse decision,” Raef said. That, he said, can “leave individuals with little clarity as to the employer’s reasoning.” 

The employer must allow time for the employee or applicant to respond before sending a final notice indicating the action the employer took. 

Still, Raef said, employers might say they had other reasons for choosing a different candidate. 

“Employers have the leeway to base their decision on a multitude of factors,” Raef said. “Oftentimes it can be really hard to sort of draw out what exactly happened here, and that’s where an employment attorney can be really helpful.” 

In Madison, employers face stricter limits on how they can use credit history. That’s because credit history is one of the 30 characteristics denoted in the city’s equal opportunity ordinance, alongside homelessness, citizenship status, source of income and physical appearance. 

“We have a very large, expansive number of protected classes,” said Peguero, the assistant city attorney. 

Employers in Madison can make employment decisions based on credit history only if one of the following is true: 

• They can demonstrate that the person’s credit history is “substantially related” to the job.
• The job requires that the person be bonded and the person’s credit history makes them ineligible. Some jobs, especially ones that involve handling money, valuables or proprietary information, require that employees be covered by a fidelity bond that will reimburse the employer if the employee steals or commits fraud. (Note: The federal government operates a little-known alternative bonding program for people who might otherwise struggle to find work, including those with poor credit. You can learn more about that program here.)

The ordinance applies within the city, so it covers Madison employers. It’s less clear whether it would apply to the growing number of Madison residents who work remotely for employers based elsewhere, Peguero said.

“That analysis would have to be done by the hearing examiner, but it is possible it could extend to an employer that is outside of the city of Madison,” Peguero said.

Why do employers check credit? 

Employers may use credit history to assess how trustworthy or responsible a person is, Raef said. An employer may assume that an employee or applicant who has lots of debt, for example, may be more likely to commit fraud, embezzle funds or accept a bribe, especially if the person is in charge of company funds. 

But Raef questions whether credit reports are useful in most employment decisions. “There’s not clear evidence that credit history is an indicator of an employee’s capacity to perform well in their job,” Raef said, pointing to a 2012 study that found no correlation.

“Someone might have poor credit on paper because of a domestic abuse situation in their home, or because they were born into really unfortunate circumstances that don’t reflect on their ability to be a great employee,” Raef said.

He worries that credit checks will create a “toxic loop” where the people who most need jobs can’t get them, which only makes their financial situation worse.  

“I can see the employer’s side where there are limited and specific circumstances where these checks make sense, but as a broad application, I think that it leads to a lot of unfair employment practices and probably exacerbates existing biases that are systemic within our society,” Raef said. 

A 2023 report by the Urban Institute, a national think tank focused on economic and social policy, echoes those concerns. 

“Research suggests that workers with low wages are among those harmed by preemployment credit checks, in part because workers with low incomes are the most likely to have imperfect credit records,” the authors write, though they note there’s limited data on low-wage workers specifically.

How common is it for employers to run credit checks?

About half of U.S. employers conduct credit checks when hiring for at least some of their positions, according to a 2021 survey by the Professional Background Screening Association.   

Jeff Palkowski leads the Wisconsin State Council of the Society for Human Resources Management. He has worked in human resources in Wisconsin for more than 20 years, mostly in the public sector in Madison. The closest he’s come to an employment credit check was when a friend applied to work at the FBI. 

“Anecdotally, I have heard of instances where a credit check may be part of the pre-employment process, but only in rare cases … Personally, I have never filled a role that had a pre-employment credit check as part of the recruitment process,” he said. 

Do all states allow employers to do credit checks?

No. As of 2023, 11 states had restricted the practice, according to the Urban Institute. Wisconsin has no state law restricting these checks.

What can I do if I think my credit report is wrong or if I think an employer used my credit history illegally?

If you believe there is a mistake on your credit report, you can dispute it by contacting the consumer reporting agency whose report showed the mistake. The agency must investigate. 

“If they can’t verify the accuracy of the information, then they have to remove it,” Raef said.

If you believe an employer used your credit history inappropriately, Raef recommends contacting an employment lawyer. 

“If they fail to notify you of a negative decision based on a report, or if they refuse to identify the source of the information that they obtained about you, or if they fail to get your permission at all, then you might be entitled to recover damages,” Raef said. 

If you or the employer is located in Madison, you can also file a complaint with the city of Madison’s Department of Civil Rights, which investigates alleged violations of the city’s equal opportunity ordinance. You must file the complaint within 300 days of the incident. 

Complaints are far less common than allegations of other kinds of employment discrimination, Peguero said. Of the 805 employment complaints submitted to the office between 2020 and 2025, just eight mentioned credit history.

How can I protect myself?

There are proactive steps you can take now to reduce the chance that a credit check will cause you unnecessary trouble.

 “You shouldn’t wait until you have signed something allowing your employer to look into this,” Raef said. 

He recommends the following actions:

• Request your own credit report to check for errors. You can do this for free once a year at www.annualcreditreport.com. If you find a mistake, report it. 

• Place a freeze on your credit report to reduce the risk of identity theft, which can damage your credit. A credit freeze blocks anyone from opening a new credit account in your name. You can place a freeze for free online, but you’ll need to do it separately for each of the three nationwide credit reporting agencies: Equifax, Experian and TransUnion. You’ll need to lift the freeze any time you want to apply for credit. “It’s kind of a pain … but it’s worthwhile to do with the amount of pain that it could cause if not done,” Raef said.

Natalie Yahr reports on pathways to success statewide for Wisconsin Watch, working in partnership with Open Campus. Email her at nyahr@wisconsinwatch.org. 

Can Wisconsin employers check your credit? is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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• Wisconsin’s women’s prisons are 78% over capacity compared to its men’s facilities, which are 30% over capacity. 
• The issue isn’t new, but despite decades of overcrowding, the system is approaching a record number of prisoners. 
• Wisconsin Watch created a tracker that shows how the population of each prison has changed over time and how far it is above that facility’s design capacity.

As Wisconsin’s prison population nears a record high, the state’s already-full prisons are getting even more crowded — especially for women. The state’s three women’s prisons collectively house 18 women for every 10 they were designed for, making them the most crowded of all state facilities.

One reason: While growth in the women’s prison population has far outpaced growth in the men’s system, Wisconsin prison officials shrank the facilities that housed them — to make more space for men.

Now, to make room for women, prison officials have set up beds in gyms and offices.

“They just cram us in wherever they can, it’s sad,” wrote Sarah Buckingham, who is currently incarcerated at Robert E. Ellsworth Correctional Center, a minimum-security facility in Racine County that now houses more than twice as many people as it was designed for.

Across the system, the rising number of prisoners and a shortage of staff have strained resources. Prisoners often wait months or years for limited spots in treatment, education and work programs, the very programs designed to prepare them for release. That, advocates say, could mean people wait longer to get out, or even end up returning to prison — making facilities even more crowded.

A new data tool from Wisconsin Watch allows anyone to track the population of the system and of each facility for free. The dashboard, which shows weekly population and capacity counts going back to 2006, updates automatically when prison officials post the latest figures. 

The data makes it clear: Overcrowding is not new. Wisconsin’s prisons have held thousands more people than intended for at least the last 20 years. The population dipped during the COVID-19 pandemic but is now heading toward an all-time high. More than 23,600 people are in state custody, according to the latest figures available from the Wisconsin Department of Corrections. That’s about 200 shy of the record 23,826 set in 2019.

The dashboard can’t show how the trends could soon change. In April, Gov. Tony Evers announced the state would soon commute prison sentences for the first time in 25 years, though it’s not yet clear how many people may be eligible or how long the process will take.

Women’s prisons are the most crowded

Female prisoners bear the brunt of the state’s overcrowding predicament. While the state’s male facilities are about 30% over capacity in total, its female facilities are 78% over capacity. That’s according to the department’s latest data, which shows population and capacity as of May 22. 

Taycheedah Correctional Institution, the state’s only maximum-security women’s prison, is designed to house 653. On May 22, it housed 1,039. 

Prison officials have raised alarms about conditions at Taycheedah for at least a decade. 

“The increased population at TCI has detrimental effects on the prison,” they wrote in a 2016 budget request, when the population was 873. Crowded conditions could cause security problems, they wrote, as each correctional officer must supervise more prisoners. They also noted the steep competition for access to programs for treatment or training. 

“There is also decreased programming availability to inmates, and programming has been shown to help reduce recidivism,” the authors wrote.

Since then, the facility has added nearly 170 women. 

“(Taycheedah) has already undergone conversions to turn spaces into living areas that were not originally meant to be used as living areas due to a problem with overcrowding,” said Daniel Cromwell, an administrator for the state’s corrections department, in an April court filing.

Wisconsin Watch heard from six currently incarcerated women who watched the women’s prison population balloon. They described sharing already overcrowded bathrooms with more women and competing for treatment and employment resources. 

Department of Corrections spokesperson Beth Hardtke confirmed that beds have previously been set up in the gym at Taycheedah but said no one is living in the gym now. Taycheedah staff are currently converting a “former property room” into a dormitory to house 20 women, Hardtke said.

The issue isn’t isolated to Taycheedah. The Milwaukee Women’s Center is at 255% capacity. Robert E. Ellsworth Correctional is now at 219% of its capacity.

Fifteen years ago, the state’s women’s prisons had nearly enough space, not just because there were fewer prisoners, but because there was a fourth women’s minimum-security prison. John C. Burke Correctional Center in Waupun, designed for 186 prisoners, housed women from 2000 to 2011, when it was converted into a men’s minimum-security prison. 

The move dropped the capacity of the women’s system — just as the number of female prisoners spiked. In the 15 years since, the women’s prison population has grown nearly 29%, more than four times as fast as the men’s population.  

Now, state officials are making plans to turn Burke back into a women’s prison, part of a $500 million prison reorganization Gov. Tony Evers proposed last year.

Overcrowding limits education, training 

Overcrowding doesn’t just mean getting an extra roommate or waiting longer for a shower. It also means prisons need extra staff — staff they often struggle to find. In 2023, prison officials locked down Waupun — canceling programs and confining prisoners to their cells for the better part of several months — because they didn’t have enough officers to conduct normal operations, Wisconsin Watch reporting revealed.

While the staffing shortage has eased since, the system is still short about 620 full-time correctional officers and sergeants, the latest DOC figures show. 

Those shortages can mean prison programs get cut or canceled, said Shannon Ross, founder and executive director of the Milwaukee-based nonprofit The Community, which helps incarcerated people pursue education and develop as leaders.

“If you have too many people to watch per staff member, now, ‘Oh, we can’t have classes tonight because we need to have more people over here watching more people that are incarcerated,’” Ross said. 

Ross, who earned a bachelor’s degree while serving a 17-year sentence in Wisconsin prisons, said when prisons are packed and money is tight, prison officials scale back vocational training and higher education to focus on the basics: food, housing, security, court-ordered programming and services prisons are legally required to provide.

“Anything beyond that is going to become superfluous,” he said. That’s a problem, he said, because more than 90% of Wisconsin’s prisoners will one day be released. “Who do we want them to be?”

How we got here

Wisconsin isn’t the only state struggling to find room for all its prisoners. Across the country, prison populations spiked in the 1980s and 1990s as states adopted harsher punishments and “truth-in-sentencing” legislation. The latter requires most prisoners to spend their full sentence behind bars, without the possibility of parole. 

Suddenly the flow of people out of prison slowed, while as many as ever flowed in. Lots also flowed back, returning to prison for allegedly violating the terms of their release.

In Wisconsin, the prison population peaked in August 2019 at 23,826, then dropped sharply beginning in March 2020 as courts shut down due to the COVID-19 pandemic. In just over a year, the number of people in prison fell by nearly 20% to 19,381, the lowest figure in the last two decades. 

As the state’s courts reopened, they began working through a backlog of cases — and sending more people to prison. In a 2023 report, the Legislative Fiscal Bureau said that if the prison population continued growing as fast as it was, it would set a record of 24,800 by July 2025. 

The authors predicted that wouldn’t happen, and they were right. 

“While recent growth patterns have been sizable, it is likely that the updated growth rate is too high to continue for the duration of the 2023-25 biennium, and that the recent rapid growth is likely temporary,” the authors wrote, noting that “at some point, the courts will catch up and prison populations will level out and grow at a slower rate.”

Still, the numbers have kept rising, and the growth has gotten faster, not slower. In the last year, that growth has been fueled entirely by a surge in women prisoners: While the male population fell slightly between May 2025 and May 2026, the female population rose by more than 4%.

What’s the solution?

Policymakers and prisoner advocates disagree about the answer to Wisconsin’s crowded prisons. 

In the major revamp he proposed last year, Gov. Evers called for, among other things:

• Closing the nearly 130-year-old Green Bay Correctional Institution.
• Transforming Waupun Correctional Institution into a “vocational village.” 
• Converting the troubled Lincoln Hills School from a juvenile prison to an adult prison.
• Converting Burke into a women’s prison.
• Expanding a program that allows some people incarcerated for nonviolent crimes to qualify for early release by completing treatment for substance use. 

Together the changes would reduce the state’s prison capacity by 700. The plan drew criticism from Republican lawmakers, who pointed to the state’s crowded prisons as a sign that the state needs more space in its prisons, not less.

State Sen. Van Wanggaard, R-Racine, said the answer is “right-sizing” the number of prisoners by “adding additional beds, reducing overcrowding and making facilities safer for not only our inmates, but for our staff,” Wisconsin Public Radio reported. 

In October, the State of Wisconsin Building Commission released $15 million to plan for Evers’ proposed changes. 

Ross of The Community calls that proposal a “marginal improvement.”

“It’s not getting us the level of change that everybody would need to see and want to see … You’ve got to get past marginal improvements at some point to really have something different,” Ross said. “Otherwise, it’s just a different version of the exact same problem every year we’re facing.”

One way to do that, he said, is to repeal truth-in-sentencing laws to reduce the number of people behind bars.

“Stop having a system in which people cannot get back out if they’re ready,” Ross said.

That, like other major prison changes, would require legislative action. But lawmakers in the Republican majority have stymied reform for years, Evers’ spokesperson Britt Cudaback said. 

“Gov. Evers has repeatedly worked to comprehensively reform our state’s justice system and corrections statutes to save taxpayers and reduce overcrowding, invest in evidence-based alternatives to incarceration, and improve public safety in our communities while reducing the likelihood that someone may reoffend once they have completed their sentence,” Cudaback said in an email. 

But Evers can’t make those changes unilaterally, Cudaback said, and lawmakers in the Republican majority have “refused nearly every effort to address these challenges over the last nearly eight years.”

In April, with nine months left in office, Evers announced he would use one of the few tools available for single-handedly easing overcrowding: commutations. It’s the first time in 25 years that incarcerated people in Wisconsin can request to have their sentence shortened. 

Advocates across the state are still trying to determine how many of Wisconsin’s nearly 24,000 prisoners may be eligible, and they’re working to help as many eligible people as possible apply. 

The first meeting of the Commutation Advisory Board will take place in June, and the first commutations will be issued some time after that. With Gov. Evers leaving office in January, it will be up to the next governor to decide whether the process continues.

Wisconsin Watch reporter Addie Costello contributed to this report.

Wisconsin’s prison population is heading toward a record high. Track the trend here. is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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• Fidelity bonds protect businesses if an employee steals or commits fraud. 

• The state issues the bonds, and research shows they’re one of the most effective ways to persuade employers to hire people with criminal records.  

• But Wisconsin issues few fidelity bonds. 

• Experts are divided on the issue, with some saying the free insurance can’t hurt and might help. 

• Others say it doesn’t address all the concerns employers have or educate them about the benefits of giving people with criminal records a second chance.

For every 10 people released from Wisconsin’s prisons, just seven find jobs within two years — even as the state’s ongoing worker shortage leaves many employers scrambling to find the help they need. 

The struggle isn’t unique to Wisconsin. Formerly incarcerated people nationwide are far more likely to be unemployed than the general population. One reason: Though people with criminal records often outperform their colleagues, many employers worry they’ll be unreliable or even dangerous. 

That’s why, 60 years ago, the U.S. government began insuring employers against that risk, for free. 

The Federal Bonding Program, established in 1966, offers “fidelity bonds” to reimburse businesses for losses if the covered employee steals or commits fraud. 

Recent research suggests these bonds are one of the most effective ways the government can persuade employers to give jobs to people with criminal records. Those jobs have ripple effects.  Families become more financially stable, communities become safer — as people with jobs are less likely to commit new crimes — and taxpayers save money as fewer people return to prison.  

So why aren’t Wisconsin employers requesting these bonds? While some states issued hundreds last year, Wisconsin issued just three — even though an estimated 1.4 million Wisconsinites have a criminal record. 

Demand in the state is so low that when the federal government in 2019 offered Wisconsin $100,000 to spend on bonds, workforce officials used just $15,000.

To figure out what’s going on, Wisconsin Watch spoke to economists, insurance experts, criminologists and workforce development officials, who ranged from enthusiastic to cynical about bonding. 

Some said the coverage limits may be too low to address employers’ worries, or that bonds don’t help when employers are worried about safety or a bad work ethic. Some said employers overestimate the risk of hiring people with criminal records and that education — not insurance — is the solution. But most said offering this free insurance can’t hurt and might help. 

In a worker-strapped state, is this insurance program a little-known lifeline or an irrelevant relic? 

Bonding basics

Imagine you’re a hiring manager who wants to offer a job to an applicant with a criminal record. If you’re in the same boat as many businesses, your commercial insurance may not cover any theft or other act of dishonesty if the employee in question has a criminal record. 

To fill that insurance gap, you contact your state’s bonding coordinator to apply for a six-month, no-deductible fidelity bond that will reimburse you for up to $5,000 in losses. In special circumstances, you can apply for additional coverage of up to $25,000. The state handles the paperwork and the $100 cost. 

The program boasts a claim rate of just 1%, meaning businesses in the program seldom report losses. At the end of the six months, you may now be satisfied that your new employee is trustworthy — or you can buy additional coverage. 

In Wisconsin, these bonds are the only incentive available to encourage what’s often called “second chance” or “fair chance” hiring.

“It is a unique tool to help a job applicant get and keep a job,” the state’s Department of Workforce Development says on its bonding webpage. “It is like a ‘guarantee’ to the employer that the person hired will be an honest worker.” 

The same bonds are also available to other job applicants whose background could make it hard to get or keep a job. That includes people in treatment or recovery for alcohol or drug addictions and people with little or no work history. 

In practice, the program is almost exclusively used for people with criminal records, according to program administrator Kevin Kulling. 

Wisconsin focuses much of its outreach effort on prisons, making sure people know how to take advantage of the program when they get out. The stakes are high: Of those released in 2023, nearly 1 in 3 were rearrested within a year and 1 in 8 ended up back behind bars. 

Recent research backs bonds 

Governments have tried a variety of ways to persuade employers to hire people with criminal records. 

Nationally, there’s the $2-billion-a-year federal Work Opportunity Tax Credit, which rewards employers for hiring people with felony convictions. But new research finds the tax credit doesn’t increase pay or hiring for the workers it’s designed to help. It expired in December but could be reinstated.

Meanwhile, a growing number of states have tried to boost job seekers by barring employers from asking about criminal records on job applications. In about a dozen states, public and private employers are subject to such “ban-the-box” measures. 

Evidence is mixed. Several studies find these laws reduce hiring for Black and Hispanic men, suggesting that when employers can’t check an applicant’s criminal record, they instead make assumptions based on demographics.

Enter the bond, a policy that predates the others by decades. In 1975, the U.S. Department of Labor commissioned a study of the then-new program. Participating workers reported major salary increases after joining the program, and a majority held on to their bonded job longer than one year. 

New evidence supports the program. In a 2023 article, researchers from the National Bureau of Economic Research teamed up with an online hiring platform to survey businesses. The platform asked users about their willingness to hire people with criminal records and how that might change if the platform offered wage subsidies or insurance coverage. 

Researchers found employer willingness to hire someone with a criminal record rose 12% when offered up to $5,000 in crime and safety insurance. It would take an 80% wage subsidy to get the same result. 

Mitchell Hoffman, an economics professor at the University of California-Santa Barbara, co-authored that study. He said policymakers have often tried to solve these hiring challenges by trying to change the workers, like with training or therapy. This research suggests it’s possible to change employers’ behavior, too.

That matters, he said, because employers hold the cards. “If firms don’t want to employ people with a record, then it’s hard to move them to employment and to good jobs,” Hoffman said.

The findings are welcome news to Jen Doleac, executive vice president of criminal justice at the philanthropy Arnold Ventures and author of the book “The Science of Second Chances: A Revolution in Criminal Justice.” Doleac, who researches crime and discrimination, was surprised when she first learned about the Federal Bonding Program.

“It’s such a smart idea. Employers say they’re worried about the risk of hiring someone with a record. How do we deal with risk? We provide insurance,” Doleac said. A critic of the Work Opportunity Tax Credit, she said the new research shows why bonds are a better bet. 

“Insurance just moved the needle more, and much more dollar for dollar,” Doleac said.   

Experts divided

Even in states issuing hundreds of bonds a year, that’s just a fraction of those released from prison annually, and a smaller share of all people with criminal convictions. 

“The total number of firms nationally that were involved, it seemed like a very small number,” Hoffman said. “There's interesting variation across states, but overall, just not that much usage.”

Just 27 Wisconsin employers participated in the program in the last five years, according to federal records obtained by Wisconsin Watch. Those businesses range from national retailers like Dollar Tree to smaller agricultural businesses like Rine Ridge Farms. 

Why haven’t bonds proven more popular? Wisconsin Watch asked more than a dozen Wisconsin businesses and industry groups about their experience with the Federal Bonding Program. Just one responded, and none agreed to answer questions. 

Hoffman thinks maybe employers just aren’t that worried, or that the risk they’re worried about isn’t covered by the bonds. They may worry the applicant will be unreliable or even dangerous, despite evidence to the contrary. In a 2021 survey by the Society for Human Resource Management, more than 80% of business leaders said second-chance hires perform the same as or better than other employees. 

“If someone does something bad to a customer,” Hoffman said, that customer might sue, or customers might take their business elsewhere. Bonds don’t cover that risk. “That is very difficult to quantify. What is the cost of that sort of event?”

Another possibility, Doleac said, is that employers don’t know about the bonds. Some states may be doing more to get the word out than others, but marketing costs money that state workforce departments may not have.

The more likely explanation, she said, is that the process is too cumbersome for employers who are used to buying insurance that covers all their employees. Although job applicants and employers do not have to complete any paperwork to get a bond, employers still need to keep track of the policies that were issued to a specific employee. 

“It’s just too inconvenient and too much paperwork to keep track of,” Doleac said. She and her colleagues are exploring whether standard policies could include riders covering these workers, without a separate process or schedule. 

Meanwhile, some advocates for formerly incarcerated people worry that the bonds can backfire, making employers worry even more. 

Craig Coleman, a case manager for Forward Service Corporation, helps formerly incarcerated Wisconsinites get trained and find work. He doubts bonds will help them. 

“You’re saying to your employer, ‘If I steal from you, then you'll be reimbursed,’” Coleman said. “I’m not an HR person, but if I had someone come in with an insurance policy saying, ‘If I steal from you,’ that’s the end of the conversation. I'm not hiring you.”

Genevieve Martin of Talent Nova agrees. Before starting a website designed to help formerly incarcerated people prepare for the workforce, she worked at Dave’s Killer Bread, which built its brand on hiring people with criminal records. 

There, she trained more than 50 other companies on “fair-chance hiring,” teaching them that hiring people with criminal records isn’t risky. Talking about extra insurance policies undermines that message, she said.

“Rather than hiring the person because they’re the best person for the job, but they happen to have a record. Now we’re trying to say, ‘Here’s an insurance policy. Please do it,’” Martin said. 

The fact that Wisconsin employers seldom use fidelity bonds might even be a good sign. The state has unusually strong organizations that prepare applicants for work and match them with employers, said Josh Morby, who represents such groups as spokesperson for the Wisconsin Workforce Hub. If those organizations are doing their jobs well, employers will trust their participants — no insurance policy necessary. 

“Wisconsin employers are looking for candidates who are screened, prepared and supported so hiring justice-impacted talent becomes a reliable workforce solution, not a risk,” Morby said in an email.

Wisconsin bond use lags 

The bonding program’s popularity varies among states, according to data Wisconsin Watch obtained from the U.S. Department of Labor’s Employment and Training Administration. In 2025, New Jersey issued 277 bonds, and Washington, D.C., issued 192. 

Meanwhile, 12 states didn’t issue any in 2025. 

Wisconsin Watch requested interviews with workforce officials in New Jersey, Tennessee, Washington, D.C., and West Virginia to learn why employers there are using more bonds. None responded. A U.S. Department of Labor spokesperson also declined an interview. 

One possible explanation for the higher numbers is that those states have higher unemployment rates. But Wisconsin’s unemployment rate was at a historic low in 2018, when the state issued 27 bonds, more than 12 times as many as it did in 2025. 

In 2019, Wisconsin workforce officials requested the maximum $100,000 federal grant to buy more bonds. They said they planned to buy 1,000 bonds over four years, plus more with other funds. They estimated more than 5,500 Wisconsinites with criminal records were eligible. The bonds, they said, would help break “the cycle of recidivism.”

But the COVID-19 pandemic — which shuttered businesses and locked down prisons — derailed the state’s plans. 

“With the unemployment rate at an increased rate in Wisconsin, many recruitment efforts for employers to use Fidelity Bonds (have) slowed,” officials wrote in each quarterly grant report from April 2020 to February 2021.

When the grant period ended in 2023, Wisconsin had issued just 59 bonds. Officials wrote that, despite their outreach efforts, their bond numbers were “extremely low.”

The bond’s popularity has since further waned. In each of the last two years, Wisconsin issued no more than three bonds. Department spokesperson Haley McCoy attributed that to the state’s tight labor market. 

“Given the strong demand to fill vacant positions, employers have not needed the added incentive of fidelity bonds to hire justice-involved employees during this historically strong economic period,” McCoy wrote in an email to Wisconsin Watch.

Asked whether the Department of Workforce Development plans to make any changes to Wisconsin’s bonding program, McCoy said the bonds are “just one tool in the toolbox that can help a job seeker secure a job.” 

“We’ll continue to work with our partners to provide opportunities and prepare job seekers and workers for their next opportunity in Wisconsin,” McCoy wrote.

From a job market ‘hidden force’ to a lever against bias

Meanwhile, Arnold Ventures researchers are trying to figure out how to get more businesses across the country to use federal fidelity bonds or something similar. 

Criminal justice director Carson Whitelemons has been studying ways to improve the federal program. But she said just trying to understand how bonding works and how it fits with existing business policies can be “incredibly difficult.”

“Even for business owners who are trying to ask their insurers what is covered and what is not covered, it's not always clear, and often that realm of uncertainty, I think, is what makes employers cautious,” Whitelemons said.

But it’s not just about bonding. The work is part of a new effort she’s organizing with experts from a variety of fields, trying to understand the biases that can keep people from getting all kinds of coverage and how to fix them.  

“(Insurance) is such a powerful lever in terms of what people feel safe or empowered to do, what they feel protected from. This has come up again and again in terms of different issues in the United States, in home ownership and redlining — insurance is often this hidden force, especially in areas where there is stigma or discrimination.”

Hoffman, the HR economist, said if more employers use bonds, that could help dispel misconceptions about people with records. 

“Employers … think they’re less productive than they actually are,” Hoffman said. That’s not the problem bonds are designed to solve, but if bonding gets more employers to hire these applicants, the experience may change how they view similar applicants in the future, he said. 

Meanwhile, officials from Wisconsin’s Department of Corrections will continue teaching prisoners about these seldom-used bonds and encouraging them to pitch the opportunity to their potential future bosses — for better or worse.  

Hongyu Liu is a data investigative reporter for Wisconsin Watch. Email him at hliu@wisconsinwatch.org. 

Natalie Yahr reports on pathways to success statewide for Wisconsin Watch, working in partnership with Open Campus. Email her at nyahr@wisconsinwatch.org.

‘Second chance’ bonds show promise. Few Wisconsin businesses use them is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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Gov. Tony Evers announced April 3 that he’s reviving the state’s commutation process, allowing Wisconsin prisoners to apply to have their sentences shortened for the first time in 25 years.

Immediately, the news began echoing through the state’s prisons. 

Some people caught it on the 4 o’clock TV news. Some got texts from excited family members and friends. 

With the news came questions. Who exactly will be eligible? How will the process work? How will people behind bars get the records they’ll need to apply, especially those who don’t have outside help?

Without access to the open internet, it’s notoriously hard to get reliable information in prison and even more so on a still-developing issue. 

Incarcerated people began calling and texting the people they trust on the outside, looking for answers. Several wrote to Wisconsin Watch reporters, sharing questions and reporting misinformation they’d heard.

Here at Wisconsin Watch, we’ll be following this developing issue in the coming weeks and months. 

As a starting point, we asked advocates for incarcerated people what potential candidates for commutations most need to know right now. They told us they’re still waiting for details, but they offered tips on how people can start preparing. 

Here are our sources:

• Diego Rodriguez, coalition coordinator for Justice Forward Wisconsin.
• Beverly Walker, executive director of the Integrity Center and administrator of the commutations committee at WISDOM, a statewide network of faith-based organizations.
• Harm Venhuizen, government and public affairs specialist at the Wisconsin State Public Defenders Office.

How big a deal is this news?

The last Wisconsin governor to commute sentences was Tommy Thompson, who issued seven commutations during his 14 years in office. Gov. Evers has granted more than 2,000 pardons since taking office in 2019. Pardons restore some rights but do not shorten a person’s sentence. Currently, they are available only to Wisconsinities who have completed their sentence, including any required supervision. 

Walker, who leads WISDOM’s commutations committee and worked with the governor’s office for three years on reviving the commutations process, called last week’s announcement “life-changing.”

“People were excessively sentenced and they just deserve an opportunity to have freedom, if they’ve done the work, to have a chance to come home,” Walker said.

Rodriguez agrees. “This is huge news,” he said. “This is the time for people to celebrate because we can safely lessen our prison population in a way that can help promote community, promote family bonds.” 

Wisconsin’s prisons are over capacity. As of April 3, 23,554 people were behind bars, 32% more than the facilities were designed to hold. As Wisconsin Watch has reported, that crowding has combined with a shortage of correctional officers to create dangerous conditions. 

Meanwhile, politicians on both sides of the aisle want to close the 128-year-old Green Bay Correctional Institution. If it closes, officials will need somewhere to send its more than 1,100 prisoners. 

Rodriguez said the members of Justice Forward Wisconsin, who belong to various Wisconsin groups that advocate for current and formerly incarcerated people, are working to gather as much information as they can for incarcerated people and their loved ones. They’re looking for answers to the potential challenges that could keep people from applying, like if they can’t afford to send mail or make photocopies.

But overall, he said, “there’s a general level of excitement and hope.”

Venhuizen of the Wisconsin State Public Defenders said in an email that “establishing this board provides hope that people who have done all the hard work of rehabilitation won’t have to languish but can instead return to their families and communities.” The process offers a much-needed “second look” at convictions, he said, but it doesn’t address the reasons so many Wisconsinites are in prison. 

“Wisconsin’s epidemic of over-incarceration is complex and deeply entrenched,” he said. “On the individual level, it’s going to be life-changing for the people who will receive commutations. At the system level, this is a step in the right direction, but it’s not a cure-all.”

How can incarcerated individuals and their loved ones learn more?

• Read Gov. Evers’ press release and the executive orders on commutations and on commutations for people sentenced to life without parole as juveniles. 
• Monitor the governor’s office’s commutations page and read its frequently asked questions. Check back for announcements about who will be on the commutations board. “The governor’s office is the best source of information on this topic right now,” Venhuizen said.
• Attend Justice Forward Wisconsin’s commutations webinar 9:30-11 a.m. on Saturday, April 11. Click here to register.
• Join WISDOM Wisconsin’s “Advocating for Commutations” Facebook group or check the page for announcements about future information sessions.

What steps can incarcerated individuals take now if they’re interested in applying for a commutation?

“Start preparing now if you meet the initial eligibility criteria, as we expect this board to move quickly ahead of the gubernatorial election,” Venhuizen said. 

He recommends the following:

• Review the application requirements listed on the governor’s commutations website and begin compiling the required documents.
• Start making plans with the people you’d want to write letters of support for you. 
• Write a “clear and compelling story of your growth and rehabilitation.” 
• Draft a post-release plan that explains where you would live and work and what programs you would participate in.

For those who are incarcerated and want help with the process, Rodriguez recommends contacting ProSay, an organization advocating for people on parole in Wisconsin, by messaging hello@weareprosay.org through the GTL app.

“I would say the biggest advice is to reach out to a group that is doing this work,” Rodriguez said. “This work gets so much easier when you’re involved in a community of other people that are doing it … And then keep asking questions until you get the answers that you need.”

Commutations are back. Here’s what incarcerated people and their loved ones should know. is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Reading Time: 8 minutes

Click here to read highlights from the story

• Wisconsin allows child welfare agencies to take federal benefits and child support payments meant for children who are in foster care. 

• The practices cost foster children and their parents more than $10 million annually. 

• While there’s been increasing bipartisan support for restrictions and bans on these practices, Wisconsin lawmakers haven’t acted.

Who foots the bill when a child is placed in foster care? In Wisconsin, it’s sometimes parents — and even the kids themselves.

Like many U.S. states, Wisconsin allows child welfare departments to take federal benefits intended for children who have a disability or a deceased parent. The practice means some foster children are paying for care the state is legally required to provide — care others get for free.  

The state also bills some parents for foster care — even when parents are trying to bring their kids home and struggling to make ends meet. 

In Wisconsin alone, these practices cost foster children and their parents more than $10 million a year. 

Now those approaches are facing growing criticism for prolonging family separation and depriving kids and families of much-needed resources. In response, some states have enacted bans or restrictions, but Wisconsin hasn’t — despite bipartisan support.

Advocates decry ‘orphan tax’

Wisconsin child welfare authorities take around $3 million each year in Social Security benefits intended for foster children, according to the state’s Department of Children and Families. 

Five years ago, nearly every U.S. state was taking these payments, NPR and The Marshall Project reported in 2021. Their investigation focused on Alaska, where hundreds of former foster youth sued in 2014, demanding the state return their money. Many didn’t know about the payments — often several hundred dollars a month — until they were about to age out of the foster care system, reporters found. On their own, those young people often struggled to afford things like rent, car payments and college tuition. 

“We get out and we don’t have anybody or anything. This is exactly what survivor benefits are for,” one former foster youth told NPR and The Marshall Project. 

Last year, Alaska’s Supreme Court ruled in their favor. It ordered the state to notify foster children if they are entitled to Social Security benefits and allow eligible children to choose to have their benefits managed by someone else instead of the state. It did not require the state to repay the estimated $1.8 million in lost benefits.   

Chief Justice Susan Carney recommended banning the state from taking such funds in the future. 

“I urge the Legislature to consider joining those of our sister states that have restricted their child protection agencies from depriving vulnerable children of these benefits intended to help them overcome extraordinary trauma as they move to adulthood,” Carney wrote.

Nationwide – largely after the Alaska case was filed – 38 jurisdictions have introduced legislation or executive actions to preserve those benefits for foster children, according to the Children’s Advocacy Institute at the University of San Diego, which has been lobbying for such change for years.  

Ten of those jurisdictions have barred authorities from taking any Social Security benefits intended for foster youth: Arizona, Kansas, Massachusetts, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, and Washington, D.C.

“The attention has been truly overwhelming. It’s like a tsunami,” said Amy Harfeld, national policy director for the institute.

Consensus grows in Wisconsin 

The agency that oversees foster care in Wisconsin now favors ending the practice too. Children who turn 18 in foster care are at a higher risk of homelessness, incarceration and health problems. 

For those children, the state’s goal should be to “help launch them into success,” Department of Children and Families Secretary-designee Jeff Pertl told lawmakers at a March hearing. Holding these payments in trust is one way to do that.

“We do a lot of things for kids who are aging out of care as an agency, but I would say (this is) probably one of the areas where we could spend just a little bit of resources and generate pretty significant improvements in people’s lives,” Pertl said.

Last year, Gov. Tony Evers proposed limiting the practice. Under his plan, child welfare departments must screen all incoming foster children for eligibility for Social Security benefits, apply on behalf of eligible children and hold the money in trust. The proposal included $3 million to hire a contractor to apply for benefits and manage those accounts.

The plan would have allowed the money to be used for expenses the agency would not typically cover for a child, as is the case now, but it would have barred agencies from using it to reimburse themselves for the care they’ve already agreed to provide. Leftover funds would be transferred to the child or their guardian when they leave foster care. 

The proposal was one of more than 600 items Republicans on the Legislature’s budget-writing committee removed in a single vote, a move that has become routine in Wisconsin’s divided Statehouse. 

Months later, President Donald Trump’s administration called for an end to the “orphan tax.” The U.S. Department of Health and Human Services sent letters in December to 39 governors. The letters demanded their child welfare agencies stop taking children’s Social Security survivor benefits, which are based on contributions made by a deceased parent.

“Every earned benefit dollar belongs to these foster youth, not the government agencies or bureaucrats,” Alex J. Adams, assistant secretary of the department’s Administration for Children and Families, said in a statement. 

In February, in the final weeks of the legislative session, Wisconsin state Sen. André Jacque, a Republican from New Franken, introduced Senate Bill 990, which would require child welfare authorities to save Social Security benefits for foster children in their care. Unlike Evers’ proposal, it does not require authorities to check eligibility or apply for benefits.

“Children who enter foster care are already at a disadvantaged position in life,” Jacque said at a hearing on the legislation. “Preserving their benefits can provide a modest but meaningful financial foundation as they transition into adulthood, helping them pay for education, secure housing, purchasing a first car or beginning a new career.”

Parents billed for foster care 

Years before the Trump administration decried the taking of Social Security payments, President Joe Biden’s administration urged states to limit another controversial practice: charging parents for foster care. 

For years, the federal government required billing parents as a way to lower its own costs. It changed its guidance in 2022, after NPR reported the practice was separating families — sometimes permanently. 

Outside of the foster care system, a parent who doesn’t have custody of their child may be ordered to make monthly child support payments to the custodial parent or guardian. Parents who don’t pay can rack up thousands of dollars of debt.

When a child is placed in foster care, child welfare departments often apply to collect that money, along with any past-due payments, in the child’s name. That can leave the parent who used to receive those payments struggling to cover rent or basic expenses. 

To defray its costs, the child welfare department may seek a court order requiring the custodial parent to pay child support, too. That’s despite the fact that many of those parents are already struggling financially. About two-thirds of the foster children in Wisconsin were removed from their biological homes because of neglect — a condition often tied to poverty, Pertl said.

Wisconsin foster care authorities seldom seek new child support orders, but they do regularly apply to collect payments on existing orders, said John Tuohy, executive director of the Wisconsin County Human Service Association. The group represents child welfare departments in all 72 counties. 

Child welfare authorities bill the parents of 7 in 10 foster children in the state, according to the Department of Children and Families. In recent years, parents have paid an average of more than $7.6 million a year. Studies show those bills can make it harder for parents to bring their children back home. 

Researchers at the University of Wisconsin-Madison compared data from Wisconsin counties that tend to collect child support for foster children to counties that don’t. A charge as low as $100 delayed reunification by more than six months, they wrote in a 2017 paper. 

Another UW-Madison study, published in 2024, found children whose parents were ordered to pay for foster care spend more than twice as long in care — an average of 21 months instead of nine — and are less likely to be reunited with their parents.

“The research suggests (allowing parents to keep that money) would help that parent to maintain a residence and have the financial capacity to have a home ready for the kids to go back to,” Tuohy said. 

Meanwhile, charging parents can actually increase the cost to taxpayers. For every dollar the department spends trying to collect these payments, it recoups only 88 cents, according to Connie Chesnik, administrator of the department’s Division of Family & Economic Security, which oversees child support collection. The department estimates ceasing this practice would substantially reduce the time those children spend in foster care, saving counties approximately $18,000 per affected child.

“The evidence indicates that cost recovery child support orders for children in out-of-home care are not in the best interest of children and families, and they’re not in the best interest of government or taxpayers,” UW-Madison social work professor Lawrence Berger told lawmakers.  

The Department of Children and Families wants the practice to stop, too. 

“It’s very clear that this kind of change in policy and practice will yield real results in terms of reunification with families,” Pertl said. 

Bipartisan support, little action

As with Social Security payments, Evers proposed allocating funds to stop child support collections for most children in foster care. The $1.87 million provision was one of the hundreds cut by the Republican-led budget committee. GOP lawmakers then introduced their own legislation at the end of the session.   

“The cost of care should not be subsidized by those who can least afford it,” Sen. Jesse James, R-Thorp, said at a hearing for Senate Bill 1072, which would bar child welfare departments from collecting child support for most foster children. Rep. Karen Hurd, R-Withee, led the Assembly companion to James’ bill.

At the hearing, lawmakers from both parties voiced support but acknowledged the bills wouldn’t pass so late in the Legislative session.

Sen. Sarah Keyeski, D-Lodi, wondered aloud why the bills didn’t get a hearing until after the Assembly had gavelled out for the session. 

“These are good bills, and I’m just disappointed we didn’t hear them sooner, because we could have done something about them,” Keyeski said. 

Lawmakers could come back to the Capitol this year to take action on spending the state’s $2.4 billion surplus, but ideas floated by Evers and Republican legislative leaders don’t include proposals on foster care payments.

Both James and Jacque said they plan to reintroduce their bills in the next budget cycle, although both lawmakers must first survive reelection bids in 2026. 

“I see a path to it getting done,” Jacque said of his proposal. “It’s certainly an idea that should have bipartisan appeal.” 

In Wisconsin, status quo persists

The lone opposition to the measures comes from the local governments that run foster care in every Wisconsin county except Milwaukee, where the Department of Children and Families directly administers care. Tuohy, of the Wisconsin County Human Service Association, said counties will face a budget shortfall if they can’t collect funds from children or parents.

“County human service budgets are very tight,” Tuohy said. “Counties cannot afford to absorb that fiscal impact.”

He said his group is open to such policy changes, as long as lawmakers allocate funding to make up for what agencies will lose and hire experts to administer these funds. 

“Our group is willing to work with both the Legislature and the governor on those types of things. We want to do what’s best for kids and families and to get better outcomes for kids who go into out-of-home care,” Tuohy said. “But … until you address the fiscal effect, it’s hard to really talk about what’s good policy or not.”

The Department of Children and Families agrees. 

“I’ve been doing this a long time. You know how we get these things done? We keep folks whole,” Pertl said. “In the scheme of the state budget, this is not a particularly expensive proposal. This is a very doable thing.”

Doable or not, any such legislation will likely have to wait until lawmakers return to the State Capitol in January. Jacque and James said they plan to add funding when they reintroduce their bills, to help counties make up the difference.

When they do, Harfeld believes the pressure will be on, especially when it comes to the taking of Social Security benefits. That practice, she said, has riled people of assorted political persuasions. 

“We’ve got the support from Evangelical groups who just see this as an affront to God, in addition to violating at least six different biblical prescriptions on stealing from orphans. We have gotten a lot of attention from the MAGA right, who are seeing this now as waste, fraud and abuse,” Harfeld said. Libertarians, meanwhile, see the practice as government overreach, she said. 

“How many issues are you seeing that have really broken through all of the political divides and resulted in this consensus between very unusual bedfellows?” Harfeld asked. “This is one of them.” 

Have you or your children been in foster care in Wisconsin? I’d like to hear how foster care costs have affected you and your family. Please email me at nyahr@wisconsinwatch.org or call me at ‪‪(608) 620-5610‬.

Wisconsin takes millions from foster kids and their parents — even as both parties say it should stop is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Reading Time: 7 minutes

Click here to read highlights from the story

• The federal Work Opportunity Tax Credit rewards companies for hiring people who often struggle to get jobs.

• Lawmakers are currently in the process of reauthorizing the $2 billion tax credit, which has been around since 1996.

• Proponents of it argue that it helps people get jobs and get off government assistance. 

• However, a new study by researchers at the University of Wisconsin-Madison and the University of Southern California found that the credit fails to increase hiring or pay for workers. 

• Furthermore, large businesses disproportionately use it.

A new study of Wisconsin data finds what some researchers and policy wonks have long suspected: The $2 billion Work Opportunity Tax Credit doesn’t work. 

Congress created the credit in 1996 as it overhauled the country’s welfare system. It rewards companies for hiring people who often struggle to get jobs, including some people who receive government aid, have disabilities or felony convictions or have been out of work for a long time. Employers can typically claim up to 40% of the wages paid to qualifying workers, with a maximum credit of $2,400. 

The credit subsidizes around 4% of all new hires, according to 2022 federal data cited in the study. Overwhelmingly, they’re low-wage, short-term jobs at large employers, including major retailers and temporary staffing agencies, researchers have found. 

Researchers have wondered for decades whether the credit pays off, but most states don’t offer the kind of records that would answer that question. Wisconsin does. 

Thanks to an unusual collaboration between the state government and the University of Wisconsin-Madison, researchers can track the earnings and employment status of participants in certain social safety net programs. 

In a 2025 working paper, researchers from UW-Madison and the University of Southern California studied two decades of records of Wisconsinites who received food aid through the Supplemental Nutrition Assistance Program (SNAP), the most common way an employee qualifies for the tax credit. Researchers compared SNAP recipients who were eligible for the credit with similar recipients who weren’t. 

Their findings were unequivocal. 

“We find that these subsidies do not increase hiring or earnings among eligible groups,” the authors wrote. In fact, they said, their findings rule out even so much as a 0.2 percentage point effect on hiring. 

They estimate 97% of the hiring subsidized by the tax credit would have happened anyway, a phenomenon known as “windfall wastage.” It’s possible, they wrote, that every one of the subsidized jobs falls into that category. 

The companies that take advantage of the credit are disproportionately large. In Wisconsin, they found, half of the subsidies go to just 48 businesses. Nationally, they estimate the credit costs more than $2 billion a year.

“Without reform, the program will continue as a costly transfer to firms with little benefit to the populations it is meant to support,” the researchers wrote.

Meanwhile, a bipartisan group of federal lawmakers wants to increase the credit, which expired in December. 

In November, legislators introduced a bill to extend the credit and expand eligibility to older SNAP recipients and spouses of military service members. The legislation would increase the amount companies can receive and automatically raise the credit amount with inflation. 

In a statement, co-author Rep. Lloyd Smucker, R-Pa., called the credit “a proven tool” that serves workers and employers. “WOTC is a bipartisan, commonsense approach that every Member of Congress should champion,” Smucker said.

Neither Smucker nor co-author Sen. Bill Cassidy, R-La., responded to a request for comment. 

Troubleshooting the tax credit

So why doesn’t the Work Opportunity Tax Credit work? The authors think one important reason is that hiring managers often don’t know which job applicants qualify. 

To receive the credit, employers must certify that they knew the applicant was eligible on or before the day they hired the person. Researchers surveyed 170 companies that use the credit. Less than 1 in 5 screened for eligibility on job applications. At companies that do collect this information, it might stay in the human resources office, never reaching the person who decides who to hire.

That may well be intentional, said UW-Madison economist Corina Mommaerts, one of the authors of the study. Federal and state law bars employers from considering certain factors in hiring decisions. That includes age and, in some cases, criminal record. There are ways to screen applicants without violating such laws, Mommaerts said, “but you can see why employers might still be very concerned.”

In addition, she said, some job applicants may hesitate to tell a prospective employer that they’re eligible. People with felony convictions, for example, may prefer not to draw attention to their criminal records. In the last two years, Wisconsin authorities certified the hires of just over 3,000 people with a felony conviction as qualifying for the credit.

“The concern is that there might be this stigmatizing effect,” Mommaerts said, explaining that some employers try to minimize that by asking applicants to review all the WOTC eligibility categories and indicate whether any apply to them. 

Melissa Riccio, director of inclusive hiring at the national re-entry nonprofit Center for Employment Opportunities, is an expert on that stigma. It’s her job to convince employers that hiring a formerly incarcerated person may not be as risky as they imagine.

Asked about the tax credit, she said such policies won’t singlehandedly make the kind of change she’s looking for, in part because many employers may see them as more work than they’re worth.

“You would never hear any of us say that it would be a bad thing,” Riccio said. “But I don’t think that that alone is enough to move the needle in encouraging employers to make a change in their hiring practices.”

Some policy experts say the new study proves that the temporary tax credit shouldn’t come back. 

Until now, there was little evidence on how well the Work Opportunity Tax Credit works, said Jen Doleac, executive vice president of criminal justice at the philanthropy Arnold Ventures, who researches strategies to reduce recidivism and help formerly incarcerated people get jobs. She and former colleague George Callas penned an October op-ed in Tax Notes calling the credit “completely ineffective.” 

“The evidence is clear: The WOTC does not serve its stated purpose and is a waste of taxpayer dollars,” they wrote. “Encouraging the hiring of workers from disadvantaged groups is a worthy goal. We must devote scarce public resources to solutions that actually achieve it.”

Lobbyists hail a proven, bipartisan tool

Initially authorized for just one year, the Work Opportunity Tax Credit has stuck around far longer — in part because of a powerful lobby. Major backers include payroll processing companies, temp agencies and groups representing the hospitality and retail industries. 

In 2022, a variety of industry groups seeking “solutions to the U.S. labor shortage” joined forces to form the Critical Labor Coalition. One of the coalition’s top priorities: lobbying for WOTC. The group spent $60,000 on lobbying last year, according to watchdog Open Secrets.

“Members of the Critical Labor Coalition — representing restaurants, retail, hotel and lodging, construction, food manufacturing, and other sectors — consistently affirm that strengthening and reauthorizing WOTC is essential both to their industries and to addressing the nation’s ongoing labor shortage,” Critical Labor Coalition Executive Director Misty Chally said in an email. 

Asked about the new Wisconsin study, Chally questioned its “narrow” focus on SNAP recipients. She said her group places “greater confidence” in a 2025 study commissioned by multinational talent management company Allegis Group. The authors of that study estimate renewing WOTC would subsidize 131,000 jobs, but they note it’s not clear how many of those jobs would have existed regardless.

“The exact impact of WOTC on net new job creation is uncertain … While some studies find that WOTC leads to meaningful employment gains among eligible groups, a significant share of the cost may stem from subsidizing hires that would have occurred anyway,” Allegis Group wrote. For their analysis, they assume more than 85% of those jobs would have existed without the credit. 

Why has WOTC stuck around?

Sarah Hamersma has been worried about WOTC for more than 20 years.

In the early 2000s, she was an economics graduate student at UW-Madison interested in programs designed to reduce poverty and help people work. She wanted to study the much larger Earned Income Tax Credit. Her adviser suggested she instead examine the smaller, newer and unstudied Work Opportunity Tax Credit. 

At the time, the credit was just 4 years old and limited to people who received cash welfare assistance. She asked state officials for access to the data. What she found matched what Mommaerts and her colleagues found decades later. Unlike the Earned Income Tax Credit, which gives money directly to low-income workers — and which studies show increases employment and boosts incomes — this tax credit seemed to just boost employers’ bottom lines.

“They’re not passing it along to the workers in the form of higher wages. They’re just sort of being like, ‘Awesome, I got more money,’” Hamersma said.

She wanted to do similar analyses on other places, but she couldn’t find any other states willing to share their data. Now an economist at Syracuse University, she researches programs like Medicaid and SNAP.

“I started studying other programs that seem to make more of a difference … but I always come back to this,” Hamersma said.

From time to time, reporters contact her to ask about it. Lawmakers, not so much.

“I still wait for them to someday call me and say, ‘What should we do, Sarah? Should we reauthorize this?’ Congress has never called,” Hamersma said.

She’s sure legislators didn’t read her research. But she hopes they might read the new study, and that it might sway them. 

“They’ve checked every angle you could possibly check, and the program is not working,” Hamersma said, calling it an “ironclad case.”

The new research was enough to convince Elena Spatoulas Patel, co-director of the Urban-Brookings Tax Policy Center, who saw the authors present their findings at a conference. “That really changed my mind about how we think about the credit,” said Patel, who co-authored a December op-ed calling for an end to WOTC. 

But Congress has reauthorized the credit each time it lapsed before, and it will likely do so again this year, Patel said. It’s not just that there’s so much industry power behind the credit (“a classic case of lobbying versus good tax policy”), she said — it’s also that lawmakers like the idea of it. 

“Unless and until something better is offered, it’s probably easier to renew the credit than to let it expire,” Patel said. “But again, it’s sort of ignoring the point, which is that we are spending taxpayer dollars on this by offering this credit, and it really isn’t helping employment.”

Exactly what the alternative might be is “the million-dollar question,” Patel said. Policy experts say options could include supporting evidence-backed job training programs or expanding the Earned Income Tax Credit.

“If you’re trying to reduce poverty, putting money in the hands of working people is a great way to do it, which is what the Earned Income Tax Credit does … Those low-income working families get more money to spend on the things they need, and we kind of cut out the middleman of the employer altogether,” Hamersma said.

Still, Hamersma doesn’t think Congress will follow her advice anytime soon. 

“This is my cynical take: It’s kind of the perfect program because it benefits corporations, which Republicans historically like, and it seems like it’s supposed to be for poor people, which Democrats historically like,” Hamersma said.

“The facts are kind of irrelevant, the facts where nobody gets helped — it doesn’t quite make it to the top.”

Natalie Yahr reports on pathways to success statewide for Wisconsin Watch, working in partnership with Open Campus. Email her at nyahr@wisconsinwatch.org.

Tax credit meant to help struggling workers mostly helps employers, Wisconsin study finds is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.