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• 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.

U.S. jobs increased by 130,000 in January, buoyed by hires in health care, social assistance and construction.

But in another sign of anemic hiring last year, estimates for 2025 were revised down by more than a million jobs to a level of low growth rarely seen outside of recessions. 

The revisions show the United States added only 181,000 jobs last year — the first year of the new Trump administration — one of the lowest increases ever outside recessions. 

Jobs dropped in 2020 at the height of the pandemic and in 2008-2009 in the Great Recession, but otherwise the last time was a lower increase in jobs was in 2003, when they rose 124,000 after two years of decreases, during a period labeled a “jobless recovery” by economists.  

Economist Claudia Sahm, who had predicted 2025 would be “a year without jobs, but no recession” before the annual revisions based on more complete data, said Wednesday that “the downward revisions are huge” in an X post.

The new revisions changed the most for January 2025, which went from a gain of 111,000 to a loss of 48,000 jobs. Only one month, October, saw an upward revision: A reported loss of 173,000 jobs was trimmed to a loss of 140,000 jobs. There are now four months of job losses reported last year, up from three. 

Overall, the number of total U.S. jobs at the end of the year was revised down by 1,029,000, from a little more than 159.5 million to a little less than 158.5 million. 

State by state jobs estimates for January are not yet available. 

There have been about 29,000 layoffs announced so far in 2026,according to notices tracked by WARN Tracker. They include 7,705 layoffs in California, 6,109 in New Jersey, 3,999 in Pennsylvania, 3,483 in Washington state and 2,607 in Texas. 

Stateline reporter Tim Henderson can be reached at thenderson@stateline.org.

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• Jolene Wilkens, employment and training supervisor, spoke about the services Wisconsin’s job centers provide and how job seekers can take advantage of them. 

• The physical locations remain an important resource for those who lack internet access, need a quiet place to work or need face-to-face assistance.

• Staff at the centers can help people write resumes and practice answering interview questions.  

• Job seekers can also take free skills assessments to see what other types of work might interest them.

Looking for a job can be grueling and frustrating. 

Though Wisconsin’s job market generally favors job hunters, with more openings than unemployed people to fill them, it can be hard to know where you fit in — or simply where to start. 

The state’s Department of Workforce Development runs dozens of job centers across Wisconsin, each staffed with people trained to help you in your quest for work. Wisconsin Watch talked to Jolene Wilkens, an employment and training supervisor at Sheboygan County’s job center, about the services Wisconsin’s job centers provide and how job seekers can take advantage of them. 

“We want to meet the person where they’re at, but we do a lot of cheerleading and bringing that positive attitude,” Wilkens said. “We’re here to support you. We’re not here to make this process more complicated.”

Here’s what to know. 

Find your job center

Wisconsin has job center locations across the state. Find the closest one to you using the map below.

This map doesn’t include all of the department’s affiliate or satellite locations, such as job centers in correctional facilities. 

While the number of people visiting job centers varies widely among the different locations, more people have used their virtual services online in recent years, Wilkens said. The Sheboygan location where Wilkens works typically sees between 60 and 80 visitors each week.

While the department offers many of their resources online, the physical locations remain an important resource for those who lack internet access, need a quiet place to work or need face-to-face assistance for any reason. Getting to know people individually also helps staff make personalized recommendations or watch for jobs that are a good fit for someone, Wilkens said.

“There’s a lot of folks that prefer to come in person and have that personal touch, and some of that is just the support they receive. You build a community,” she said. 

What to bring with you 

Depending on the services you’re looking for, you might need to bring documentation or identification with you. Here’s a list of things visitors often need: 

• Driver’s license or ID. 
• Social Security card or number.
• A list of your last 18 to 24 months of work history, if applicable.
• Your cellphone, to set up two-factor authentications.
• Paper to write down your login information or to take notes.
• A resume, if you have one.
• Direct deposit or checking information.

What to expect when you show up

When you walk into a job center for the first time, you should expect to answer a list of questions from the employees. 

They’ll want to know:

• What work experience do you have? (It’s OK if you don’t have any.) 
• Have you enjoyed that work? What kind of work do you want to be doing? (If you don’t know, they’ll help you figure it out.) 
• Do you like your resume? (If you don’t, they’ll help you change it.)
• Are you having trouble securing job interviews after applying? (They might want to take a look at your resume.)
• Are you securing interviews, but having trouble landing jobs? (They’ll probably want to work on interview skills with you.)

Finding the right fit 

If you’re not yet sure what kind of work you can or want to do, job center staff can help you figure it out.

Staff will recommend taking the Occupational Information Network’s (O*NET) quiz to help understand your interests and the things you enjoy doing. The quiz asks you to rate how much you’d like different activities — such as building kitchen cabinets or teaching a high school class — if they were a part of your job. Your answers help the application suggest careers you might enjoy. 

You can also access the quiz here.

If you know what kind of jobs you want to do, or you want to see different jobs you’re qualified for, staff will recommend using a tool called Skill Explorer. The program asks you to input your job, education or training experience and produces a list of occupations and industries that your skills may transfer to. Skill Explorer also contains information about wages, job openings and projected growth for each occupation. 

You can also access the tool here.

“Sometimes it’s not recognizing all the transferable skills that you already possess and being able to move those industry sectors,” Wilkens said. “Other times, it’s identifying, ‘I like what I do, but it’s not my passion. I want to upskill and go to something else.’”

If you want to return to school or job training to pursue a different career or to move up in your industry, staff will connect you to the Department of Workforce Development’s training arm. From there, career counselors help you track down the right educational program — and assistance affording it.

You can begin browsing training programs here.

Getting the job

After settling on what kind of work you’re after, job center staff will focus on helping you secure the job. 

First: the resume. Most job applications ask for a document summarizing one’s education, work experience and skills. Building one shouldn’t be overwhelming, Wilkens said. 

Job center staff are trained to help people put together resumes that help secure job interviews. They also use a tool that creates a resume after asking you to answer prompts. When users log a job title, it suggests additions based on the profession’s occupational outlook, a federal compilation of data, information and predictions about jobs. 

Wilkens encourages people to be open to changing up their resume or being challenged. 

“You ask 100 people how to do a resume, and you’re going to get 100 different answers,” Wilkens said. “Just because you worked in one industry for 10 years, and then you did a 180 and went into a different industry, and now you’re looking at yet another, doesn’t mean there aren’t skills in there that we can transfer and highlight.”

You can access the department’s resume building tool here. It plans to roll out a new and improved version of the tool in the next year.

Job center staff will help throughout the interview process by scheduling mock interviews and helping you answer practice questions. They can also create an account on InterviewPrep, a tool that allows you to see how you sound responding to interview questions and get feedback from staff. 

Staff can also help you choose between job offers by comparing the wages or cost of living between different locations. 

Other services job centers offer 

Unemployment and job loss resources

People commonly visit job centers to get assistance filing for unemployment. 

“You can’t walk into an unemployment office, so you come into a job center,” Wilkens said. 

Staff also complete an “assessment of needs” when people visit for unemployment help. They ask questions to understand if a person is experiencing housing scarcity, food insecurity or other struggles, so they can direct them to free community resources.

“Somebody will come in feeling really defeated and disheartened about losing their job,” Wilkens said. “We have resources for that. Helping people realize all the things that they brought to the job and why they were able to retain that job for so long, really helps reframe and start thinking and looking at things glass half full.” 

“There are a lot of positives,” she said. “You didn’t just go to work and make widgets … You showed up promptly every day. You worked as part of a team. You were dependable and reliable. You adhered to safety standards.” 

Support for people with disabilities

The state’s job centers have a Division of Vocational Rehabilitation that helps people with disabilities obtain and keep work. 

The division can connect people to diagnosis and treatment, transportation assistance,  interpreter services and help with job search and placement, among other services. 

Job fairs 

Job centers often host or collaborate with local employers on job fairs and hiring events. You can view a list of upcoming hiring events coming up across the state here. 

Miranda Dunlap reports on pathways to success in northeast Wisconsin, working in partnership with Open Campus. Find her on Instagramand Twitter, or send her an email at mdunlap@wisconsinwatch.org.

Looking for work? Here’s how Wisconsin’s job centers will help you for free 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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The state of Wisconsin generally cannot consider U.S. citizenship or national origin in hiring for state jobs.

Republican U.S. Rep. Tom Tiffany of northern Wisconsin, who is running for governor in 2026, said Nov. 17 he would ensure state jobs “go to Americans.”

His congressional and campaign offices did not respond to requests for comment. 

The U.S. Supreme Court has held that states cannot restrict public employment to citizens.

Both public and private employers are generally barred by federal law from treating people differently based on national origin or ethnicity.

Wisconsin laws prohibit discrimination by public or private employers based on national origin or ancestry.

The state’s hiring handbook says the state can hire only people legally in the U.S., but “shall not refuse to hire aliens based on their foreign appearance, accent, language, name, national origin, citizenship, or intended U.S. citizenship.”

This fact brief is responsive to conversations such as this one.

Sources

• FindLaw: Sugarman v. Dougall 413 U.S. 634 (1973)
• Cornell University Legal Information Institute: Amdt14.S1.5.3.2 Alienage Classification
• Wisconsin Statutes: State Employment Relations
• U.S. Equal Employment Opportunity Commission: National Origin Discrimination
• Wisconsin Department of Workforce Development: Discrimination because of Race, Color, National Origin, and Ancestry
• Wisconsin Personnel Management Division: Wisconsin Human Resources Handbook

Can Wisconsin require state jobs go only to Americans? 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.