When Congress reformed the welfare system in 1996, major goals of the legislation were to increase employment and income of needy families and to decrease child poverty. Another major goal was to improve child outcomes through increased parental employment and earnings along with other provisions of welfare reform. Our analysis finds that, between 1997 and 2004, the well-being of children in working poor families improved significantly for 10 of the 15 measures available in both years and remained stable for the remaining measures. In contrast, the well-being of children in non-working poor families improved significantly for only five measures and deteriorated significantly for four measures. Moreover, whereas the well-being of children in working poor families was not consistently better than the well-being of children in non-working poor families in 1997, by 2004, the well-being of children in working poor families was better than for children in non-working poor families for 12 of the 17 measures available for that year. These patterns held when social and economic factors are accounted for statistically.