Efforts to shift women from welfare into the labor market will not necessarily move women out of poverty because the wages they are likely to earn are so low. According to research tracking Aid to Families with Dependent Children (AFDC) recipients over a 2-year period, 43% of AFDC recipients combine welfare with a substantial amount of paid employment. Most earn poverty-level wages. Two labor market reforms could help women: pay equity remedies and a higher minimum wage. Because average earnings in an occupation fall as the proportion of women workers in that occupation rises, pay equity would mean more money for families. If a pay equity policy (such as a federal comparable worth policy) were adopted nationally, the percentage of women earning less than each of the three poverty thresholds would decline. An analysis of the impact of raising the minimum wage on women's poverty that included consideration for wage increases on the "minimum wage contour" established that the impact of a 90-cent increase in the minimum wage on reducing poverty among women would approach but not equal the impact of a pay equity policy. Pay equity would also help reverse the recent increase in earnings inequality and erosion of living standards at the bottom end of the earnings distribution in the United States that have occurred since 1980. (MN)