This report examines how state welfare-to-work programs have affected young children since the 1996 welfare reform act, which moved millions of women into low-wage jobs. Researchers followed a sample of 948 mothers and young children for 2-4 years after the women entered new welfare programs in California, Connecticut, and Florida. After interviews with these mothers, assessments of their children's development, and visits to homes and child care settings, several findings emerged. Many women had moved into low-wage jobs. Though their total income had risen significantly, most still lived below the poverty line. Related measures of economic wellbeing showed little improvement. For example, almost one-fifth of mothers had recently cut the size of meals because they did not have enough money to buy more food. The magnitude of income gains was too weak to improve home environments or allow women to move to better neighborhoods. Mothers were spending less time with their children as they went out to work. They displayed twice the national rate of clinical depression. Many children had moved into new child care centers and preschools. Those who move to center-based programs displayed significantly stronger cognitive and school readiness skills than children who remained in home-based programs. Measures and national norms are appended. (Contains 150 endnotes.) (SM)