The policy issue of work replacing welfare is examined through evidence derived from the Panel Survey of Income Dynamics (1981-1988). Results indicate that welfare recipients supplement the earnings from low paying occupations with public assistance. Further, this income strategy responds to changes in economic incentives. For example, higher wages are associated with a greater probability of working without a welfare subsidy while lower wages are associated with a higher probability of mixing welfare and work. These results underscore the importance of liveable wage levels in providing for a durable substitution of work for welfare. The results also support Solow's recommendations of packaging welfare and work for those who find their occupational choices limited to the lower end of the labor market.