This paper uses Habermas' theory of the state and his idea of legitimation crisis to critically evaluate recent reforms in New Zealand designed to engage young people (16-24 years of age) in paid employment and/or education and training. The paper identifies three broad strategies adopted by the state to reclaim the disengaged and hence, resolve the crisis of legitimation. These are motivational, punishing and bridging. Motivational strategies are designed to reclaim the disengaged by encouraging young people to adopt dispositions favourable to economic conditions of the time. If successful, young people will work hard to build their human capital in ways conducive to the needs of the economy. Punishing (or work-first) strategies are designed to reduce welfare dependence by making benefits harder to gain in the first instance and reducing entitlement where beneficiaries do not undertake mandated activities (such as looking for work). Finally, bridging strategies attempt to create links between job-seekers and recruiting employers. The paper argues that while these strategies will deliver short-term gains (for the state), the fact that they tighten the connection between the current labour market and education, means that over the longer term, crisis tendencies will remain. (Contains 2 figures.)