Families with incomes between the official poverty level and the minimum economic security level face many of the same material hardships and financial pressures that officially poor families face, partly because as their income grows, they lose eligibility for public benefits. This report focuses on the role that public policies play in supporting low-wage employment. The report examines how both improvements in the economy and public policies supporting low-wage employment such as the earned income tax credit, public health insurance coverage, and subsidized child care, contributed to declines in child poverty levels during the 1990s. The role of welfare reform in the context of a strong economy is described as an important contributor to the increased percentage of low-income children in families relying on earnings but not public assistance. The report maintains that low-wage work, by itself, is insufficient to move families from poverty to economic self-sufficiency, even within a positive economic climate. The economic downturn, rising unemployment, and cuts in public work supports are cited as factors compounding the challenges faced by low-income families. The report concludes with suggestions for how policymakers can help low-income families make financial progress, including expanding the federal earned income tax credit, decreasing payroll taxes for low-wage earners, raising the minimum wage, providing working parents with health insurance, expanding child care subsidies, and strengthening unemployment insurance for low-wage workers. (Contains 28 endnotes.) (KB)