This paper explores the interactions between welfare reform, employment growth, and poverty rates across all US counties for the period 1989-99. Models for the USA overall as well as separate models for metro and nonmetro counties are estimated, to consider differentiated impacts by residence. Results show that changes in welfare policy under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) were accompanied by reductions in welfare caseloads and poverty rates, as employment rates increased. However, changes in policy that sought to put poor people on welfare assistance to work reduced poverty rates only in metro areas but not in rural areas due to the weak job prospects in the latter. Further, the results of the estimated models hint that not everyone in the USA benefited to the same extent from the rising employment rates of the 1990s. The greatest increases in employment rates occurred in counties where there was room for improvement in employment rates but not where populations facing greater barriers (e.g., female household heads and minorities) were more concentrated.