A decade ago, concern was growing in the UK and the US about the struggles of low earners to remain steadily employed and move up in the labour market. Evidence on welfare-to-work programmes had shown that many participants who exited such programmes, even successful ones, did not work consistently, and many participants who got jobs earned very low wages, typically joining the ranks of the working poor. In the US, the advent of time-limited welfare made families with only a weak foothold in the labour market especially vulnerable. Yet mainstream employment programmes were not well positioned to address this problem. Typically, they focused on helping non-workers get jobs, rather than offering assistance to help low and modest earners advance. Policy innovators in both countries thus began looking beyond these traditional programmes for ways to help participants who entered work retain employment and move up.

While policymakers recognised the importance of advancement, changes taking hold in the structure of the labour market were making that goal even more challenging. In the US and the UK (and other European countries), labour markets have been polarising since the 1980s. Employment growth and earnings gains were becoming increasingly concentrated among low-skill, low-wage jobs and among higher-skill, higher-wage jobs. Demand for workers to fill middle-skill, middle-wage jobs was lessening. Consequently, the kinds of middleskill jobs that would represent substantial advancement for people starting in the lower rungs of the labour market, though still a major share of the economy, were becoming relatively more difficult to obtain.

Compounding this challenge was the problem that low-skill, low-wage jobs were not always economically worthwhile for lowincome families. Such jobs could result in a loss of cash welfare and related benefits that offset much or most of the gain in earnings, thus discouraging work effort. For some people (especially those with larger families), bigger advancement strides would thus be necessary in order for work to make financial sense. In the US, the expansion of the Earned Income Tax Credit (EITC) in the 1990s and introduction of time-limited welfare and other reforms have increased the economic calculus in favour of work. Britain's more expansive safety net has likely made low-wage work less advantageous than in the US for many lowincome families.