This paper examines how the discourse of workfare, which has swept a number of Western countries over the past two decades, perpetuates social divisions and facilitates the intensification of Western capitalism. The social politics of workfare in Western countries is underpinned by dubious notions about the flawed behaviour and morality of welfare recipients on the one hand and the virtue of paid work on the other, often expressed as a ‘work-first’ approach. This policy narrative is guided by the belief that the sources of economic disadvantage are largely attributable to the behavioural problems and moral shortcomings of an established ‘underclass’, rather than the result of structural inequalities in the national and global economy. While some critical attention has been paid to the words of welfare, far less attention has been paid to the effects of discourse, particularly in terms of analysing how ‘target’ populations respond to the policy frames that are used to legitimate welfare state restructuring. This paper draws on a 3 year semi-longitudinal study with long-term unemployed in Australia to examine how low-income people respond to problematised constructions of citizenship, such as ‘welfare-dependent’ and ‘work shy’. Through this form of ‘reader research’ I aim to show that ‘welfare reform’ is much more than a set of policies aimed at managing the poor and the long-term unemployed in advanced capitalist economies; it also reinforces a system of values and beliefs about how all citizens should behave.