This article explores the urban politics that led to the outbreak of the Newburgh, New York, welfare controversy in 1961. It uncovers the intricate interplay between race, place, and poverty that led to the early backlash against social welfare from the immediate postwar years to the early 1960s. Newburgh officials engineered their welfare reform as a political response to the economic, demographic, and urban transformations the city underwent in the 1950s. Race was central to their concerns as they scapegoated newly arrived African American migrants and blamed them for the city’s population loss and slowing economy. Welfare reform served at once as a tool for migratory, demographic, and racial regulation. The Newburgh story demonstrates that welfare regulation was used by city officials to enforce racial hierarchies in the Jim Crow North and suggests that city politics should be taken into greater account in the history of the American welfare state.