The purpose of the study is to explore the relationship between the forms of labor market marginalization - understood here in terms of labor market status and job quality on the one hand, and income disadvantage, material deprivation and social exclusion on the other hand. Public policies which aim to improve labor market position as well as the income level of people disadvantaged in the labor market are also assessed. We exhaust data of the survey on social exclusion: 2 500 respondents were interviewed, who either were welfare benefits recipients or considered their situation to be comparable with welfare recipients situation. We show that marginalization on the labor market is transparent not only in unemployment spells (often repeated and long-term) but at the same time in temporary, low paid and poor quality job positions. The level of incomes of those who are employed in the lowest segment of the labor market and of the unemployed is very similar while deprivation of the unemployed is greater in many respects, in possibilities of influencing the course of life and life opportunities of their own and of their families in particular. We identify under-use of welfare benefits as well as of active measures which might improve the standard of living and human capital of those who are disadvantaged. A part of the disadvantaged remains active on the labor market and perceives work incentives, on the other hand we identify the poverty traps which emerge for the other fraction of those who become discouraged and welfare dependent.