This article explores two contrasting perspectives on the role of informal settlements in urban labour markets. One proposes that they help to lift households out of rural poverty and onto a path to prosperity through affordable access to urban opportunities. The other suggests that the debilitating conditions confine residents to enduring hardship and insecurity. South Africa is an important test case because of the extent of social and spatial inequalities, and the policy ambivalence towards shack settlements. Preliminary evidence indicates that employment rates are much closer to formal urban areas than to rural areas, but conditions of employment are noticeably worse. Other forms of data are required to assess the magnitude and timescale of economic progression for households.