ABSTRACT This article argues that the invention of the European Union (EU) common market and the lifting of national border controls produced a mobility-control vacuum within the EU and its member states. Building on ethnographic research in the German city of Munich and symptomatic policy-paper analysis (2013–2021), it traces the emergence of a new policy field that targets ‘poverty migration’ and ‘benefit fraud’ in this vacuum. This internal border work builds on transformations of the German social system from an ethos of welfare to active labour-market policy. With the classical toolbox of national migration regimes no longer working for intra-EU movers, their mobility rights and right to residence have been increasingly restricted by making economic self-reliance a conditionality of stay and excluding those not engaged in wage labour or self-employment from welfare services. Social policy is used as a tool for controlling mobility, which we refer to as ‘workfare-state borders.' This is because it reinforces the radicalization of the workfare state by either pushing the racialized and migrantized poor into precarious wage labor or depriving them of social protection. This internal border work reconnects meritocratic logics with classical articulations of racism, thus contributing to the finely tuned reinvention of a racial order in Europe.