Nothing has damaged the squatters of Rio de Janeiro more in their quest for dignity than the popular image of vagabonds living off the sweat of other inhabitants of the city. Notions of the favelado as street urchin, hustler, scavenger, and criminal have persisted for at least a half century. The truth is more complicated but no less dramatic. Favelados have served the city of Rio de Janeiro in every imaginable capacity, but when their services were no longer required they have been discarded like rotten fruit. Not by chance did Carolina Maria de Jesu's title her memoirs of life in the favela Quarto de Despejo (The Garbage Dump) (de Jesu's, 1962). This article examines the working populations of three Rio de Janeiro squatter settlements, Praia do Pinto, Bras de Pina, and Jacarezinho, during the generation of 1940-1969, focusing on employment opportunities, salaries, and living standards. Favelasshantytowns distributed largely in the suburbs and metropolitan peripheryreplaced slums as the principal form of housing for the poor in Rio after 1940.' It is my contention that the inhabitants formed part of an urban subproletariat that maintained precarious connections to the job market but nevertheless performed economic functions vital to the functioning of the city and the nation. Rio de Janeiro from 1940 to 1969 experienced rapid urbanization and a decline in the importance of industry to the local economy, resulting in the growth of an informal working class alongside the formal proletariat. The emergence of a subproletariat as a key component of the urban labor force since the 1940s has been detected in most Third World nations (Portes and Walton, 1981: chap. 3). The subproletariat reduced the costs of the reproduction of capital for the bourgeoisie by allowing large and middle-sized firms to use unskilled labor on a temporary basis without resorting to formal contracts guaranteeing subsistence wages, thereby expanding the extraction of surplus labor and surplus value. The petite bourgeoisie or middle class