We address the electoral consequences of profound welfare state reforms taking the German Agenda 2010 as an exemplary case. The Agenda is usually perceived as having developed into an electoral disaster for the German Social Democrats (SPD). In this article, we focus on the electoral reactions of directly affected labor market groups in four elections from 1998 to 2009. We combine detailed meso-level information on the regional socio-economic structure with official elections results. Our findings indicate that the electoral effects of the reform on the group of ‘Agenda losers’ were limited, while the effect on the German party system and its coalition dynamics are more permanent as the reform helped to entrench a party left to the SPD in the German party system.