Joseph II's reforms gave Jews access to educational opportunities and new sources of livelihood, such as agriculture, transportation, crafts, and manufacturing. They were also granted the right to own and pass on land to children. However, the prohibition of leasing rural landholdings, mills, and inns was maintained, and only those Jews who personally worked the land were to be tolerated in rural areas. Moreover, a number of the economically beneficial reforms were only partially implemented in Galicia.

Widespread poverty aggravated social antagonisms, in particular the landlord-peasant relationship based on the coercion of labour-rents from the peasantry. Polish gentry owned most of the landed estates in Galicia and were politically powerful. There was also a substantial Polish peasant population, mainly concentrated in western Galicia, and Polish inhabitants in the larger cities, including artisans, merchants, and professionals. Ukrainians (then known as Ruthenians) were primarily a peasant society, with a thin layer of clerical and (by the 1840s) secular intelligentsia. Jews occupied intermediary positions in the feudal economy and the emerging money economy, the latter remaining marginal until the 1860s.

An official report on conditions in the newly acquired Austrian province of Galicia — prepared for Empress Maria Theresa by Prince Wenzel Anton von Kaunitz-Rietberg — found that Galician Jews were dependent on the production of the peasantry for their livelihood. The report also stated that "taken as a whole, they [the Jews] are very poor and merely a sponge that the clergy and nobility squeeze." An Austrian government investigation in 1815 reported that around one-third of the Jewish population in Galicia was composed of Luftmenschen, people whose only source of income was irregular, odd jobs. Impoverishment motivated many Galician Jews to emigrate to Hungary, the Romanian principalities, the Kingdom of Poland, and eventually Western Europe and America.