Jacks, this isn't quite what he's getting at. Life on a reservation is pretty much the worst, as it's poor, with nothing around and no real opportunities. Money from welfare doesn't lead to a good life, but it does contribute enough that there are an unfortunate number of people just living off of it and it really helps to keep the regions depressed.
The biggest problem with it is that the reservations are 1) The only remaining bastian of rich, interesting and important cultures that have been largely wiped out and 2) desolate crap holes in the middle of nowhere (on purpose--thanks past US government) where there are few opportunities that can really be exploited to get ahead. What this means is that to succeed, you have to largely give up your culture and get the heck out of dodge, and go to school elsewhere, etc., and when you succeed, you certainly don't go back to the reservation because there is nothing to go back to, no jobs, no wealth, and no skilled labor force. This means that the talented individuals leave while the talentless, lazy butts stick around. The only real exception are those talented individuals that are fighting to preserve an important culture--but unfortunately, while they can do that, they can't also raise the standard of living for those around them.
Add on top of this the staggeringly awful racism that surrounds most reservations (a bunch of rednecks who started off with bad attitudes and who have largely only dealt with teenagers from the reservation being dicks, because that's what teens are), and it's not particularly wonderful, and it helps to keep things stagnant. The money they get is enough to live, but not enough to invest, and there is simply no infrastructure FOR investment. The only real opportunity is in casinos, which are a toxic environment, even if with some success.
I honestly have no idea what needs to be done, but it needs to be something more than throwing a living wage at large groups and turning our backs. The fact that a reservation is a craphole combined with the fact that it's culturally vital makes any real revitalization obscenely difficult, but to be honest the current system props up a model of failure, and that certainly isn't going to do doodly squat.