How can cities upgrade urban waste infrastructures while also supporting the livelihoods of the poor? While development experts now agree that informal recyclers should be included in urban waste systems, many cities struggle to implement inclusive reforms. With a case study of informal recycling in Asunción, Paraguay, which compares dumpsite and street recyclers, this article addresses a gap in the literature by focusing on the policies, politics and frameworks that inhibit the implementation of pro‐poor reforms. Proposals to include waste pickers misunderstand key dynamics of informal waste work and locate waste‐picker cultures as the key barrier to successful waste‐picker integration. However, they overlook the historical production of waste‐picker organizing styles and underappreciate the diversity between different groups of informal recyclers. They seek to institute cooperatives, a promising model for segments of highly organized recyclers but one which threatens to exclude a large share of waste pickers who opt to work individually. Successfully integrating informal recyclers into waste management requires significant investments in the sector, meaningfully including waste pickers in proposal design and an epistemic shift to prioritize waste‐picker needs.