Judy Boyd recalls that she was 25, divorced and pregnant with her fifth child when she learned that her oldest daughter, Raymona, 7, had rheumatoid arthritis. Wanting to be at home with the child, she quit work as an auto mechanic and went on welfare.

When Raymona's condition gradually improved, Boyd sought and received financial grants and enrolled at Roxbury Community College. In her fourth semester, however, welfare aides insisted that she participate in a work-incentive program and pressured her to leave school for a job as a maid or else forfeit her welfare eligibility, she said.

Boyd turned down that job and three others. She also dropped out of college, where she said she was on the dean's list. She calls the incentive program demeaning and "a pain in the butt."

Massachusetts now has a new employment-incentive program for welfare parents that snubs both "workfare," the once controversial work-for-welfare concept that is gaining new popularity, and the take-work-or-else approach.

The new approach is called Employment and Training Choices program, irresistibly nicknamed "ET." All state welfare recipients must register for ET but are then free to choose immediate job placement, on-the-job training, career planning, education, or none of the above.

Those who enter a program retain welfare benefits and may also receive day-care vouchers, transportation subsidies, and free education and training.

Boyd is participating in the new program with gusto.

Most weekdays she leaves the house before dawn. By 7 a.m., she is scrubbed sterile and dressed to assist in surgery at Boston's prestigious Brigham and Women's Hospital.

At the end of September, her 11-month internship ends and Boyd expects to work as an operating room technician earning at least $15,600 a year, plus health-care benefits and overtime. As a welfare mother, she receives $9,924 a year in cash and food stamps and is eligible for Medicaid.

"I'm hoping one day to buy a home," Boyd, 34, said recently, pausing to savor the thought, then giggling with pride and excitement.

More than 17,000 welfare parents have obtained full- or part-time jobs since the state launched ET in October 1983.

None of the jobs is subsidized, most are in the private sector, two-thirds provide health insurance, and more than 70 percent of those hired have remained employed for at least six months, according to state statistics.

In several instances, the former welfare recipients are earning above-average wages.

Blessed with an economic resurgence, Massachusetts has the nation's lowest unemployment rate -- 3.7 percent, or about half of the national average. ET also has helped to shrink the state caseload for Aid to Families with Dependent Children to a 12-year low and has cut the AFDC budget by an estimated $50 million.

"What it proves is that you can help people to build a far better future for themselves and their families and do so in a way that at the same time is fiscally responsible," Gov. Michael S. Dukakis (D) said in an interview. "You have the best of all possible worlds."

The state recently established a similar training and placement effort for the general-relief program for the financially destitute, and is pondering a third program for inmates at a women's correctional facility.

Representatives of several states have trekked to Massachusetts to observe the program.

ET has its critics, however.

Some complain that average wages earned by women after they leave the program, about $5 an hour, are not enough to allow head-of-household mothers, the program's mainstays, to become financially independent bread-winners.

"This, in the long run, is just creating another group of poor women going into another poverty level," said Khin-Lin Johnson, regional coordinator of community empowerment for the American Friends Service Committee.

Johnson and others also contend that many women have only marginally higher net incomes after leaving welfare rolls to take work, and that male welfare recipients, most from two-parent households, obtain better-paying jobs. There also is no proof yet, they say, that jobs many women receive can offer opportunity for advancement.

Moreover, they assert, the job-placement rate for Hispanics is about half that of their level of participation in the program, while that for males is three times as large as their presence on the AFDC roster.

State welfare officials acknowledge many of these shortcomings but argue that none is intentional, saying many Hispanics are still in the training program. They say some problems are beyond the welfare department's control, noting that men generally earn higher wages.

"We haven't reinvented the wheel," Welfare Commissioner Charles M. Atkins said. "We're not going to fix all of society's ills at once with this program."

AFDC is the largest federal-state welfare program that pays cash -- about $14.4 billion to 10.7 million people during the 1984 fiscal year. Federal funds accounted for 54 percent of those benefits.

Generally, all "able-bodied," nonstudent welfare recipients not caring for small children are required to register for work and training, and all states operate a variation of the federal Work Incentive program (WIN), which requires participants to accept available jobs, training or needed services to prepare them for employment.

As part of the overhaul of the nation's welfare laws instituted by President Reagan in 1981, Congress permitted states to implement programs requiring welfare recipients to look for jobs, or institute Community Work Experience Programs, commonly called "workfare," in which recipients perform public-service jobs in exchange for AFDC benefits.

Critics of workfare say recipients work off their grants at the equivalent of dirt-cheap wages ("slavefare") or spend time on work that gives them no preparation for other jobs.

Most of the newly-launched "workfare" programs give credit for work at the minimum-wage rate.

Massachusetts was soured by its experiences with workfare during Dukakis' first term as governor from 1975 to 1979 and with a subsequent WIN program that state officials said forced employer-employe mismatches that usually failed.

During ET's first 18 months, 53,000 people registered, 35,000 took part and 14,325 obtained jobs. About 20,000 are waiting to enter ET programs.

ET's day-care provision helped more than 5,000 parents find jobs, state officials said. Day-care vouchers can be retained for as long as a year after employment, Medicaid can last 15 months and so can some food-stamp allotments. About one-third of the 17,000 hired retained one or more benefits.

The state spent $15 million last year to enhance the program. This included incentive awards to encourage its Division of Employment Security to give priority to welfare recipients in some job referrals and supplementary grants to reserve slots for ET clients in other job-training projects.

It also helped to provide special funding for such job-training efforts as the operating room technician program at Dimock Community Health Center in Roxbury in which Boyd is enrolled.

To the dismay of some, Massachusetts has concentrated its efforts heavily on those motivated toward self-improvement, those who possess what Dukakis termed "a fierce desire to be independent," partially stimulated, he suggested, by the women's movement.

The 18,000 whose interest in ET went no further than registration receive occasional prodding to go further. Atkins' message to them is: "You can stay at home and try to live on $6,400 a year. Good luck." The average AFDC grant and food-stamp allotment in the state is $6,360 a year.

The Massachusetts program is unique in its near total voluntary approach, the high level of state funds infused and -- most important, some say -- the bustling job market that absorbs so many of its graduates.

"Even if we had the money to do very sophisticated training, there wouldn't be jobs there at the end," said Barbara B. Blum, president of the Manpower Development Research Corporation in New York City, which monitors work-and-welfare programs in 11 states. None has an employment outlook as rosy as that of Massachusetts.

Bay State welfare officials counter that notion, however. Between 1976 and 1978, the state's unemployment rate dropped from 12 percent to 6 percent while welfare rolls increased 15 percent.

Between January 1983 and January 1985, unemployment dropped 4.1 percentage points in Massachusetts, and the AFDC caseload decreased 9.6 percent. During the same period, Ohio and Wisconsin experienced unemployment rate drops of 5.9 and 5.6 percentage points, respectively, but their caseloads increased by 10 percent and 11.6 percent, according to Massachusetts figures.

Atkins contends that the difference is ET. "It's a lot of bunk that a rising tide lifts all boats," he said. "A lot of people are stuck in that mud when the tide goes up unless you give them a boat like this."