New York State is a good example of a diversified economy for a diversified population. Minority middle classes can be found in many places in the state, which has relied heavily on education as a policy tool to increase its human potential resources. Just as the middle of the income scale has been declining nationally, so New York's education system--by having such a high number of high school dropouts and an excellent record of access to higher education--may be inadvertently contributing to an increase in the low end and a corresponding increase in the high end of the income levels in the state. There is much stability in New York as the divorce and crime rates are actually quite low, but this stability could be threatened if New York becomes a state for the rich and the poor. The parts of the state's educational system do not mesh as well as they might. New Yorkers are used to receiving quality services for their higher taxes, and it may be time to look strategically at how the investment in education could yield a greater return. Weak points include retention levels to high school graduation and early childhood education. (15 references) (KM)