The paper, one of a series of monographs, is intended for educators and employers who are actively concerned with improving the interaction between the institutions of education and work. The purpose of the paper is to make educators more aware of the realities of the labor market. The first part of the paper introduces the concept of underemployment (the under-utilization of such human resources as talent, education, and training) and traces its effects on the society, the individual, the economy, and the institution of education. A rapid increase in the educational attainments of the work force and a marked change in work values among young people are then contrasted to a rather static occupational structure, one with only slowly expanding opportunities for good jobs. It is this particular combination of trends that leads to some of the worst problems associated with underemployment. In the final part of the paper, alternative policies for meeting the problems of underemployment are reviewed, with special emphasis given to life-long learning, especially work-based life-long learning. (Author)