Although U.S. policymakers have adopted the view that work is the solution to poverty, work may not ensure a decent standard of living for many families. This report estimates the number of families who are not making ends meet. It examines the cost of living in various communities in every state and determines "basic family budgets" for six family types in all metropolitan areas and in a combined rural area for each state. These budgets cover housing, child care, health care, food, transportation, and taxes and, in contrast to the federal poverty line, offer a more realistic measure of the income needed for a decent standard of living. The families studied comprised one or two adults and one to three children under age 12. Among these kinds of families, nationally, 29 percent fell below basic family budget levels for their communities in the late 1990s, and over 2.5 times as many families fell below family budget levels as fell below the poverty line. Families headed by single parents, young workers, minority workers, or workers who were high school dropouts were more likely to be struggling. The report also examines "critical" and "serious" hardships faced by families. Among the findings: families at all income levels had problems meeting health care and child care needs, and lack of health insurance was a strong predictor of family hardship. Extensive policy recommendations are offered concerning worker pay and benefits and a safety net of social services. Appendices present methodology, hardship data, and family budgets for 400 rural and urban areas. (Contains 45 references and many statistical data tables.) (SV)