HALF A MILLION PERSONS, REPRESENTING 7.5 PERCENT OF THE POVERTY AREA WORK FORCE, WERE UNEMPLOYED IN THE POVERTY AREAS OF LARGE STANDARD METROPOLITAN STATISTICAL AREAS IN MARCH 1966. HOWEVER, A REASONABLE, AND PROBABLY MINIMAL, ESTIMATE OF "SUBEMPLOYMENT" (A COMPOSITE MEASURE OF BOTH JOBLESSNESS AND EMPLOYMENT AT SUBSTANDARD WAGES) IN THESE POVERTY AREAS WOULD BE 1.5 MILLION. THE FACTORS WHICH PRODUCE SUBEMPLOYMENT IN BIG CITY POVERTY AREAS ARE AS DIVERSE AS THE CHARACTERISTICS OF THE PEOPLE AFFECTED. THEY ARE ALSO INTERRELATED, MUTUALLY REINFORCING, AND DIFFICULT TO DISENTANGLE. SOCIAL-PSYCHOLOGICAL FACTORS, LACK OF EDUCATION AND TRAINING, ILL-HEALTH, DISCRIMINATION AND OTHER EMPLOYER PRACTICES WITH RESPECT TO SELECTION OF EMPLOYEES, AND DISTANCE FROM AVAILABLE JOBS ARE AMONG THE MANY BARRIERS WHICH CONTRIBUTE TO JOBLESSNESS, UNDEREMPLOYMENT, AND LOW EARNINGS. THE BARRIERS WHICH SEPARATE SUBEMPLOYED SLUM RESIDENTS FROM THE MAINSTREAM OF ECONOMIC AND SOCIAL LIFE HAVE RESULTED IN THE CREATION OF AN IRREGULAR ECONOMY IN POVERTY AREAS, A SEPARATE ECONOMIC WORLD WHICH DIFFERS VITALLY FROM THE MIDDLE-CLASS WORLD SURROUNDING THE SLUMS. THIS WORLD HAS ITS OWN SPECIAL VALUES, ITS OWN STRATEGIES FOR SURVIVAL, ITS OWN MORAL STANDARDS, AND ITS OWN CRITERIA OF SUCCESS OR FAILURE. MOTHERS RECEIVING ASSISTANCE THROUGH THE FEDERAL PROGRAM OF AID TO FAMILIES WITH DEPENDENT CHILDREN ARE USED IN AN ILLUSTRATIVE STUDY OF ONE GROUP OF SUBEMPLOYED IN THE IRREGULAR ECONOMY. THE IMPLICATIONS OF THE VARIOUS DIMENSIONS OF SUBEMPLOYMENT FOR MANPOWER POLICIES ARE DISCUSSED. THIS CHAPTER APPEARS IN "MANPOWER REPORT OF THE PRESIDENT AND REPORT ON MANPOWER REQUIREMENTS, RESOURCES, UTILIZATION, AND TRAINING" (1968) AVAILABLE AS VT 001 025. (ET)