This volume contains an introduction and four policy option papers that explore key issues affecting the economy and state options to address the issues within the context of the U.S. workplace. "Introduction" (David Bedford, Evelyn Ganzglass) discusses the issues identified in the first phase of the governors' initiative on Excellence at Work and outlines a state action agenda. "State Strategies for Manufacturing Modernization" (Brian Bosworth) provides a framework for considering state government policies to encourage modernization among small and medium-sized manufacturing companies and promotes a review of state policies and programs for helping train workers and managers. "State Strategies for Building Market-Based Workforce Preparation Systems" (Robert Sheets, David Stevens) argues that the challenge for states in the 1990s is to refine and integrate the use of various performance standard systems and other related market incentives into comprehensive market-based workforce preparation systems. "The Flexible Workplace: Implications for State Employment Policy and Regulations" (Barney Olmsted, Stephen Trippe) discusses the changing relationship between employers and employees and the demands of workers for more flexible working conditions to accommodate family and other responsibilities. "Health Benefits in a Changing Economic Environment" (John Luehrs) discusses the ways in which concerns about health care delivery and financing have affected the U.S. workplace. An index is provided. (YLB)