This report examines the sub-baccalaureate labor market, defined as a labor market for those with less than a baccalaureate degree but at least a high school diploma. This market constitutes about three-fifths of employment. Following an introduction, the report describes the sub-baccalaureate labor market as primarily a local labor market dominated by small employers and affected by cyclical variation that undermines incentives to accumulate extensive training and experience. Next, the report looks at providers of education in the sub-baccalaureate market and their connections to employers. Among other things, advisory committees, placement offices, contract education, co-op programs, and licensing requirements are discussed. Then the report examines employers, concentrating on the following areas: (1) skills employers want; (2) hiring standards; (3) views about education providers; (4) promotion practices; and (5) employment trends. The report concludes that the sub-baccalaureate labor market generally works better for employers than for employees. The report identifies the following areas in need of reform: (1) the teaching of basic academic skills; (2) dissemination of information about the employment effects of various education and training programs; (3) the connections between educational institutions and employers; and (4) use of skill standards to organize sub-baccalaureate labor markets. Two appendices describe labor markets and describe interview methods and protocols. There are 67 references. (CML)