This report provides objective information about the relationship of poverty, welfare, and homelessness to California's regional economy and about the design of programs that help people in poverty build working lives. California does not have enough jobs for its workforce, and welfare caseloads are consequently determined by the economy. The severity of California's current recession is tied to the decline in the manufacturing and construction sectors. The sharp decline in aerospace and high-technology jobs has affected many occupational specialties that require many years of education and experience. In addition, in California, and in Los Angeles in particular, there are few occupations where there is not already an available pool of highly trained and experienced workers who are seeking work. The sections covered in this report are as follows: (1) The Recession That Refuses To Leave; (2) Welfare Caseloads Determined by Economy, Not Work Ethic; (3) Challenging Myths about Welfare Recipients; (4) The Need for Safety Net Programs; The Experience of Michigan; (5) Proposed Welfare Changes Portend Harm for the Majority of Recipients--Children; and (6) Homeless Job Seekers Have Skills but Need Stability To Be Job Ready. (Contains 26 references and 8 figures.) (SLD)