The importance of a skilled and highly educated workforce to economic well-being is widely recognized, and the relationship between skills and income is becoming stronger over time. Largely as a result of growing demand for skilled workers, state-level training programs are becoming increasingly important as complements to federal programs. Although the demand for workers with a bachelor's degree or more is growing rapidly, many future workers will not attend college and will require other types of training. Cost-sharing for worker training and improved communication between businesses and students will help facilitate the transition from school to work. The needs of older workers are also important, as the relative size of the workforce aged 45-64 will grow. Finally, small and rural firms may need some special assistance in modernizing because the difficulty of finding highly trained workers may preclude investment in advanced technology. (Contains 6 tables and 65 footnotes.) (Author/TD)