Data from the 1992 National Adult Literacy Survey (NALS) were used to assess the prospects of California's welfare population versus those of the U.S. welfare population. Welfare recipients were found to have substantially lower basic skills than other adults do. Although 58% of California adults with basic skills and demographic characteristics similar to those of welfare recipients are working at least part time, their jobs are characterized by low wages, intermittent employment, and less than full-time hours. Although many welfare recipients can and will find work, a substantial proportion lack the skills needed for successful integration into the labor force. California faces greater challenges than most other states because the basic skills of welfare recipients in California are lower than those of welfare recipients in the rest of the nation. A substantial portion of welfare recipients may therefore continue to need some form of income support. (Twenty tables/figures are included. The following items are appended: examples of NALS tasks and difficulty levels; information on sampling design and scoring of the NALS; discussion of the NALS and labor force outcomes; regressions on NALS; and an explanation of the process for determination of welfare counterparts. The bibliography lists 45 references.) (MN)