Recent congressional action has increased the incentives for welfare recipients to seek new skills and has altered the system for providing education and training services. Addressing the impact of changes in welfare regulations on participation in education and training programs requires a baseline measure of how often disadvantaged populations engaged in skill-building activities before the reforms. The first wave of the National Survey of America's Families (NSAF), a nationally representative survey of households that collects a range of economic, demographic, and program participation data, provides such a baseline. The NSAF includes five indicators of human capital investment activities that create new skills. Two concern the development of better work habits: unpaid jobs provided by the government and job search/job readiness training. The other three pertain to basic education, vocational training, and college courses. One in 6 adults aged 25 to 54 engaged in some skill-building activity outside the workplace in 1996. NSAF findings show that even before federal legislation promoting greater work effort began to take effect in 1997, families and individuals receiving government income transfers invested in new work skills more frequently than prime-age adults generally. (SLD)