The growing importance of education in overall economic growth and individual opportunity has necessitated that education reformers address the need for the additional and better human capital needed to foster overall growth in the new knowledge-based economy. Education reformers must also work to reduce the growing differences in family incomes by closing the gap between the nation's education-haves and education-have-nots. Addressing these challenges requires strengthening the relationship between education and work requirements and focusing more strongly on the years when academic and applied learning overlap between the completion of basic academic preparation and the completion of occupational or professional training. Although jobs requiring an associate degree are expected to grow the fastest, a sizable number of jobs will still be available for less-skilled workers. The shift in the U.S. economy's structure to a knowledge-based economy has increased the need for workers with reasoning, problem-solving, and behavioral skills; a positive cognitive style; and specific occupational and professional competencies. Although policy goals are well defined in elementary and higher education, the middle sections in the K-16 education pipeline needs revision to provide the appropriate mix of academic and applied curricula for the transition years from high school to college or high school to training and work. (Contains 83 references.) (MN)