Despite 6 years of economic growth, California's workforce investment system faces the following challenges: (1) meeting the needs of workers who do not earn enough to bring their families significantly above the poverty level; (2) meeting the needs of employers who face continuing shortages of workers with needed skills; and (3) meeting the needs of the millions of middle-income workers who are ineligible for most public workforce programs and increasingly cut off from private training efforts. To successfully address the needs of California's workers and firms, state policymakers must focus on productivity growth, career advancement, and agency partnerships pursuing a common workforce development strategy that includes the following components: (1) a solid foundation of basic workforce skills in K-12 education; (2) the ability of California high school graduates to attend college; (3) easy transitions from high school to career; (4) recognition that economies and labor markets throughout California are primarily regional in geographic scope; (5) emphasis on opportunities for workers within industries and sectors rather than in individual firms; (6) incorporation of the expertise of private sector employers; and (7) focus on the critical role of partnerships. The following items are appended: approaches for reducing poverty; occupational projections; and career ladder examples. (COntains 16 tables/figures.) (MN)