The problems faced by out-of-school young adults in the United States and the policy implications of those problems were examined. The analysis was based on a review of pertinent publications and statistical data from various government agencies and other sources. The study documented that the past decade has witnessed areas of progress, stagnation, and decline in the educational and labor market arenas for the nation's young adults. The likelihood of a young adult being out of school and out of work in 2001 varied widely by educational attainment, race/ethnicity, family income and background, and geographic location, with high school dropouts from low-income families in the nation's largest central cities facing joblessness rates of 70-80%. The labor market lessons of the 1990s revealed that strong economic growth and the attainment of full employment conditions in labor markets are clearly necessary but not sufficient to solve all youth labor market problems. Improving labor market prospects for the nation's and central cities' young adults especially those with limited postsecondary education in the coming decade will likely prove more formidable than in the previous decade because of forthcoming demographic developments, the U.S. labor market's current weakness, and ongoing changes in the structure of the so-called New American Economy. (Contains 71 tables/figures and 71 footnotes.) (MN)