A survey of 10,739 employers (37 percent rate of return) was conducted in Washington state from July through September 1999 to determine training and skill needs of employers and the capacity of the state's training programs to meet those needs. In addition, research was conducted through data matching of unemployment insurance and training program records and telephone surveys with former training programs students and the employers who hired them. Some of the findings of the survey were the following: (1) nearly two-thirds of firms looking for workers during the last 12 months reported difficulty finding qualified applicants; (2) the scarcity of skilled workers affected all industries, most particularly construction and manufacturing; (3) among those reporting difficulty, nearly three-quarters of firms said the scarcity of skilled workers lowered productivity, while about two-thirds said it reduced output and sales and the quality of products and services; (4) the most serious shortage was of workers with postsecondary training, especially vocational training; (5) 9 of 10 employers had a hard time finding skilled workers with occupational-specific skills; (6) more than one-third of employers reported increasing classroom training for employees during the past 3 years; (7) 85 percent of employers provided on-the-job training; (8) nearly half of employers reported that the skills required to perform production or support or support jobs have increased during the past 3 years; and (9) nearly half of all nonsupervisory employees used computers on their jobs. (KC)