At the request of the United States Senate Budget Committee, a study was conducted to analyze present federal programs affecting the youth labor market and to consider a number of alternative options. The study showed that in 1981 the unemployment rate among white youths aged 16-21 was 15 percent, more than twice the average rate for the labor force as a whole; for nonwhite youths, the rate was almost 35 percent. The youth employment problem has two aspects: the difficult transition from school to work, even for youths who are job-ready; and longer term and recurring unemployment for youths who lack basic academic skills, especially the black and poor. Efforts to alleviate the employment problems of young people can seek to increase employment demand for youths; enhance their job qualifications; or improve their ability to negotiate the transition from school to work or from one job to another. Options for increasing employment demand include stimulating the economy, leaving the minimum wage unchanged, expanding work experience programs, and expanding employment subsidies. Options for enhancing job qualifications include expanding job training programs, and redirecting federal expenditures for secondary education to develop job skills; while options for facilitating labor market transitions are increasing job placement services in high schools and providing job search methods classes. It was noted that long-term job-search skills training programs had a higher rate of long-term job placement success, but were much more expensive to maintain. In keeping with the mandate of the Congressional Budget Office to provide objective and impartial analysis, the paper offers no recommendations. (KC)