The term "underclass," which refers to the concentration of economic and behavioral problems among racial minorities (mainly Black and Hispanic) in large, older cities, accurately describes a real and new condition in the United States social structure. In a sense, the rise of the underclass is an effect of the success of American social policy: the civil rights revolution caused a bifurcation of the racial minority groups. As upwardly mobile and educated members of racial minority groups have moved out of the ghetto, the people left behind have become more isolated and their problems have increased. Underclass conditions are economic, behavioral and attitudinal, and geographically focused. The concentration of poor Blacks and Hispanics in urban poverty areas is well documented, and little descriptive research is still required. For makers of urban and social policy, therefore, the time has come to shift focus from diagnosis to prescription, and to address the needs and problems of the underclass. The philosophy of the Great Society has given way to a newly emerging social philosophy, adopted by conservatives and liberals, which synthesizes three approaches to welfare reform: guaranteed income, job provision, and block grants. One new trend, workfare, has shown promising effectiveness in reducing welfare dependency, and its emphasis on jobs appeals to the new reform mentality. Appended are tables presenting detailed data on the characteristics of poor people in 14 of the 100 largest cities in the United States. (KH)