In the 1980s and 1990s important demographic, economic, and social changes will affect the nation's schools, families, and workplaces. In anticipation of these developments, there is renewed interest in formal educational attainment and basic academic skills. A concerted national effort to address the current crisis in basic skills development would advance the nation's goals in several important ways. This paper attempts to show how inadequate basic skills are intertwined with problems of youth employment and with dropping out of school, out-of-wedlock parenting, welfare dependency, and the decline in work-force productivity. The first section examines relationships among macroeconomic trends, individual earnings, family-formation patterns, and educational achievement. The second explores the basic skills crisis, presenting evidence that inadequate skills are an underlying cause of poverty and economic dependency, and identifying the intergenerational causes and consequences of inadequate basic skills. The third section presents a conceptual framework for thinking about the problem, describes effective programs, outlines a system for improving the quality of current programs and the accountability of the institutions involved, and identifies weaknesses in the nation's current educational and training institutions and systems. The final section suggests an agenda for future action. Appendices discuss the Armed Forces Qualification Test, the results of various literacy tests administered to individuals at different levels of educational attainment, and the effects of basic skills on earnings. Tables and figures illustrate the data. (BJV)