This document provides an overview of the distribution of minority groups across the economic class structure, examines the concept of a separate underclass, and assesses the potential of strategies based on residential and job mobility for improving the prospects of each of the different classes. A racial comparison of all urban households on the basis of income yields the following findings: (1) 4 percent of Black households and 14 percent of White households comprise the upper class; (2) 23.6 percent of Black households, 27.6 percent of Hispanic households, and 41.9 percent of White households are at least middle class; (3) 20 percent of all groups comprise the working class; (4) 15.3 percent of Black households and 17.5 percent of Hispanic households comprise the low income class; and (5) 41.3 percent of Black households and 33.4 percent of Hispanic households comprise the very low income class. The underclass is a newly emerged group that can be viewed as a subset of the low and very low income groups, whose members have developed problems beyond poverty and lack of opportunity, and are geographically concentrated in urban innercities. Policies that employ residential mobility to overcome the limitations of innercity residence focus on either improving the relative advantages available in the inner-city, or improving the access of innercity residents to advantages available in the suburbs. However, these solutions, which merely involve movement within the current geography, cannot assure employment success. Two tables of statistical data and a chart illustrating the theories of the underclass are included. A list of 19 references is appended. (FMW)