An 18-month, 3-phase study examined formal employer-sponsored basic skills instruction in small- and medium-sized firms. Data were gathered through the following methods: in-depth case studies of 72 small and medium firms in 5 states, a series of linked national surveys of 11,000 randomly selected firms, follow-up telephone surveys of 4,317 of those firms, a telephone survey of a random sample of 775 small firms, and a survey of 1,535 members of the American Association of Community and Junior Colleges. The data collected were synthesized into an overview of the evolution of basic skills training programs for employees of small and medium businesses and current trends in their implementation. The perspective of providers of basic skills instruction (community and two-year colleges in particular) were identified along with barriers to the development of expanded and improved services by training providers. The study findings were also analyzed from the standpoint of their implications for public policy and private action. Overall, the study confirmed that workplace education offers a simple economical solution to the problem of training workers with low basic skills and that neither present policies nor new ideas offer an approach better than workplace education. (MN)