A study examined the characteristics and impact of workplace literacy programs in businesses with fewer than 500 employees. Particular emphasis was placed on workplace literacy initiatives in Michigan. Case studies and telephone surveys were conducted to determine the extent of basic skills deficiencies and incidence of workplace literacy programs, attributes of programs and workers who participate in them, and impact of workplace literacy programs. Although between 20% and 40% of hourly employees were found to have some basic skills deficiencies, fewer than 5% of small businesses have a workplace literacy program. The major reasons cited for offering workplace literacy programs were receipt of subsidies and a desire to improve employee well-being, meet customer requirements/improve customer relations, and meet increased competition. Over 20% of firms without programs wanted to initiate one. Workplace literacy programs were found to improve workers' communication and mathematics skills, boost work attitudes and job skills, improve the quality of companies' output, and enhance individual workers' productivity and earnings by 10-20%. It was recommended that federal and state governments provide funding and technical assistance to workplace literacy programs. (Summaries of the 28 Michigan case studies are appended. Also included are 24 tables/figures and 15 references.) (MN)