While no one can predict the future, today's economic and demographic realities suggest the opportunities and challenges that will face America in the years to come. The U.S. economy has already undergone dramatic changes in the latter part of the twentieth century. The extension of product and labor markets has expanded global competition, and the infusion of technology has been widespread across all sectors of the economy. Both of these forces have affected the structure of jobs and the way people work, fueling increases in educational attainment and the demand for skill. The kind of education and skill demanded has also changed. General reasoning, problem-solving, and behavioral skills as well as a positive cognitive style are increasingly needed to supplement the narrow cognitive and occupational skills sought in a more directed work environment. Access to good jobs and earnings in the American system are driven by the complementarities between these soft skills, general education beyond high school, occupational preparation, and the resultant access to learning and technology on the job. The growing importance of education in overall economic growth and individual opportunity creates two primary economic challenges for education reformers: (1) to meet the need for a greater quantity and quality of human capital necessary to foster overall growth in the new knowledge-based economy; and (2) to reduce the growing differences in family incomes by closing the gap between the nation's education-haves and education-have-nots. The authors contend that strengthening the relationship between education and work requirements begins with a stronger focus on the "missing middle" in education policy: the years when academic and applied learning overlap between the completion of basic academic preparation and the completion of occupational or professional training. These are the critical years when young adults begin to mix educational experiences with their growing independence in families and communities, and with their early attachment to the world of work and careers. The missing elements at the critical juncture between education and careers are curricula that effectively mix academics and applied learning as well as institutional relationships that create venues for applied learning and successful transitions from school to school and school to work. (Contains 10 figures and 19 endnotes.)