This report highlights the interconnectedness of welfare reform and broader strategies concerning the economy, education, and the conditions of work. Recommendations are presented for policies that would help working poor families avoid dependence on welfare. The report is divided into five chapters. Chapter I summarizes major findings and presents recommendations, to achieve two goals: (1) to make individual self-sufficiency possible through a dynamic economy and a productive labor force; and (2) to approach welfare reform in the larger context of work and the economy. Chapter 2 examines national poverty data to identify who is poor and why. Chapter 3 discusses the importance of economic policies in fighting poverty. Chapter 4 considers specific proposals for reforming welfare and facilitating the transition from welfare to work. Finally, Chapter 5 outlines a strategy for moving toward a new "social contract" based on the mutual responsibilities of citizens and society. (KH)