A survey group of the State Literacy Workforce Development Council studied the impact of illiteracy on Alabama's work force and economy using census data. Findings indicated that 55 percent of Alabama's adults functioned at literacy levels inadequate to meet the demands of a modern, technical society. Costs to business and industry were lost productivity, high employee turnover rates, wastage, and absenteeism associated with inadequate basic skills among workers. Other findings were as follows: the contribution of illiteracy to poverty, the effects of which cost the taxpayers at least $495 million per year in Aid to Families with Dependent Children and food stamp costs and the link between illiteracy and crime, with the support of over 20,000 prisoners costing over $200 million per year--rising by 1,000 prisoners each year. The literacy level of Alabama's workers affected the state's ability to retain existing business and industry and attract new business and industry. Social costs associated with low worker literacy levels included some social conditions associated with poverty such as the following: low birth weight babies, high infant mortality, child death, high teen violent death rates, large numbers of high school dropouts, high rates of teen pregnancy, and crime. The survey group identified the following needs that, if met, would have a positive and significant impact on the state's economy and future: a high school credential; basic literacy and computational skills; and effective work attitudes. (YLB)