This paper presents specific steps elected officials, program managers, and other policymakers can take to craft a more effective workforce development system intended to give workers the tools they need to succeed in the new economy. First, the new labor market and work systems are discussed. The paper then lays out eight principles for all levels of government to follow in designing a workforce development system: invest in training; leverage employer investments; encourage firms to become learning organizations; address both short- and long-term skill shortages; expand learning choices for workers; demand accountability; use information technology to give people new tools; and be customer-focused. The following steps are recommended: target limited training funds to firms upgrading technology and skills or training workers in transferable skills; shift support from individual firms to regional skills alliances; design incumbent worker training programs that encourage firms to become learning organizations; engage employers in the curriculum design; connect high school to work; create math and science charter or magnet high schools; invest in developing college curricula in science, math, and information technology; establish state "SciTech Scholars" programs; support Workforce Investment Act training vouchers; reimburse colleges for noncredit student enrollments; establish a tax credit for company investments in remedial education, literacy training, and English as a second language; develop "report cards" on training providers and colleges; build a national occupational/employment data system; use technology to automate services and improve quality; create "learning stores"; develop employer-focused education and training systems; develop true customer response systems; and integrate job training with adult education. (Contains 15 endnotes.) (YLB)