The recent run of good macroeconomic news masks mounting evidence that worklessness is increasingly concentrated on selected individuals, households, and socio-economic groups and in geographical areas. These distributional aspects have been overlooked or ignored over the last 20 years, but we believe they now form the most pressing labour-market and social problems facing this administration. We focus on what we view as the government's selected priorities: the concentration of unemployment on certain individuals, groups, and areas; increasing inactivity, especially marked among less educated, older men; low pay, persistence of low wages, and its relationship with job loss; and the distribution of work across households and child poverty. Many of these problems leave lasting scars on individuals, so that successful intervention may beneficially change an individual's life-chances. We examine the evidence on each of these issues and the current state of policy aimed to reduce their scale or intensity. Copyright 2000 by Oxford University Press.