This article documents the functional transformation of our older, larger cities from centers of goods processing to centers of information processing. It shows that their entry-level industries, which once provided ready employment for less skilled residents, are declining precipitously. These industries are being replaced, in part, by knowledge-intensive industries whose requisites for employment entail substantial education and, hence, preclude large segments of inner-city minority populations. Urban demographic-employment base mismatches are analyzed, as are their consequences, including rising rates of minority unemployment, labor force nonparticipation, and welfare dependency. Special attention is given to place-targeted welfare programs anchoring unemployed minorities in areas of severe blue-collar job decline, and to new policies that would enhance the spatial mobility of minorities from economically distressed inner cities.