Too many workers lack skills, declared Federal Reserve Chairman Alan Greenspan in response to growing pay inequality and wage sluggishness.

This mantra -- that American workers simply aren't taking advantage of training that will magically secure them well-paid jobs -- is appealing. But is it really only workers' skills that need upgrading?

As Morgan Stanley's chief economist, Stephen Roach, recently pointed out, from March to June, hiring in lower-end industries in our hourglass economy has accounted for 44 percent of the workforce. Twenty-five percent of our nation's workers earn less than $8.70 an hour (or $18,000 a year) before taxes or health insurance, which puts a family of four under the federal poverty level. These low-wage jobs -- nursing aides, security guards, teachers' assistants, janitors, home health aides, retail sales and food preparation -- are among the country's fastest-growing employment opportunities. Meanwhile, manufacturing and service jobs that once provided a middle-class income for millions of American families are disappearing. As Greenspan himself acknowledged, people are having a hard time finding jobs that pay as much as the "lost" ones.

Unfortunately, Greenspan's facile dismissal of low-wage jobs as "unskilled" is a way to avoid acknowledging these essential jobs and the men and women who perform them. It is a way of justifying their poverty wages and meager benefits and blaming them for our failure to properly reward them.

In fact, skills are not the real problem. Today's workers have the requisite skills for their jobs as child-care providers, nursing-home aides, poultry processors and janitors. Without question, better education and fluency in new technologies are essential to improving job options for this and the next generation of working men and women. People in virtually any position should receive training throughout their careers to increase their opportunities for job and social mobility.

Yet these labor-intensive employers will continue to demand large numbers of workers. They are not prospects for outsourcing, because the jobs must be done in specific locations, face to face with patients or customers. For the people who hold these jobs to be in a position to support themselves and their families, the rewards of their jobs must be improved.

Without improvement, the rising gap between the haves and the have-nots will continue to grow, straining an already divided nation. A forthcoming study from the Russell Sage Foundation shows that once the income divide becomes entrenched, it is increasingly difficult for workers and their families ever to break free. Falling incomes among the poor make it more difficult for them to improve or escape from underfunded public schools, limiting their chances for future success.

If work does not work for millions of Americans, it undermines our most fundamental ideal: that if you work hard, you can support yourself and your family. Consigning millions of Americans to dead-end, low-wage jobs endangers the notion of equal opportunity.

A key to turning this around is understanding what made "good jobs" good. There is nothing inherent in welding bumpers onto cars or manufacturing steel girders that makes those better jobs than caring for children or guarding office buildings. Workers organizing through unions, and the passage of social legislation, raised wages and created paid leave and health and retirement benefits in these initially "bad" manufacturing jobs, changing them into good middle-class positions.

Fortunately, we can make choices as a society to make today's "bad" jobs "good" ones.

First, we can raise the minimum wage. Its earning power has not kept up with inflation. Frozen at $5.15 an hour since 1997, its value is 30 percent less today than in 1968, leaving millions of workers and their families well below the federal poverty line.

Second, we can clear the way for workers to unionize. Recent Labor Department statistics show that, on average, unionized service jobs pay nearly twice as much as nonunion service jobs. Compare the same positions in hotel-casinos in Reno and Las Vegas. They vary by more than $5 an hour, depending not on the skills of those who hold them but on whether they are unionized.

Third, we can reward businesses that provide their employees a living wage and basic benefits by offering taxpayer subsidies, contracts or grants.

Finally, we can provide access to health insurance for all Americans. Workers in the growing low-wage service sector are the least likely to get health insurance from their employers.

As a nation, we can decide to ensure that the people who protect and help our families can support themselves and their loved ones by making service jobs the good jobs of the 21st century. We must not simply label certain jobs "unskilled" and sentence a quarter of our population to a life of poverty just for doing their jobs.

Beth Shulman, author of "The Betrayal of Work," is a spokeswoman for the Russell Sage Foundation's project on social inequality.