The U.S. is awash in good news: crime is down, welfare rolls are plunging, employment rates are high and births among teenagers are declining.

But American Enterprise Institute analyst Charles Murray has been taking a look at the state of America's underclasses. He uses three indicators to examine the condition of those at the bottom of the socioeconomic ladder -- criminality, young male dropouts from the labor force and out-of-wedlock births among young women.

Here is a brief description of what he found:

• Crime is down because so many of the chronically criminal are locked up -- as demonstrated by the fact that if we were to imprison people in 1997 at the same rate we did in 1980, when crime hit an all-time high, there would have been about 1.3 million fewer inmates.

• Among 16- to 24-year-old black males who are not in school, the proportion who are not working or looking for work has risen from an average 17 percent during the 1980s to 20 percent in 1992, then to 23 percent in 1997.

• While headlines have trumpeted the fall in out-of-wedlock births per 1,000 unmarried women, the illegitimacy ratio -- that is, the percentage of babies who are born to unmarried women -- has been flat since 1994, at 32 percent.

Murray suggests that there may be a downside to the shift of single mothers from welfare to work. No body of research exists to demonstrate that it is good for children when a single mother works, he points out.

"Can the U.S. retain its political and social culture," Murray asks, "in the presence of a permanent underclass?" His answer is yes, if it is "sufficiently small." If it is large, he believes, the answer is no.

He points out that underclass ethics -- among all races -- are deteriorating and contributing to a coarsening of American life.

Source: Charles Murray (American Enterprise Institute), "And Now for the Bad News," Wall Street Journal, February 2, 1999.