I use layer masks ALL the time in Elements 2 using a nice trick and I expect this will work in Elements 3 too (I'll know for sure tomorrow when I get my copy of Elements 3). I simply create an adjustment layer (usually levels, but it doesn't matter what kind of adjustment layer), hit OK on the dialog to NOT change it's settings at all. Then, create a new layer above the adjustment layer and group is with the adjustment layer. Since all adjustment layers have masks and that mask will apply to the grouped layer(s) above it, you now have a layer mask that works just like any other layer mask.

Here's an example:
Kelsey mask applies to Layer 1
Sara mask applies to Layer 2 (and the two other layers above it)
http://jfriend.smugmug.com/photos/10482688-L.jpg

Dave Fitzpatrick wrote:
>
> Is there any way to do layer masks? I use Elements 1 because it's
> so easy to fake the program out and get a layer mask. And once you
> get used to masks, you'll never be without them.
>
> ---
> The camera sees things as they are. Photoshop makes them appear as
> we'd like them to be.
>
> Dave