| Changes in the American economy over the last 20 years have been extremely unfavorable for school dropouts. |
The General Educational Development certificate, or GED, is rapidly becoming a major educational credential in this country. In 1998, half a million Americans obtained a GED, more than doubling the number (231,000) who received the credential in 1971. Today, one-seventh of the young Americans who report on government surveys that they are high school graduates are actually GED recipients who obtained the credential after dropping out of school.
Changes in the American economy over the last 20 years have been extremely unfavorable for school dropouts. Between 1979 and 1996, the real earnings of 25- to 34-year-old male dropouts fell by 28 percent; the comparable figure for female dropouts is a fall of 7 percent. The declining economic prospects of school dropouts are especially disturbing because, according to the National Center for Education Statistics, the percentage of 18- to 24-year-old Americans who left school without a high school diploma increased from 21.2 percent in 1994 to 25.3 percent in 1998.
Most state and government programs aimed at improving earnings prospects for school dropouts focus on preparing them to take the GED examinations. These examinations cover mathematics, reading, social studies, science, and writing. Since 1988, the GED battery has included a short open-ended writing component; the rest of the exams consist of multiple-choice questions.
With support from the National Center for the Study of Adult Learning and Literacy, we have used data from many sources to explore the labor-market value of the GED credential for school dropouts in their mid-20s and to compare it with the value of the conventional high school diploma. Our work focuses exclusively on the value of the GED to those who obtain the credential before age 25—two-thirds of all GED recipients in 1997. The results should play a role in debates about how to improve American education.
The GED program was started in 1942 as a means of certifying that veterans returning from World War II without a conventional high school diploma had the skills to take advantage of the postsecondary education benefits provided in the GI Bill. In 1947, New York allowed school dropouts who were not veterans to seek the GED credential. Other states soon followed. The rapid growth in the number of people receiving the GED credential began in the late 1960s as the Great Society programs provided funding for GED-preparation programs. By the standard of the number of Americans obtaining the GED credential, the publicly funded programs preparing school dropouts for the exams are a success. But is the GED credential valuable in today’s economy?
The Economic Benefits of the GED for Dropouts
Students drop out of school for many reasons and with very different skill levels. A central lesson of our research is that the labor-market value of the GED credential is very different for students who leave school with very weak cognitive skills than it is for students who leave school with stronger skills.
Students who leave school with weak cognitive skills tend to have an especially difficult time in today’s labor markets. As a result, by the time they have been out of school for a few years, they typically have employment records characterized by a series of short-term jobs interspersed with periods of unemployment. Such track records make these dropouts extremely unattractive job applicants because employers most of all want reliable workers. For these dropouts, our research shows that acquisition of a GED improves labor-market outcomes by about 15 percent. The likely reason is that the GED signals to employers that the dropouts have matured enough to complete a seven-hour set of examinations and have acquired at least a minimum set of cognitive skills. In other words, the GED improves access to jobs and allows dropouts to acquire critical work experience.
| Our research shows that acquisition of the GED enables lower-skilled dropouts who are in their mid-20s to earn about as much as high-skilled dropouts who don’t possess a GED. |
It is important to keep in mind that the economic benefits of the GED for low-skilled dropouts, while quite large in percentage terms, are modest by the scale of what it costs to raise a family in the United States. Five years after acquiring the credential, the average earnings of 21- to 26-year-old white GED holders whose scores on the GED exams were just high enough to obtain the credential were about $11,000 in 1995 prices. This is less than the poverty level for a family of three in that year.
Dropouts who leave school with relatively strong basic skills (defined as 10th grade math scores in the upper half of the national distribution of 10th graders’ scores) fare better in the labor market than do dropouts who left with very weak skills. At age 27, they earn, on average, about 15 percent more than the dropouts who left school with weak skills. For these higher-skilled dropouts, we find that acquisition of a GED does not improve their labor-market outcomes. The likely explanation is that these dropouts form early connections to employers and as a result are less in need of the labor-market signal the GED provides. Overall, our research shows that acquisition of the GED enables lower-skilled dropouts who are in their mid-20s to earn about as much as high-skilled dropouts who don’t possess a GED.
The GED and the High School Diploma
Students who drop out of high school and acquire a GED do not fare as well in the labor market as students who stay in school and earn a high school diploma. The primary reason is that students who earn a high school diploma are much more likely to go to college than are GED recipients, and college credits pay off in the labor market. This is true even among students with the same cognitive skills as 10th graders. For example, among high school sophomores with relatively strong cognitive skills, 20 percent of those who obtained a GED went on to complete at least two years of college. The comparable figure for those who obtained a conventional high school diploma is 64 percent.
Why are GED recipients so much less likely to accumulate college credits than are high school graduates with the same cognitive skills as 10th graders? Part of the reason is that GED recipients tend to come from lower-income families than conventional high school graduates. Their parents were less likely to have completed high school. As a result, they may know less about how to enroll in college and how to gain access to federal financial aid than do conventional high school graduates. Another possibility is that success on the GED examinations does not guarantee mastery of the skills needed in college coursework.
Making the GED a More Constructive Part of American Education
The GED Testing Service recently announced the goal of increasing the number of GED test-takers to 1 million by 2002—up from 800,000 in 1997. This would make the GED an even more prominent part of the American educational system. Despite the quantitative importance of the GED credential, the GED program is rarely a part of discussions in state governments about strategies to improve public education. Indeed, in many states, the administrators of GED preparation and testing programs have little dialogue with state officials responsible for K-12 education reforms. We believe this is a mistake, as a growing number of states require that high school students pass exit examinations in order to obtain a high school diploma.
| It is foolhardy to debate strategies to improve American education without considering the growing role of the GED. |
In our view, discussions of the role of the GED in American education should focus on how to attain four goals. The first is providing a second-chance opportunity to Americans who leave school with weak skills and then develop poor employment records. A second is improving GED recipients’ access to postsecondary education, which is increasingly necessary to earning a decent living in our society. The third is minimizing the incentive for students to drop out of high school with the intent of obtaining a GED. The fourth is minimizing the incentive for guidance counselors and other school personnel to counsel students who might do poorly on state exit examinations to drop out and pursue a GED.
The policy tools available to state governments include setting the minimum age at which individuals may take the GED examinations and setting the minimum passing scores. It is unlikely that these tools are sufficient to attain the four goals. As a result, there may be steep trade-offs among the goals. For example, a cost of allowing the GED to serve as a second-chance opportunity for dropouts may be an increase in the number of students who do drop out. To date, the evidence on the trade-offs and the extent to which they can be ameliorated by state policies is not clear. It is clear, however, that it is foolhardy to debate strategies to improve American education without considering the growing role of the GED.
Richard J. Murnane is the Thompson professor of education and society at Harvard University’s graduate school of education in Cambridge, Mass. John H. Tyler is an assistant professor in the department of education at Brown University in Providence, R.I.
