The Finances of High School Dropouts: Not Quite as Bad as You'd Think

Rows of empty wooden antique desk-chairs with turqouise writing surfaces in an aging classroom.
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More and more Americans are questioning the value of costly universities, and some fairly smart people have been pushing the idea that skipping college may be a better way to make a good living.

But what about those who leave the educational system behind even earlier? How do high school dropouts fare financially once they have to make their way in the real world?

With the Census Bureau's new Consumer Expenditure Survey out, we get a glimpse of the spending habits of Americans everywhere. Recently, we looked at how bachelors spend their money. Today, let's delve into the finances of those who say sayonara to high school without a diploma.

The Money

It should come as little shock that high school dropouts don't make much money. Compared to the average consumer "unit" (meaning a household of one or more members with shared income), units without a high school degree pull just half as much cash: $25,325.

Working their way up from the bottom, dropouts just don't get as far. A whopping 38 percent of dropout-led consumer units fall below the poverty line, compared to 18 percent of all American households. And for college grads, a mere 6 percent live below the poverty threshold.

The Work

Most Americans classify their occupation as "professionals" (22 percent), while the next most popular jobs are "other services" at 15 percent, and administrators or managers at 11.4 percent. High-school dropouts get a bit more hands-on with their work. While 28 percent also fall in the "other services" category, 14 percent are handlers, helpers, or laborers, and 10 percent work in construction or mining.

But less education doesn't translate to more government handouts. Only 4.2 percent of dropouts received unemployment insurance over the last 12 months, compared to 4.8 percent of all Americans. And while an average unemployed American snagged $7,140 in claims from Uncle Sam in 2012, the average jobless dropout received $5,890.

The Pad

Half of those lacking a high school diploma live in single-family residences. And they are slightly more likely than the average American to live in rural areas. But that's where the stereotypes end.

While dropouts have a 40 percent higher chance of living in rented quarters, the odds you'll find a dropout residing in a mobile home are the same as for any other American.

When asked to estimate a hypothetical monthly rental cost for their residence, dropouts' answers averaged $970, a full $450 below the overall average response. That makes sense, though, considering dropout-led households live on average, in a 2.5 bed/1.4 bath abode -- not quite as much space as the average American's 2.8 bed/1.7 bath residence.

The Ride

High school dropouts aren't living it large on the road, either. While 97 percent of college grads own a car, and 84 percent of Americans overall do, just 59 percent of dropouts own a vehicle.

This demographic seems to be less mobile, in general: Their average annual spending on public transportation clocks in at just $80, compared to a national average of $200. And while fewer cars means less mobility, it also means less spending on maintenance. Dropouts spend $1,730 on overall transportation costs annually -- around $1,150 less than the average American.

The Party

High school dropouts might not make as much, but they still manage to have a good time. The average dropout spends $415 a year on entertainment, a relatively larger proportion of their income than the average American's $775.

In a sour sign for public health, dropouts spent more on tobacco and smoking-related products last year than any other education demographic. While the average dropout doled out $140, the average American's expenditure clocked in at just $105. But while they might smoke more, they spend a lot less on alcohol. The average dropout spend $58 on alcohol last year, less than half the national average.

Living Large?

Getting an education alone won't boost your income, but the numbers don't lie. While high school dropouts hold their own on employment, and their lives aren't all bad, their income just doesn't add up to what the average American earns. That translates to harder work, a smaller home, less mobility, and less pocket money. Staying in school isn't only cool -- it's worth it for your wallet.



You can follow Motley Fool contributor Justin Loiseau on Twitter @TMFJLo.

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rduran92

Whats funny is I work in the industry or bar scene as some call it. You can definitely make a living without having a piece of paper saying you paid for classes that you probably wont even remember half the things you learned.Graduating high school is without question important, but college is another story. People who have degrees rarely even end up getting a job in the field they studied for or end up leaving because they flat out dont enjoy what they do. If you have a hard work ethic, a good head on your shoulders, and motivated to learn then experience is truly the key to success unless your trying to be in the medical field. I would rather hire someone who has years of experience in the field they are applying for rather than some college grad who is fresh out of school that doesnt know the basics. You pay thousands of dollars for classes where you probably didnt even retain half the information given to you because the work load these days are unreal! With all that said, having a degree will always put you in a better position in competitive markets but it really is about what the individual wants in life. If you can make it happen without a piece of paper, go for it.

October 22 2013 at 10:17 PM Report abuse rate up rate down Reply
Artie

I can't believe they actually pay people to produce these useless studies and articles. Wow, just look at all the revelations that you didn't already know.

October 22 2013 at 10:14 PM Report abuse rate up rate down Reply
Living Legend

Dropouts still make good money selling drugs and panhandling. About all their education trained them to do.

October 22 2013 at 9:50 PM Report abuse +1 rate up rate down Reply
clflyguy88

Hmmmmm just how high in school did Ben Franklin, Tom Edison go.
My first wifes grandfather went to the eighth grade, taught Highschool and was Superintendent of his school district.

October 22 2013 at 8:30 PM Report abuse rate up rate down Reply
1 reply to clflyguy88's comment
Living Legend

Things were different then. I'm sure you wife's grandfather was smarter and more informed than alleged high school grads of today.

October 22 2013 at 9:49 PM Report abuse rate up rate down Reply
anddreaa

Funny...I've worked in Arizona as a teacher for 11 years and still only make $28,000 a year.

October 22 2013 at 3:14 PM Report abuse +2 rate up rate down Reply
4 replies to anddreaa's comment