The Finances of High School Dropouts: Not Quite as Bad as You'd Think
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.
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.
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.
%VIRTUAL-article-sponsoredlinks%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.
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.
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.
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.
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.