A GED & Its Effect on Income

A five-year study by the Bureau of Labor Statistics revealed that a 20-percent income gap may exist between a recipient of a General Education Development credential and a high school diploma. Since its start, the GED test has aided close to 18 million individuals between the ages of 14 to 26 in the United States to earn an alternative to a high school diploma.

GED Credential

After World War II, veterans returned home and wanted to complete their high school education but did not necessarily want to return to high school. Because of this need, The United States Armed Forces Institute developed a credential for veterans to reenter the workforce or enter college.

Wage contrast

In a long-range study conducted from 1980 to 2005, the U.S. Department of Education concluded that a male GED recipient earned a median income of $30,000 while a high school diploma graduate averaged more than $33,000. This conclusion is also reinforced by a 2013 longitudinal survey of youth produced by the BLS. For example, a GED recipient may earn $9 per hour while his counterpart, the high school diploma graduate, earns an hourly wage of $11. High school dropouts may earn as low as $8 per hour or minimum wage.

Employer Views

Employers may look differently at GED and high school diploma applicants. According to Maya Frost, author of “The New Global Student: Skip the SAT, Save Thousands on Tuition, and Get a Truly International Education," employers might be doubtful about hiring a worker over the age of 18 without a high school diploma. “GED may be seen as an indication of lack of ability or follow-through,” says Frost. Her suggestions include enrolling in a few college courses or highlighting pertinent experience on a resume or application. Obstacles may exist for GED recipients looking for work. University of California Professor of Education Russell Rumberger, author of "Dropping Out," says employers want students who attended four years of high school, studied hard and earned their diploma. "It's not as good as a diploma," Rumberger says of the GED certificate. "It doesn't replace a diploma, in terms of labor market outcomes."

Changing Status

According to the American Council on Education, about 95 percent of U.S. colleges and universities, even overseas, now accept the GED credential as readily as a high school diploma -- sometimes even more so. Manufacturing is an industry looking for young employees willing to speed up their education to fill the lack of trained workers in advanced technology. "In our experience with trade skills and labor positions, GEDs are typically considered an equivalent of a high school diploma and rarely have any impact on job seekers," says Brett Yardley, marketing and communications specialist for MAU Workforce Solutions. A 2012 American Council on Education study reported that more than 96 percent of the U.S. employers are beginning to embrace the GED as equal to a high school diploma. “It's when a job seeker doesn't have a GED or a high school diploma that employers move on to the next applicant," says Yardley.