This issue was authored by Paul E. Barton,

Director, ETS Policy Information Center

accessed at www.ets.org/research/pic/v9n2.pdf

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Comments to: VanSloan@SQ.4mg.com

. Introduction

. The Effect of Grades

. The Effect of Achievement

. The Effect of Graduation

. Implications

Americans continually receive societal messages

telling them that learning more-and, particularly,

receiving degrees and certifications-generally leads

to higher earnings. Related information is published

regularly and is often communicated in terms of

average earnings for people with different levels

of education. Most high school students have read

about this relationship and have likely been told by

parents that they would have to get a good education

to make good money.

Perhaps less well known is that the earning differential

between those who have college degrees and

those who do not has been widening over the last

couple of decades. And real earnings have actually

declined for those with a high school diploma or less.

Economic incentives to learn beyond high school

abound, and economists attribute increasing post-high

school enrollments in educational institutions to

a growing market for advanced education. Economists

are the first to point out that labor markets play a

critical role in motivating young people to further

their education. However, there is a glaring exception

to this rule that has received practically no attention.

Students heading into the work force right after

high school do not receive market signals telling them

that learning more in high school will result in their

earning more upon leaving high school-up to, say,

age 20 or 21. This is important when trying to understand

student behavior and may have a lot to do with

students' motivation to complete high school, as well as

to take more rigorous courses and achieve good grades.

Let's start with how the market treats high

school graduates who had good grades. Differences

in employment and earnings among

students who graduated from high school with

different grade-point averages (GPAs) and

who were not enrolled in college two years

later are summarized in Figure 1. The data

source is the National Center for Education

Statistics' NELS:88 survey, which began with

a national sample of eighth-graders in 1988

and tracked the students through 1994, when

they would have been out of high school for

two years, or 19- or 20-years-old.

Were those who had achieved better

grades more likely to be employed? Figure 1

shows that the percent of employed males was

slightly higher for those with high grades but

that the differences were not statistically significant.

For females, the middle group had a

higher percent employed than the low or high

group, and women with the highest GPAs

were no more likely to be employed than those

with the lowest GPAs.

The bottom half of Figure 1 shows differences

in earnings among students with different

GPAs. While it shows that male graduates

with the lowest GPAs had higher average

earnings than those with the highest GPAs,

the difference was not statistically significant.

For females, the monthly earnings were about

the same.

In sum, these data show that the labor

market does not generally reward high school

graduates who had good grades. Of course, the

meaning of grades can vary considerably from

school to school; so students with high GPAs

in one school may have what are considered

low GPAs at another school. Because of

this, we used a more rigorous comparison

approach, by also considering reading test

scores provided by NELS:88.

In Figure 2, we compare high school graduates

by the quartile in which they scored on

the reading test. The employment rate rose

for males from the lowest to the third quartile

but then dropped down considerably for

those scoring in the highest quartile. Thus,

the highest scoring male graduates were least

likely to be employed. For females, the differences

were small among the second, third,

and fourth quartiles, but the employment

rate was much lower for those scoring in the

lowest quartile.

In terms of monthly earnings, there was no

statistically significant difference between the

lowest and the highest quartiles for males. For

females, the earnings were almost identical.

We can also get a feel for earnings by using

the Armed Services Vocational Aptitude Battery

(ASVAB), given in the National Longitudinal

Survey of Youth by the U.S. Bureau of

Labor Statistics. In Figure 3, we can see workers'

average hourly rate of pay by test scores

for mathematics, science, and paragraph

comprehension. The data are for all civilian

workers ages 19-31, not just 19-year-old

high school graduates who are not enrolled in

school. (However, the results are similar if we

only look at high school graduates.)

as well as to take more rigorous courses and

achieve good grades.

Percentage Employed After Two Years (1994)

Average Earnings per Month After Two Years (1994)

Employment and Earnings of Male and Female 1992 High School Graduates

(not enrolled in school) Two Years After High School (1994), by Grade Point Average

Percentage Employed After Two Years (1994)

Average Earnings per Month After Two Years (1994)

Employment and Earnings of Male and Female 1992 High School Graduates

(not enrolled in school) Two Years After High School (1994), by Reading Scores

quartile in which the workers scored. However,

after about age 22, the pay rates start to

separate, and those with higher scores start to

gain higher pay. The difficult question is why

this happens. John Bishop 1 has suggested a

couple of reasons.

One possibility, he says, is that high school

graduates who got higher grades or scores

entered jobs that had greater training opportunities;

so even though these jobs may not

have paid more initially, their related training

ultimately led to higher pay. The other possibility

Bishop discusses is that employers may

not fully realize the skills of young new hires

initially-but that they may over time. This

author would add that we don't know if

employers end up paying more for specific

academic knowledge or whether the same set

of characteristics that allows people to excel in

the school environment also enables them to

rise to the top in employment settings.

Overall, then, the previous discussion of findings

shows that the labor market does not

generally reward efforts to excel in school-or

that it does so only marginally-for those who

persevere to graduation.2 But in the first few

years after graduation, does it reward those

who have earned a high school diploma?

Figure 4 compares 19- and 20-year-olds

not enrolled in school, on the basis of whether

they dropped out of high school or got a

diploma (again using NELS:88 data). It shows

that males who graduated were somewhat

more likely to have a job (91 percent, com-pared

to 84 percent) but that females who

graduated were considerably more likely to

have one (81 percent, compared to 60 percent).

These differentials are less than what has

been reported in the annual census reports

(March Current Population Surveys). The

March 1999 report shows a differential of

24 percentage points in favor of high school

graduates from ages 18 to 20. For recent high

school graduates and dropouts, who are surveyed

by the census every October, the differential

has been narrowing-from 24 percent-age

points in 1980, to 22 in 1990, to 17 in

1996-suggesting less differentiation by

employers based on high school graduation

(October Current Population Surveys, Bureau

of the Census). So there seems to be some

variation in the size of the differential depending

on the time of the survey and the age of

the respondents.

high school. So while employers may often

prefer hiring youths with a high school

diploma, they will not, on average, initially

pay a 19- to 20-year-old more for having one;

however, a pay differential does emerge over

the years.

Although exactly comparable statistics do

not exist from 1975, we can safely say that

little or no progress has been made in increasing

the high school completion rate over the

last quarter century. In 1975, 83 percent of

those ages 19-20 had received a diploma or a

GED, compared to 85.9 percent in 1997, for

those ages 18-24. (Given that the 1997 age

group was larger than the 1975 one, these

percentages are likely about equal.)

Average Hourly Pay Rate for Civilian Workers, by Age and Armed Services

Vocational Aptitude Battery (ASVAB) Score Quartile

Employment and Earnings of Male and Female 19- and 20-Year Olds (not enrolled in school in 1994), With and Without a High School Diploma or GED From 1992

In this analysis, however, we are more

interested in those who stay in high school

and graduate with a diploma-and the related

trend is disturbing when one considers reports

from The National Education Goals Panel

since 1988. In 1988, 80.3 percent of 18-24-

year-olds had regular high school diplomas; by

1992, this figure had risen to 81.2 percent.

Since then, there has been a steady decline: to

78.8 percent in 1994, to 77.5 percent in 1995,

to 76.4 percent in 1996, and to 74.9 percent in

1997. 3 This author has no explanation for the

recent decline but suggests that the labor

market is not sending the kind of signals in

the early years after high school that would

encourage youths to persevere.

While the lack of immediate labor market

reward for achievement in-or even finishing-

high school has been generally down-played,

or seemingly unnoticed, by economists

and educators, it has not likely gone unnoticed

by teenagers.4 Such youths are usually

attuned to how to earn the privileges and

rewards of adulthood-and they surely check

to see if putting extra time into studying is

generally worth the effort. They have friends

and older siblings who left school and went to

work, and they find out what these people

earn. They see the Help Wanted ads in the

papers and the signs in stores. They know

However, the plans and aspirations of

young people in this age range are also shaped

by forces other than peers. Teenagers know

how their parents and relatives fared and can

relate this information to how much education

these people received. Many also listen to the

advice of parents, who likely know that education

pays off ultimately, if not immediately.

We just don't know how the varying influences

and conflicting messages affect the decisions

young people make and the effort they expend.

One apparent fact, however, is that we

cannot consider a motivating force for high

school students to be the job market for youths

who have been out of school for two years or

so; we need to establish for them that the payoffs

may take several years to emerge. We

must also let these high-schoolers know that if

they are inclined to go on to college, they will

need to take more rigorous courses; and if they

aim for selective schools, they will also need to

get above-average grades in these courses.

This lack of differences in early employment

and earnings experience is not a recent development.

While the kind of data used in this

report was not available in the 1970s, enough

information was there to see that a similar

situation existed back then. In 1975, this

author wrote a book chapter entitled, "Youth

Employment and Career Entry,"5 which asks

the question, Is teenage employment different?

The answer determined was yes: that most 17-, 18-, and 19-year-olds are

working as sales clerks at the 5 and 10 or drug

store checkout counters, or in fast food chains.

Teenagers go into particular occupations

and industries that are teenage intensive,

and work their way into the kinds of jobs

adults hold as they pass the magic age of

20 or 21....

In raising the question of the access of

teenagers to adult-type jobs, the concern is

greatest with the school-leavers expecting to

enter the labor force on a full-time basis.

This review of the evidence strongly suggests

that teenagers are largely held back

from adult-type jobs, and that until age 20

or 21... a high school diploma (at least for

males) makes very little difference in the

early years of work experience.

Finishing high school does not, in the

labor market, coincide with entering economic

adulthood. Instead, says the 1975 report, "It

gives rise to a period where the youth is dislocated

from the education system and not yet

located in the employment world but remains

in a youth labor pool, aging and waiting."

The implication is that teenagers are waiting

to be duly compensated-since while they

are in this youth labor pool, they are all paid

about the same, irrespective of their academic

accomplishments. However, as they do when

considering candidates of any age, employers

of youth do give great weight to experience.

This can be seen in Figure 5, which shows

the employment rates for 1994 of those who

graduated high school in 1992.

Males who held a job in high school had a

higher post-graduation employment rate and

monthly earnings $350 higher than those

who did not. Females who worked in high

school had a post-graduation employment

rate 21 percentage points higher than those

who hadn't, and their monthly earnings were

about $250 higher.

Over the last 20 years the press has been

wont to report on studies that showed ill

effects of student employment on grades. But

actually, studies from this time frame show

that working a moderate number of hours

(20 or less) does not depress grades. At some

point, of course, work does affect schooling-

but common sense tells us this.

What has developed in post-World War II

America is a situation where those under 20

or 21 are pretty much treated alike in the

labor market. The age of entry into jobs that

pay more and have career ladders and fringe

benefits seems to be rising, and is likely into

the mid-20s now. But young graduates

who are not rewarded in the years after high

school for their academic efforts unlikely

realize this. As a result, raising high school

achievement levels and graduation rates are

difficult tasks.

The solution here is not obvious. One

encouraging effort now under way is the campaign

to get businesses to ask for high school

transcripts when they are hiring. In the past

this seldom happened, as John Bishop pointed

out in a study from the early 1990s.

Over the last two years the Business Coalition

for Education Reform has been urging

employers to ask for transcripts, as a way of

signaling to students that academics count in

the employment world; about 5,000 employers

to date (May 1999) have agreed to cooperate.

More must join the effort, though. A 1999

survey carried out by the Public Agenda Foundation

found that while 84 percent of high

school students say they would work harder

if they knew employers would look at their

transcripts, only 16 percent of employers say

they do indeed ask for transcripts.

Employment and Earnings of Male and Female 1992 High School Graduates (not enrolled in school) Two Years After High School (1994), by Employment

in High School

Overall, what we have is a disjuncture

between the age we complete public education

and the age of economic adulthood. This is

bound to cause a lot of problems-one of them

being high school students working well below

their potential. If nothing else, we need to

understand what has been happening over

the last three or more decades.

In other writings, this author has urged

employers and educators to collaborate by

providing our nation's youth with a combination

of schooling and work experience, and to

stretch out the high school years, if necessary,

to make sure we allow ample time for students

to master the academics. This kind of joint

effort has the potential to establish a better

link between learning and earning and, among

other benefits, to make the economic rewards

of school achievement tangible and clear.

We are not likely to fool youth into thinking

that learning in high school pays; in fact,

we should stop fooling ourselves. And if we tell

ourselves that all must go to college, we must

also keep in mind that only slightly more

than one in four 25- to 29-year-olds earns

a four-year college degree.

Those of us trying to bring about education

reform need to further examine how much

learning more actually results in earning

more. This dynamic may be critical to reaching

our ambitious national education goals.

Setting high standards for achievement certainly

seems the way to go, as does administering

fair and reliable tests that are aligned

to what is actually taught. But without consequences

in the work world that can be clearly

observed by high school students, forging

change will surely continue to be like rowing

upstream. In fact, more than 15 years of education

reform has seen little change in the

academic achievement of high school students

or in graduation rates-rates that have actually

been falling since 1992.

The previous discussion lends itself

to numerous implications and additional

questions.

.There is discussion about the "right" curriculum

to make high school students more

employable-giving them what employers

want them to have. But what employers

really seem to want is for hirees to be

older, and curriculum changes cannot age

high school graduates.

.Employers do recognize experience, as

seen in Figure 5. Yet, the school-to-work

movement's effort to incorporate worksite

training and experience into the high

school structure has resonated with only a

small proportion of employers. Can we do a

better job of building on the part-time work

experiences that teenagers are able to get

while going to school?

.We regularly read that employers are

dissatisfied with the education of young

people coming out of America's high

schools. It is, therefore, puzzling that

employers treat similarly those at both

the top and bottom of the grade and test-score

distribution scale, at least for the first

couple years after high school graduation.

.We have found many of our remedial youth

education and training programs to be

wanting in results. More specifically, findings

from controlled experiments and

evaluations using control groups showed

that, on follow up, those in the experimental

group did not fare better than those in

the control group. But at ages 18-21, or

thereabout, we know that all youth in the

work force are treated much the same.

What is the right standard of success,

then, in this kind of labor market?

.If a disjuncture does exist between the age

society stops providing education and the

age of maturity, as demanded by the labor

market for adult-type jobs, does a major

issue in need of public policy exist?