Another Day, another Study Overvaluing Law Degrees

“The College Payoff” comes from Georgetown University’s Center on Education and the Workforce’s analysis of the Census Bureau’s 2007-2009 American Community Survey.

Here’re its basic findings for our purposes:

Four million dollars for your law degree?

No, for two reasons.

One, since a bachelors is required for a law degree, we can use Georgetown’s $2,268,000 (despite its likely inaccuracy) and lop that off, leaving us with a $1,764,000 margin. Then subtract opportunity cost (which is about zero these days) and debt service, and you find your law degree is worth less than that. Arguably half.

Two, Georgetown commits the sin of equivocation. It is not saying that people who have law degrees make four million dollars in lifetime earnings; rather, it’s saying that employed lawyers and judges make four million dollars in lifetime earnings. The $3,648,000 figure for professional degrees isn’t useful because it includes more consistently lucrative careers such as medicine. Richard Vedder arrives at similar conclusions; two of them of them in particular are applicable to our discussion. For instance, a stunted law career dramatically reduces earnings:

[A] huge percent of college graduates are taking jobs that are traditionally taken by those with high-school diplomas. Carnevale partially comes back with a counterargument: even for those persons, college grads earn more than those with just a high-school diploma. That is often true, but the differential associated with the college degree is almost certainly dramatically reduced. Do the 80,000 college grads who are bartenders gain the same $900,000 plus advantage from a diploma that others supposedly do? I doubt it. And remember the costs of college are rising, and likely will continue to do so in the future. Those costs, by the way, appropriately include the opportunity cost of income foregone during college years from lost labor income.

Likewise, if you don’t get into Biglaw and stick with it throughout your decades-long career, you will not make more than a couple million dollars in lifetime earnings, which you probably could’ve made not going to law school at all. This fact applies to public interest lawyers too. Vedder adds that university prestige impacts career opportunities:

[N]ot all colleges are created equal. If there is a $900,000 advantage associated with a college degree, there is plausibly three times that advantage associated with a degree from Harvard College. But what about the graduates of the University of the District Columbia?

Many law schools have little hope of seeing large numbers of their graduates earning high five-figure salaries, yet they charge as much as those that do. Hopefully no one will rely on this paper, but at least it wasn’t as bad as the Pew one from a few months back.