Simkovic and McIntyre Respond to My Am Law Daily Article

‘Million Dollar Degree’ Authors Answer Harper, Leichter,” The Am Law Daily, August 29, 2013.

[UPDATE: I did decide to write a response. Part I can be found here.]

I’ve been eagerly anticipating Simkovic’s and McIntyre’s rebuttal for a while now, and I can say that I’m OUTRAGED that they didn’t give me credit for not “throwing in a few disparaging remarks to boot” as Harper did. How could they have not acknowledged that??

Anyway, I’m on the fence about publishing a rejoinder—not because I don’t expect it to convince the authors or anyone else that proving causation requires eliminating all other potential causes (like signaling, zorpqaq in law schools’ water). No, the problem is that the authors’ response was so frivolous—and, frankly, boring—that it’d waste everyone’s time to put too much effort into it.

On the other hand, I’m starting to think that “labor economics” as the college premium crowd practices it is a pseudoscience. Given any criticism and they ferociously respond that they’re measuring a “premium,” or that the higher average earnings demonstrates the need for higher education “Period,” as Wonkblog said a few days ago. The researchers rarely ever try to investigate what aspects of higher education increases earnings. NO! It’s an irreducible, sacrosanct, black box phenomenon, like the E-meter auditing devices they use in Scientology.

It’s surreal.

Okay then, I’ll just go out and pay twice as much for a new car that’s the same quality as it would’ve been thirty years ago. No problem there; it’s better than a rickshaw!

About these ads

5 Responses

  1. Here’s my ten-minute summary:

    - No data from graduates later than 2008, right when the market turned. Five years (and counting) of horrible job outcomes, with the BLS not expecting things to get any better before 2020. So, 2008 through 2020: that’s 12 years of data, nearly as long as Simkovic’s study. Gosh, it’s almost as if a future Simkovic would have an entirely different set of conclusions!

    - As many, many people have pointed out, it is a false equivalence to compare the 25th percentile of law school earnings to the 25th percentile of undergrad earnings. The former would have vastly outperformed the latter in undergrad. It would be more honest to compare JD outcomes to MBA and other graduate school outcomes, while taking into account the cost of a JD compared to those other graduate programs.

    - “Evidence” that the downturn in legal market is cyclical and not structural is BY FAR the weakest section of the paper, and flies in the face of literally everyone else commenting on the legal industry, including designated cheerleaders ABA and NALP. There is little more than flimsy personal assertions that *prove* that the massive changes in the legal industry are cyclical, and as soon as the economy gets better, the LPO’s and predictive software and reallocation of legal work to everyone from compliance officers to real estate agents to legalzoom will just vanish. People will happily pay a premium for licensed attorneys to do piecemeal, commoditized work, because, well, uh, I don’t know. The paper whiffs on this one. And stable for four decades! It’s a mug’s game for anyone to make predictions that far out. If you don’t believe me, check out what happened when ATT hired McKinsey (Simkovic’s first employer, btw) in the early 1980′s to predict how large the global cell phone market would be in 2000. I believe they were off by more than 36,500% (i.e. their prediction was less than the daily number of new cell phone subscribers in 2000).

    Also, there is no discussion of how the recession’s impact on the general population has and will continue to affect the market for legal services. After all, lawyers need solvent clients to have solvent practices. This point seems utterly lost on the one-year veteran of Davis Polk. The middle class has lost 40% of its household wealth.

    - No calculation of student loans in the earnings premium – at least, not in any of the big shiny numbers that the report highlights. And one cannot help but notice that Figure 1 of the paper shows essentially flat wages for the 10th, 25th, 50th, and 75th percentile wages of attorneys since 1997, in 2012 dollars. Of course, the cost of attending law school has increased a few hundred percent, in 2012 dollars, since 1997, and continues its skyward ascent untroubled by the devastation it wreaks. The authors come close to eighty-sixing their own argument with the inclusion of their first figure. As a free editorial tip, I’d suggest excising that particular chart.

    - No calculations of lost wealth vis a vis spending on student loan payments and interest instead of building retirement savings and home equity. A recent labor economics report out of Demos concludes that a couple who each possesses the average student debt load of $27k ($54k total) will lose approximately $208,000 in lifetime household wealth versus their peers without student loans, due exactly to lower retirement savings and home equity – and this is under a best-case scenario where neither every experiences unemployment and spends their working lives in college-level jobs with annual wages. If we were to scale that up to the average lawyer couple each owing $125k (plus undergrad loans), well, that would eat up most of the average earnings premium and come out negative for lesser earnings premiums. It’s all well and good to have a six-figure lifetimes earning premium, but what is good for the goose is good for the gander: include the student loan payment premiums and their lifetime effect on household wealth. Anything less is sophistry at best, openly dishonest at worst.

    - No discussion of whether income-based repayment might be repealed. One should note that Rep. Thomas Petri (R) of Wisconsin is on a crusade of sorts to repeal PSLF. Barclays estimates that IBR/PAYE will cost $190 billion just through 2020, making it a very likely target of any future austerity-minded administration or Congress. Of course, the very existence of IBR/PAYE/PSLF represents a structural change in the marketplace, as they did not exist six years ago (and may not exist in another six years). As a 2007 graduate of Harvard Law School, Simkovic just missed the GradPLUS gravy train if he financed his education, and would likely owe six figures in private student loans (HLS in 2007 was roughly $68k, and one could borrow a max of $20.5k per year in graduate Stafford Loans, so that’s >$120k in private loans before we talk bar exam expenses or undergrad debt), so he probably knows exactly what I am talking about here. If he had only graduated two years later, all of his loans could have been federal and eligible for IBR/PAYE. And contrary to his happy assertions of everything coming out wine and roses, here’s a downgrade of some SLABS offered by Access (largest private lender for law schools and other graduate programs, and actually owned by the 201 accredited law schools). Fitch is downgrading its SLABS (Student Loan Asset-Backed Securities) because it believes the default rates on the underlying private student loans will top 16%, and the realized collection rate on those defaulted loans will only be around 30% – meaning that those defaulting lawyers are stone broke. Historically, between ½ and 2/3 of Access’s annual loan originations were to law students, so this is a decent indicator of how they fared in the job market. http://www.businesswire.com/news/home/20130815005759/en/Fitch-Downgrades-Access-Group-Floating-Rate-Student

    - Frankly, Simkovic doesn’t answer any of Stephen Harper’s substantive criticisms of his paper (beyond taking hollow umbrage in Harper’s “tone”), and given that Harper has worked in large law firms about as long as Simkovic has been alive, I’d take his expertise over the one-and-done law professor whose job may be cut next year because his employer (Seton Hall Law) can no longer lure enough prospective students to pay their untenured faculty.

    I could go on, but I have to prepare for a rare interview. For an internship. Not in the legal profession. Offering a service-sector wage. Until then, I remain

    Unemployed Northeastern
    Attorney, alumnus of one of the best liberal arts colleges in the United States, and one of America’s tens of thousands of un/underemployed law school graduates

    • I know how you feel. I could write a book on what’s wrong with this paper, which is why I’ve hesitated to do so.

      Good luck with your interview. Looking forward to hearing from Employed Northeastern.

  2. Sadly, it’s a non-starter. Shockingly, after seven years of college, I find I cannot afford to live on $15/hour in Boston, nor spend additional money on a third degree to make me more marketable in this field which is far from undersaturated in job applicants. Unemployed Northeastern I remain. But of course, I’m rolling in money, because Simkovic says so.

  3. “it’s better than a rickshaw”

    That is a *major* aspect of the S&M paper (S&M…law schools and their students/suckers…hmm…whips and chains…).

    The fallback defense of S&M is that while lawyer outcomes are crappy…undergrad outcomes are crappier.

    (One contemplates the historically slandered HS grad…no “premia”, but also no debt in a retail-outlet-and-restaurant-only America)

    Thus, the “premia”.

    Yippee.

    But don’t look behind the curtain at costs (opportunity and otherwise).

    Not to mention all the other methodological and just plain logical holes already enumerated by *many* others on the internet.

    But let’s face it – the S&M paper is largely a *marketing* tool for schools – that is why it has gotten so much MSM play – the schools have their ill-gotten fortunes with which to buy MSM influence.

    Things aren’t as bad as the bad old days (thank you, blog software) but the infrastructure of the bad old days (MSM and otherwise) is still with us, exerting its continuing (albeit diluted) influence.

    • “The fallback defense of S&M is that while lawyer outcomes are crappy…undergrad outcomes are crappier.”

      What are you saying cas127, that degrees generate earnings because of signaling and credential inflation? Don’t you know that Simkovic and McIntyre measured a premium??

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 130 other followers

%d bloggers like this: