Marketplace Has No Idea Why Law School Enrollment Is Down

In, “Why Law School Enrollment Is Way Down,” Marketplace teaches us:

While law school was once seen as a golden ticket [Ugh, so lazy.] to a financially stable future, the profession is becoming less popular. New technology is helping lawyers work more efficiently, allowing them to handle a bigger workload. But it also cuts down on a firm’s need to hire more lawyers, which means fewer graduates nab full-time permanent jobs.

Tell that to the productivity data. In terms of output per hour, the legal sector is 8 percent less productive than in 2007. It may be that potential applicants are hearing stories that law firms are filled with robo-lawyers, but if so it’s thanks to misinformation from outlets like Marketplace, not facts. It boggles my mind that reporters can get away with simply passing memes off as explanations for people’s behaviors. It’s not something that should be taught in journalism programs.

Speaking of higher education, that same article tells readers they should like another published in October titled, “Arne Duncan: Education Beyond High School Is Absolutely Necessary.” Oh joy. According to the interview:

When asked if he thought everyone should go to college, Duncan said he believed everyone needed additional education beyond high school: “If young people drop out of high school today, they are basically condemned to poverty and social failure. There are no good jobs out there… the economy has changed.”

I have no idea why Obama didn’t replace Duncan in his second term. The education secretary strikes me as an uninspiring one-term posting, like every other no-name in executive branches you didn’t even know existed. But we’re stuck with Duncan for a while longer, and with quotes like these, we can expect a warm seat for him at the student loan welfare Lumina Foundation. I forget if I’ve said this before, but in the coming decades when politicians start flinging mud at one another over the student loan write-down, Incompetent Arne will be long gone. At least the voters deciding the issue will have watered-down credentials to help them make the right policy choices.

Which Law Schools Are Shedding Full-Time Faculty? (2014 Edition)

It’s a question I posed earlier this year and can answer before 2015 comes along.

One thing the latest 509 Information Reports do is consolidate “full-time” and “other full-time” faculty into just “full-time faculty.” This decision, which likely relates to the change in the accreditation standards that removed the student/faculty ratio requirement, has led to two results. One, we no longer know in detail what’s going on with legal writing instructors or clinicians, and two, the peak for full-time faculty (total and mean average) is now 2010 instead of 2011 as I reported last year. I’ve merged the categories retroactively to better illustrate the trends.

No. Law School Faculty by Type (Calendar Year Average)

Click to enlarge.

 

Since last year, the number of fall full-time instructors at all law schools fell by 8 percent; the cumulative decline since 2010 has been 11 percent, so much of what’s going on happened just before this academic year.

Once again, here are your law schools ranked by net change in full-time faculty and smallest faculty size in 2010.

**********

FULL-TIME FACULTY (FALL)
RANK SCHOOL ’10 ’13 ’14 ANNUAL CHANGE NET CHANGE
1. WMU Cooley 101 115 49 -66 -52
2. George Washington 106 93 72 -21 -34
3. Florida Coastal 69 51 36 -15 -33
4. Chapman 51 41 20 -21 -31
5. Vermont 55 33 26 -7 -29
6. Pacific, McGeorge 63 43 36 -7 -27
7. Texas 103 80 80 0 -23
8. Seton Hall 59 47 38 -9 -21
9. Hamline 34 24 14 -10 -20
9. Albany 46 36 26 -10 -20
9. Villanova 49 38 29 -9 -20
12. Detroit Mercy 42 29 23 -6 -19
12. St. Louis 65 50 46 -4 -19
12. Seattle 66 55 47 -8 -19
12. Boston University 67 48 48 0 -19
12. John Marshall (Chicago) 75 64 56 -8 -19
17. Capital 35 25 17 -8 -18
17. Widener 50 39 32 -7 -18
17. Catholic 56 41 38 -3 -18
17. Hofstra 60 47 42 -5 -18
17. California-Berkeley 90 72 72 0 -18
22. Arizona Summit [Phoenix] 32 34 15 -19 -17
22. Golden Gate 42 30 25 -5 -17
22. DePaul 56 50 39 -11 -17
25. Florida A&M 35 23 19 -4 -16
25. Cleveland State 39 31 23 -8 -16
25. Fordham 81 72 65 -7 -16
28. Southern University 35 36 20 -16 -15
28. Southern Methodist 46 42 31 -11 -15
28. Stetson 59 51 44 -7 -15
31. Western New England 36 24 22 -2 -14
31. New England 40 35 26 -9 -14
31. Case Western Reserve 47 47 33 -14 -14
31. New York Law School 71 65 57 -8 -14
31. American 104 113 90 -23 -14
36. Quinnipiac 32 28 19 -9 -13
36. Touro 42 36 29 -7 -13
36. Pace 47 41 34 -7 -13
39. Wake Forest 48 41 36 -5 -12
39. St. John’s 50 42 38 -4 -12
39. Rutgers-Camden 54 56 42 -14 -12
39. Maryland 63 63 51 -12 -12
39. San Diego 66 60 54 -6 -12
44. La Verne 19 11 8 -3 -11
44. Regent 25 17 14 -3 -11
44. Nova Southeastern 60 55 49 -6 -11
44. Santa Clara 65 60 54 -6 -11
48. Roger Williams 27 20 17 -3 -10
48. Whittier 31 25 21 -4 -10
48. Oklahoma City 34 28 24 -4 -10
48. Hawaii 35 28 25 -3 -10
48. Pittsburgh 47 39 37 -2 -10
48. Penn State (Dickinson) 57 49 47 -2 -10
48. Michigan 92 88 82 -6 -10
55. Ohio Northern 22 21 13 -8 -9
55. Dayton 27 19 18 -1 -9
55. Thomas Jefferson 42 34 33 -1 -9
55. Syracuse 60 56 51 -5 -9
55. Brooklyn 68 62 59 -3 -9
60. Appalachian 16 17 8 -9 -8
60. Faulkner 23 15 15 0 -8
60. Gonzaga 29 26 21 -5 -8
60. Charleston 31 30 23 -7 -8
60. William Mitchell 34 32 26 -6 -8
60. Oregon 35 31 27 -4 -8
60. Arizona 44 36 36 0 -8
60. California Western 45 37 37 0 -8
60. Loyola (CA) 66 63 58 -5 -8
69. Montana 19 15 12 -3 -7
69. Widener (Harrisburg) 25 22 18 -4 -7
69. Howard 26 24 19 -5 -7
69. Arkansas (Little Rock) 30 20 23 3 -7
69. George Mason 38 34 31 -3 -7
69. Alabama 47 45 40 -5 -7
69. Florida State 47 42 40 -2 -7
69. California-Hastings 71 65 64 -1 -7
77. Ave Maria 26 20 20 0 -6
77. St. Thomas (MN) 29 27 23 -4 -6
77. New Hampshire 33 25 27 2 -6
77. San Francisco 37 32 31 -1 -6
77. Louisiana State 41 37 35 -2 -6
77. Iowa 46 46 40 -6 -6
77. Connecticut 52 46 46 0 -6
77. Lewis and Clark 53 50 47 -3 -6
77. SUNY Buffalo 54 51 48 -3 -6
77. Washington University 68 65 62 -3 -6
77. Houston 76 68 70 2 -6
88. Northern Kentucky 28 26 23 -3 -5
88. Wayne State 38 31 33 2 -5
88. Marquette 39 37 34 -3 -5
88. North Carolina Central 42 33 37 4 -5
88. Illinois 49 52 44 -8 -5
88. Temple 63 58 58 0 -5
88. Miami 82 83 77 -6 -5
88. Georgetown 129 132 124 -8 -5
96. Samford 23 21 19 -2 -4
96. Baylor 27 23 23 0 -4
96. Tulsa 28 25 24 -1 -4
96. Texas A&M [Wesleyan] 30 26 26 0 -4
96. Missouri (Kansas City) 34 36 30 -6 -4
96. Valparaiso 35 31 31 0 -4
96. St. Mary’s 36 41 32 -9 -4
96. Loyola (LA) 50 49 46 -3 -4
96. Cornell 51 50 47 -3 -4
96. Indiana (Bloomington) 59 52 55 3 -4
96. Loyola (IL) 60 65 56 -9 -4
96. Chicago 71 59 67 8 -4
96. Pennsylvania 75 69 71 2 -4
109. Maine 16 22 13 -9 -3
109. Mississippi College 26 25 23 -2 -3
109. Southern Illinois 27 24 24 0 -3
109. Drake 28 29 25 -4 -3
109. Arkansas (Fayetteville) 29 28 26 -2 -3
109. Tennessee 30 31 27 -4 -3
109. Texas Southern 30 33 27 -6 -3
109. Washburn 31 30 28 -2 -3
109. Akron 33 27 30 3 -3
109. Rutgers-Newark 40 40 37 -3 -3
109. Georgia 51 49 48 -1 -3
109. Tulane 53 51 50 -1 -3
109. Minnesota 58 57 55 -2 -3
109. Wisconsin 65 65 62 -3 -3
123. Louisville 26 26 24 -2 -2
123. Kansas 35 35 33 -2 -2
123. Vanderbilt 36 39 34 -5 -2
123. Indiana (Indianapolis) 41 43 39 -4 -2
123. Notre Dame 46 46 44 -2 -2
123. Arizona State 53 54 51 -3 -2
123. Georgia State 57 59 55 -4 -2
123. Chicago-Kent, IIT 66 66 64 -2 -2
123. Virginia 79 78 77 -1 -2
123. Suffolk 80 74 78 4 -2
123. Harvard 141 140 139 -1 -2
134. South Dakota 14 14 13 -1 -1
134. District of Columbia 21 18 20 2 -1
134. Campbell 23 22 22 0 -1
134. Kentucky 25 22 24 2 -1
134. Toledo 26 23 25 2 -1
134. Duquesne 26 28 25 -3 -1
134. Willamette 28 28 27 -1 -1
134. Mississippi 31 31 30 -1 -1
134. Utah 34 36 33 -3 -1
134. Richmond 36 39 35 -4 -1
134. Southern California 43 45 42 -3 -1
134. Yale 76 81 75 -6 -1
146. Northern Illinois 19 23 19 -4 0
146. Elon 20 26 20 -6 0
146. Wyoming 21 17 21 4 0
146. Mercer 27 29 27 -2 0
146. Drexel 27 27 27 0 0
146. Cincinnati 29 30 29 -1 0
146. Atlanta’s John Marshall 35 41 35 -6 0
146. Southwestern 57 59 57 -2 0
146. Cardozo, Yeshiva 61 67 61 -6 0
155. Creighton 23 25 24 -1 1
155. Washington and Lee 35 34 36 2 1
155. City University 36 38 37 -1 1
155. Baltimore 58 59 59 0 1
159. North Dakota 12 13 14 1 2
159. Nevada 26 32 28 -4 2
159. Barry 33 33 35 2 2
159. Texas Tech 35 38 37 -1 2
159. South Carolina 36 38 38 0 2
164. Liberty 19 21 22 1 3
164. Nebraska 26 31 29 -2 3
164. Missouri (Columbia) 28 33 31 -2 3
164. Florida International 32 37 35 -2 3
164. California-Davis 43 48 46 -2 3
164. South Texas 44 49 47 -2 3
164. Boston College 51 54 54 0 3
164. Florida 56 63 59 -4 3
164. Emory 58 65 61 -4 3
164. New York University 151 154 154 0 3
174. Western State 16 22 20 -2 4
174. Memphis 18 20 22 2 4
174. Idaho 21 25 25 0 4
174. St. Thomas (FL) 28 34 32 -2 4
174. Pepperdine 35 40 39 -1 4
174. Northeastern 36 42 40 -2 4
174. Duke 70 75 74 -1 4
174. Northwestern 99 102 103 1 4
182. New Mexico 28 34 33 -1 5
182. West Virginia 33 40 38 -2 5
182. Oklahoma 34 39 39 0 5
182. Washington 54 60 59 -1 5
186. Michigan State 52 56 58 2 6
187. Brigham Young 19 26 26 0 7
187. Colorado 43 46 50 4 7
189. William and Mary 39 53 49 -4 10
189. North Carolina 42 51 52 1 10
189. Ohio State 42 53 52 -1 10
192. Denver 62 84 73 -11 11
193. California-Los Angeles 86 99 98 -1 12
194. Belmont 17 14 -3 14
195. Massachusetts — Dartmouth 15 17 2 17
196. Stanford 68 81 90 9 22
197. Charlotte 35 66 64 -2 29
198. California-Irvine 27 32 5 32
199. Columbia 107 154 167 13 60
10TH PERCENTILE 23 22 19 -9 -18
25TH PERCENTILE 30 28 25 -6 -10
MEDIAN 42 39 35 -3 -4
75TH PERCENTILE 58 55 51 -1 0
90TH PERCENTILE 75 72 70 2 4
MEAN 46.4 44.4 40.7 -3.6 -5.0
GROSS GAIN 88 343
GROSS LOSS -807 -1,329
CUMULATIVE 9,093 8,826 8,107 -719 -986

Editorial observations:

  • The data look a lot more consistent than last year, e.g. the University of Chicago losing a dozen law professors last year.
  • But I still have no idea how Columbia has added so many more teachers.
  • Kudos to Campos for discovering the first ranked winner
  • It occurs to me is that law schools might be buying out some full-time instructors but rehiring them as part-timers. There wouldn’t be a way to tell though.
  • Two law schools, La Verne and Appalachian, now have fewer than 10 full-time instructors. Both are down more than 50 percent from 2010.
  • I didn’t include them, but the number one decline by percentage is Chapman at 61 percent. Hamline and La Verne follow.

That’s all for now.

The End Is Near for Many Law Schools

…The end, that is, of the matriculant crunch that blights them.

(What, you thought I was going to predict widespread school closings? Haha, no.)

The accelerated (sure surprised me) release of law schools’ Standard 509 Information Reports, aka/fka the Official Guide, allows us to peer into the world of law schools as they are this very semester. Like, you can see them delaying their finals on account of grand jury verdicts … in real time.

No. The first finding is that there were 33,426 full-time law school matriculants this fall, down a paltry 1,247 from 2013. Last year, the drop was 2,621, hence this post’s title. (These figures exclude the three Puerto Rico law schools, which applies throughout this post.) I’d like to take this time to apologize for teasing you on Wednesday with one law school’s 90 percent full-time matriculant decline since 2004.

Part of the matriculant stabilization might be attributable to a slight uptick in acceptance rates.

Dispersion of Full-Time Law School Applicant Acceptance Rates

Click to enlarge

Emphasis on the “might,” for it’s a very slight change in the trend, unlike 2013, but it does correspond to a similar budge in matriculant yields (omitted).

In general, though, the distribution of the matriculant collapse since the last trough years (1999 and 2007) is about the same as last year. I shan’t display that analysis now, but it’s still true that about 10 percent of the law schools account for half the total decline since 2007, which is probably the best comparison and not 2010, which was a peak year.

As for the number of full-time applications, you can see the accelerators are being hit at all levels:

Dispersion of Full-Time Law School Application Growth Rates

This year, about 20 percent of law schools saw a growth in applications. First place goes to Case Western, which rallied from 1,200 applications last year to 1,913 this year, leading to a 46 percent increase in matriculants. Iowa saw a similar growth in its incoming class size after its application count nearly doubled. Penn State also saw some growth. I’ll have to look into the role that nominal tuition cuts play, but maybe they’re more successful than I thought. I just don’t think anyone should expect them to cause a Black Friday rampage by new applicants.

Nevertheless, probably the most interesting story this year is the surge in applications at most of the members of U.S. News and World Report‘s 14 highest-ranked law schools—as well as four of the remaining six of the top twenty. It’s really remarkable. Fourteen of these twenty schools contributed 1.39 percent against the -7.56 percent application growth rate. (Those stats are additive.)

The phenomenon is fascinating because it demonstrates that applicants interpreted a message (from somewhere) as saying that reputable law schools are worth applying to while most of the rest are not. More than even the law school tipping point between late 2009 and early 2010, I can’t recall ever seeing evidence of such discrete thinking on the part of applicants.

An admitted weakness with the LSTB is that it’s not as good at measuring inputs as outcomes, so I can’t tell you whether this behavior is due to a particular article on a news Web site, advice from guidance counselors or others, or some kind of forum. It might be multiple concurrent causes. Regardless, the now-is-the-best-time-to-apply-to-law-school-ever crowd might be able to take credit for directly influencing potential law school applicants’ actions, though I read their advice as telling people that it was also okay to be the number one pick at a respected non-elite institution. Thus, it might not be those writers. Possibly, the applicants, whom I’ll call “surplus applicants,” interpreted those messages more conservatively than their authors intended.

But was “apply to only elite law schools” a successful strategy? My first cut says that it was a waste of time for many surplus applicants because highly ranked law schools are not desperate for applicants with good credentials.

Here’s a table of surplus full-time applications, offers, and matriculations between 2013 and 2014 at the 14 out of 20 U.S. News‘ top law schools that saw application increases.

2014 T20 Surplus Applications Table

Click to enlarge

The odds of getting into one of these schools as a surplus applicant are not as good as the typical applicant was last year, assuming these schools used the same acceptance strategy this year. Only 12 percent of the total were accepted, but the ratio of surplus applications to surplus matriculants is 28, which is much higher than the ratio for all top 20 law schools in 2013 (16-17). Consequently, we can infer that many surplus applicants were rejected.

Of course without the now-is-the-best-time-to-apply-to-law-school-ever message, presumably the number of applications at these schools would have continued to fall or not fall by as much, so it depends on where you think the baseline for the first surplus applicant should be set. Anyway, more research might illuminate the issue, but the pushback in favor of law school appears to have gotten all the benefits it can. Prestigious law schools just aren’t changing their behaviors.

I should also note that some of these schools, such as Georgetown and Columbia, scorned their applicants as they came out of the woodwork. One strategy that might be developing, or, rather, receiving more scrutiny, is prestigious law schools rejecting many applications while accepting transfers instead. If you take a look at Georgetown’s 509 report, you can see that the 113 tranfers it took in (about 6 percent of its 2014 enrollment) came from dozens of schools. The list of origin schools goes on for a page and a half! As growth (decline) in applicants becomes less relevant, focusing on distribution will. My cursory look into the matter has found that some schools have a taste for for-profit law school refugees, e.g. Arizona State from Arizona Summit.

Other oddities I noticed: One, not all highly ranked law schools did so well. UVRollingStonebotchedrApereporting lost 815 full-time applications, and Minnesota lost 751. I could be convinced that these are typos in their thousand digits, but if not it’s peculiar that these two highly regarded schools would contribute -0.4 percent to the -7.6 percent full-time applications decline while their peers did so much better. Two, the University of Chicago found the 20 or so full-time law professors it misplaced last year. Congrats, and let that be a lesson to other law schools that misreport their numbers to the ABA.

So far the 2014-15 academic year has shaped up to be more interesting than I thought it would be. More research on other issues will appear here in time.

Fewer Than 50,000 Applicants Predicted for 2015

And it came to pass, in the 48th week of 2014, that the LSAC saw its shadow and decreed that the fall 2015 law school application cycle had begun, a week earlier than the previous year.

11,415 people have submitted 70,009 applications to an ABA law school thus far, down 8.5 percent and 9.5 percent from last year, respectively. By contrast, in week 49 of 2014, 14,171 people had sent 90,032 applications. Arithmetic suggests that fewer than 50,000 applicants will emerge from the depths next fall.

No. Applicants Over App Cycle No. Applications Over App Cycle

…But arithmetic can be so imprecise. In week 49 of 2013, the projected number of applicants was varied by several percentage points, implies 2015 will be little different from 2014.

We’ll see how the horse race develops.

How the Transparency Movement Reinflated the Law School Bubble

Of course I’m click-baiting you! But in place of the vicious criticism you were expecting, you shall receive bitter irony instead. Frankly, I think you’re coming out ahead, so be thankful, you ingrate!

So why did I flag you down?

It appears the Bureau of Labor Statistics is changing its employment projections methodology, specifically its measure of how many workers will be replaced in occupations in its 10-year projection periods—as opposed to the number of positions that the economy will create. Apparently this is a project the BLS has been engaged in for a while, and the comment period is over, so why I didn’t know about it before now escapes and saddens me.

The BLS’s employment projections have long been a go-to source for law school critics. The ~24,000 projected annual lawyer job growth rates they showed every two years contrasted excellently with the ~40,000 law graduates each year (and the even greater number of bar admits). No longer.

Background: Developed in the early 1990s, the BLS’s occupational replacement methodology uses a simple age cohort analysis. For instance if there are fewer employed lawyers in the 55-59 cohort today than there were in the 50-54 cohort five years ago, then you have a rough number of how many people in that age group left the occupation. Do that for all the adjacent cohorts and add together all the negative net changes, and you have the replacement rate. The math behind it is a little bit more complicated and there are some exceptions, like if the occupation is projected to decline overall, but that’s the basic concept.

But the BLS isn’t satisfied with this methodology any more. It suffers from sample bias for occupations with small numbers, and it leans on the assumption that it’s mostly young workers who replace older ones. The bureau is interested in finding the “actual” replacement rate, i.e. one that includes workers transferring to other occupations or leaving the workforce altogether who are concurrently replaced, not just retirees, whom the current methodology tends to capture. This way the projections will include everyone who switches jobs, e.g. fast-food workers for retailer clerks and vice versa, when such changes would otherwise net out under the current methodology. The new methodology is based on Current Population Survey data and regression analysis (which always turns out well) rather than historical trends.

As evidence that the new methodology achieves its purpose of finding more replaced workers where the current one does not, the BLS points to … lawyers because there are external data on employment rates. I’m totally not kidding. It writes (and I editorialize in brackets):

Not all law school graduates become lawyers, but the American Bar Association (ABA) conducts a census of employment outcomes for all law school graduates in order to count the number who find employment in positions that require bar passage (effectively, lawyers). Since ABA began collecting this data in 2011 [Not correct, see below], the number of graduates finding employment in such positions has averaged 29,000 per year. Because some graduates who don’t immediately find such positions may become lawyers later in their career (for example, many graduate become law clerks, a position that does not require bar passage, for a few years before becoming lawyers) [Citation please?], this number [the 29,000 graduates—it’s unclear] should be less than the total number of new entrants into the occupation.

Under the current method, BLS projects an average of 19,650 job openings per year, while the new method projects 41,460 openings per year [!!!!]. Again, no direct comparison between the ABA number and the BLS numbers is possible due to conceptual differences [which, of course, does not rule out indirect comparisons], but the results under the current method are significantly below the actual number of new graduates finding work in the occupation [!]. The new method projects a higher number of openings, which allows for additional entrants not immediately after completion of a law degree.

Okay, data on law graduate unemployment has actually been around for many years, e.g. the NALP and the Official Guide, crude though it was. I’ve written about the strong correlation between falling proportions of graduates finding bar-passage-required jobs and graduates taking JD-advantage jobs or not finding any work. This is evidence of a saturated lawyer market, even if it’s caused in part by slack aggregate demand.

Percent Employed by Status (NALP)

The BLS could also look at lawyer-licensing rates courtesy of the National Conference of Bar Examiners, which it probably should be doing instead of law graduates. So when the BLS says the data are only now available, it’s not doing its homework.

However, the irony—and this is really incredible—is that all those demands for transparency in the employment data, after accusations of misrepresentation and deceit, have perversely led the government to (indirectly) compare the number of graduates in bar-passage-required jobs to its current estimates and use it as evidence that those graduates must be finding bar-passage-required jobs long after graduation.

As arguments from incredulity go, this is a pretty good one. As usual, there are other fallacies.

For one, the BLS is assuming that all occupation changes are positive sum. Everyone who leaves law practice is making the best choice among alternatives (ultimately), so too does everyone who chooses to become lawyers. Thus, departing lawyers need to be replaced. The new methodology automatically rejects the possibility that new entrants force out existing ones and that if more people chose better alternative occupations to law, then fewer lawyers would exit, and everyone would benefit. (Except law professors.) Now, whenever someone leaves the law, there is by definition a shortage, a misallocation of human capital that can only be met by sending more people to law school.

…Especially in light of the eye-exploding 41,460 annual job growth rate, courtesy of the BLS’s new, inscrutable regression approach. It’s certain that some number of lawyers enter practice long after graduation, but assuming 29,000 grads get bar-passage-required jobs, that leaves another 12,500 lawyer jobs each year that must go to earlier graduates despite the swelling numbers of JD-advantaged, unemployed, and other grads who aren’t absorbed earlier.

This leads to an unbelievable replacement rate under the new methodology: If 834,700 projected lawyer jobs in 2022 less 759,800 lawyer positions in 2012 yields 74,900 jobs due to growth, then the cumulative replacement rate (74,900 – (41,460*10 years)) is 339,700 lawyer positions that will “need” replacement over the next decade. If the legal profession has been going through a 44 percent 10-year replacement, then there should never have been a backlog to begin with, and it’s something we should have heard about by now. By contrast the current model shows only a 16 percent 10-year replacement rate.

There’re a few other reasons why the methodology change isn’t a good idea, like aging lawyers, but this post isn’t about that. Rather, it’s a rebuke to everyone who crusaded for transparent employment data based on the rational, debt-guzzling law student assumption. Thanks to them the law schools will soon be saying that the graduate-to-annual-job ratio is (indirectly) in equilibrium right now. The demand for lawyers is there, they’ll say, just after an undetermined period of crippling malemployment … and at a time in their careers when no one is measuring it … except for those After the JD people who found that 24 percent of bar-passers weren’t practicing after 12 years.

Cheekiness aside, it’s likely the BLS (and state governments) will change their projections methodologies accordingly despite law being an unrepresentative occupation with substantial early-career turnover. Be prepared for the dark age of lawyer employment projections.

Yes Texas, Take the Scam-Tax Bait. I Dare You.

Or at least, Forbes dares you, but it’s ingested enough of its own product that it actually believes the hype. See “Texas Can Lead the Nation on Property Tax Reform.”

Its arguments for a single tax on sales boil down to:

  • Americans hate property taxes.

So? Americans also love greasy food. That doesn’t make it good. Let’s hear what the experts think.

  • Property taxes “distort the housing market by placing a wedge between buyers and sellers. They force housing prices up, pushing many low- and fixed-income residents out of the market. They create barriers to entry for large capital-intensive industries, reducing the number of high-paying jobs those companies employ.”

As opposed to sales, income, and other deadweight taxes that place wedges between buyers and sellers, push many low- and fixed-income residents out of markets, create barriers to entry for large capital-intensive industries, and reduce high-paying jobs?

As for pushing housing prices up, that’s a laugh. The supply of housing is fairly inelastic. Certainly the location component, but the physical, capital component is as well. Saying that taxing property is regressive is like saying that poor people pass their income taxes on to the rich, which is why corporate America struggles with low profits. Or, as Mason Gaffney wrote decades ago, “To own property is to be rich, in the measure that one owns, and to tax the quality of richness should not be presumed to burden the poor more than the rich.” (“The Property Tax Is a Progressive Tax” (pdf))

  • “Perhaps worst of all, the imposition of property taxes means that people will never truly own their home or business even after it’s paid in full. Property-tax payers live under a system that mandates regular “rent” payments to the government in perpetuity.”

Because confiscating people’s hard-earned incomes is far more just. Won’t someone please think of all those large landowning corporations?

More prosaically, without property taxes, the authors are arguing for feudalism or “royal libertarianism”—the political theory that monopoly power is morally just. In effect, they envision a state in which people receive more in government services thanks to unearned land rent than they pay in taxes.

  • Texans have seen their tax bills soar over the past two decades. According to the Texas Comptroller, property tax revenue exploded by 188 percent from 1992 to 2010, partially as a result of the proliferation of special purpose districts, increasing by 57 percent more than population growth and inflation over this period.

Distribution data please? I’d like to see a Lorenz curve on which percentile households are bearing the bulk of these property taxes. Given that rich people and corporations, which are owned by rich people, own the best real estate, I’m not too concerned that migrant workers are being robbed here. That’s not to say that there probably aren’t flaws in Texas’ property tax system, but this statement stinks of the kind of bait-and-switch rhetoric that regressive taxation advocates depend on.

  • Enter the property tax-sales tax swap. … [based on a study] by President Ronald Reagan’s chief economic advisor Dr. Arthur Laffer and his associates, that offers a sensible path forward.

It takes a brave wonk to use Laffer’s name for the truth of the matter asserted. Supposedly he said that only land taxes aren’t subject to his eponymous curve. In fact, he was last seen shilling Kansas’ failed (and foolishly reelected) experiment in expansionary tax cuts.

  • To achieve revenue neutrality, the study estimates that that the current 8.25 percent total sales tax rate, which includes the sum of state (6.25 percent) and local (max 2 percent) portions, could be modestly adjusted upwards to 11 percent and the base broadened to include property and all goods and services taxed in at least one other state.

Border-town tax evasion, ho!

But let’s also not forget the tried-and-true revenue mechanism for sales-tax paradises: building shopping malls. Dedicating land for housing just means hungry mouths that don’t spend money.

  • The Foundation’s research suggests that, if the tax swap were implemented in full, total personal income could increase by some $23 billion over a five-year period. In addition, the increased economic activity could lead to the creation of at least 200,000 jobs above what the status quo promises.

Notwithstanding that this is Arthur Laffer, who gets the $23 billion over five years?

  • Of course, critics will contend that a tax swap of this nature might disproportionately hurt those on the lower end of the socioeconomic spectrum because sales taxes are regressive.

Uh-huh.

  • But this claim is little more than a red herring. As noted by the Texas Comptroller’s 2013 report Tax Exemptions and Tax Incidence, all taxes in Texas are regressive.

Well that settles it.

  • Since property taxes are based on subjective property valuations determined by a county tax appraiser, there may be an incentive for the appraiser to raise the value to increase local revenues. Too often, these valuations are out of step with the true market value forcing people to lose their homes, struggle to pay bills, or keep people from purchasing their first house.

People are much, much, much more likely to lose their homes, struggle to pay their bills, or not purchase homes due to losses of jobs than property taxes.

Also, which is more transparent, the county tax assessor on a property’s value or the county burgher on his own income?

  • To be fair, a sales tax is not perfect. It distorts your decision to purchase goods and services.

Sales taxes also favor real estate speculators, but they’re job creators, right?

  • But it distorts the economy the least of any tax and, to a large extent, is a voluntary tax. You only pay a sales tax when you decide to purchase goods and services.

Bullshit. Land taxes, congestion taxes, and other taxes on things that are inelastic in supply are all less distortionary than sales taxes.

Sales taxes are only “voluntary” to the extent that one’s income isn’t dedicated to consumption for basic needs. If only those poor people were like the ant and not the grasshopper!

  • No American ought to suffer the slings and arrows of a punishing property tax system to pay for our government.

So on Fortune’s cap Arthur Laffer is not the very button? Nor the soles of her shoe?

To be clear, taxes on buildings are imperfect, assessments could be done more fairly, and endless layers of special assessment districts aren’t a hallmark of good governance, but to say that the solution is to give Texas’ wealthy landowners a break to gamble on land values makes this one of the dumbest ideas I’ve heard in a while. So go ahead, Texas, I dare you to adopt the scam-tax system. I’m sure Arthur Laffer will rescue you when you lose your shirt.

**********

On a positive note, congratulations to Aundré Bumgardner‘s election to the Connecticut House of Representatives. Bumgardner advocates property tax reform by shifting the burden onto land, not improvements—and certainly not sales.

The Legal Recessions That Weren’t

I don’t read The New Yorker regularly, but I’m of the demographic that does, so it pained me to read the first two sentences of its article, “The Legal One Percent.”

After every recession since the Second World War, the legal profession swiftly and robustly recovered. Not this time.

This is not what the data say. The legal sector (which isn’t the same as the legal profession, but given that the article goes on to cite profits-per-partner data I think that’s what The New Yorker means) has done terribly after recessions since the late 1970s. Although the BEA still hasn’t updated its industry data for the period between 1977 and 1997 per its comprehensive revision, the older data show the overall stagnation.

Legal Sector Real Value Added

It took five years for the legal sector to recover to its 1979 high, and then eight years to get back to where it was in 1990. This is supported by data on household consumption expenditures on legal services, as well as the Labor Department’s measure of employees in legal services.

Household Consumption of Legal Services

Per capita spending on legal services probably peaked in 1990, and it’s probably fallen to its 1960s’ level.

The legal sector and the legal profession have been ailing for quite a while. It’s surprising that their stagnation is still misreported.

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