‘Liberal’ Law Grad Thinks Unemployed Law School Debtors Not Poor Enough to Matter

Not even a day after learning that David Graeber thinks there’s infinite demand for corporate lawyers, writer Matt Bruenig adds himself to the list of liberals who believe that lawyers are cheaters who get a free lunch while in the real world law graduates are joining the unemployment line. The kicker is that Bruenig himself just graduated from Boston University School of Law.

I’m uneasy criticizing a recent law grad—and I don’t think I’ve ever done it before—but Bruenig’s callousness toward the unlucky in his cohort utterly shocks me.

Responding in The Week to the recent Chemerinsky/Menkel-Meadow NYT op-ed, he writes:

In reality, reducing barriers to entering the legal profession would probably have very little effect on quality, while also blowing up one of the biggest upper class rackets in our society.

In 2012, the median income for lawyers in this country was around $113,000, more than triple the national median income for all occupations. Why such high pay? In significant part, it’s because we have made becoming a lawyer exceedingly difficult, which has the effect of driving up the prices lawyers can charge for their services.

The link is to, of all places, the Bureau of Labor Statistics’ Occupational Outlook Handbook, which says that competition for lawyer jobs will be “strong” due to too many law grads. This is a good indicator that legal services are traded under free market conditions. I’ve seen law professors blatantly (and probably self-servingly) miss that line—but never a law grad. As with other liberals who’ve made similar arguments, Bruenig obviously rejects marginal product theory, the possibility that “lawyers” is a very broad occupational category with wage variation among specialties (which even the BLS link says), or the hypothesis that demand for legal services is income and wealth elastic.

Equally disappointing are the neophyte factual errors he makes in the next paragraph about the prelegal education requirements for a law license.

To gain entry into the legal profession, you must acquire a four-year undergraduate degree, a three-year law degree, and then pass a state bar exam. These onerous credentialing requirements ostensibly act as a gatekeeper, filtering out lower-quality would-be attorneys until we are left with only a small pool of supposedly highly competent lawyers from which to hire. But by keeping this pool small in this way, lawyers are able to capture credential rents — surplus income far above what they might otherwise make. This is good for lawyers, but bad for everyone else.

Filtering out lower-quality would-be attorneys? Tell that to all the law schools that are accepting anyone with an LSAT score and a pulse to keep Moody’s from downgrading their bond ratings.

Contrary to Bruenig’s assertions, according to the Comprehensive Guide to Bar Admission Requirements (pdf), 30 states do not require would-be attorneys to have college degrees to sit for their bar exams, including Massachusetts where Bruenig received his JD. The ABA accreditation standards (Standard 502 (pdf)) do require law schools to admit students who’ve completed at least three-fourths of a bachelor’s degree (with exceptions allowed), but one can become a lawyer in Massachusetts without attending an ABA-accredited school, e.g. the Massachusetts School of Law. (It’s possible that MSL requires students to have bachelor’s degrees but that’s a different issue.) I should also note that Wisconsin grants law grads from its two ABA schools diploma privilege in lieu of taking the bar, an idea Iowa is thinking of adopting. (Update: I forgot to mention that foreign law school grads are allowed to sit for the bar in Massachusetts under certain conditions. Pretty hard to engineer a shortage when that’s allowed.)

Despite being a deregulated market, Massachusetts lawyers don’t earn substantially less than lawyers do nationally.

Median Annual Lawyer Salary (2013 $)(Source: BLS Occupational Employment Statistics, which excludes self-employed lawyers, but I dare you to include them and see if it falsifies my point)

Simply put, if someone really wants to become a lawyer without the expensive, extraordinary signaling power Boston University provides, it can be done, just not necessarily in every state, but even then some states will allow reciprocity anyway.

Citing Erwin Chemerinsky’s $350,000 salary, Bruenig then argues that the legal profession is such a scam that the rents spill over into the legal academy. (Amusingly, even Chemerinsky and Menkel-Meadow in their op-ed acknowledged that rising faculty salaries are a problem.) More likely than legal profession rents, legal academia is in student-debt-fueled bubble that’s deflating. Take away the federal loans and Chemerinsky (or at least law professors generally) will have to take a pay cut. Lawyers would be unaffected.

Bruenig then has the chutzpah to write: “The big scandal in all of this is not that law students are somehow getting a raw deal because of the debt they undertake in their arduous path through the credential gate. It’s that the whole system wastes a ton of money that could be spent on more useful things than lining the pockets of lawyers and law professors.”

Tell that to the 5,229 class of 2013 graduates who reported being “somehow” unemployed as of last February. Many of these people are unlikely to be collecting rents from anyone in their lifetimes.

Bruenig’s proposal, though, is partly correct: Yes, needless lawyer licensing requirements should be reduced, but no, legal services won’t be any cheaper.

I thought about letting up on Bruenig a little given that he pretty much bit his thumb at his chosen profession and his own law school within months of leaving it. Then I read some of the comments where some people challenged him on his errors, and his responses (they appear to be under his name and are consistent with his article, but you can never be sure with the Internet) are flat-out contradictory and simply breathtaking:

TheWeekComments1

TheWeekComments2

TheWeekComments3

WOW!

I really hope someone was impersonating Bruenig in that comment thread because if he really wrote them—and my intuition says he did—it proves my point. It’s not the million-dollar-law-degree profs or conservatives who think law students should be held to higher intellectual standards than the After the JD researchers. It’s the liberals who are willing to throw law school debtors under the bus to prove their loyalty to the poor they consider deserving. If you go to law school and it goes south, mainstream liberals will not defend you because your poverty credentials won’t be good enough.

You will be alone.

After the JD Wave 0

Last month I wrote an article for the The Am Law Daily about the After the JD project, a longitudinal study that measures employment outcomes for people who passed the bar exam in 2000. I thought it might be interesting to offer, as an appendix, the Official Guide‘s employment outcomes for Y2K law grads (they’re in the ’03 edition). Obviously, this isn’t a perfect fit as some people who passed the bar in 2000 graduated earlier, but the overlap should be fairly significant.

Back in those days, though, the Official Guide wasn’t the treasure trove of knowledge that the ABA’s employment questionnaire reports are now, and it’s certainly not as detailed as the After the JD’s information is. However, for those interested in getting a sense of the legal market many of the After the JD cohort entered into by law school, look no further.

To conserve blog space, the tables will follow the jump.

Continue reading

Class of 2013 Employment Report

[UPDATE: Emory's data are now included in this page.]

Okay, this’ll be short as I have work to do.

The ABA has released its employment data for the class of 2013, which is defined as everyone who graduated between September 1, 2012, and August 1, 2013. Employment data are outcomes as of February 15, 2014, irrespective of interim job changes. Savvy readers will notice that the most mediocre law school ever, Generic University School of Law, made an appearance again. They’ll also note that Emory’s data have been removed from the ABA’s site, which I’m sure will be corrected soon. For those who are truly curious, the ABA has even broken down the employment data for each of Cooley’s branch campuses. There are a few other traps for the unwary, e.g. schools that haven’t received even provisional ABA accreditation, like Lincoln Memorial. Even Peking China made the list. None of these schools have any useful data.

Generally, graduates fared little better this year than last year. 55.3 57 percent were employed full-time/long-term in bar-passage required jobs. This is up 0.2 0.8 percentage points from February 2013.

On the other hand, the graduate unemployment rate grew while the non-response rate declined.

Tables below the jump to conserve blog space.

Continue reading

The Official Guide is Dead, Long Live the Official Guide!

Deciding that paper is out, the ABA has moved the information that used to be published in the encyclopedic ABA-LSAC Official Guide to the ABA Law Schools to the Internet. I’m told that the ABA will release a spreadsheet full of the same data to make researchers’ lives easier.

Being a masochist, I went ahead and looked through the full-time tuition numbers anyway.

The biggest overall changes are one new private law school (Belmont), and Texas Wesleyan is now Texas A&M. It’s the first time since 1997 that a private law school has merged with a public university, but I think it will become more common going forward. For instance, South Carolinians were discussing buying up Charleston School of Law a few months ago. Same goes for the University of New Hampshire. In fact, just this weekend Vermont Law School was said to be in merger talks with the University of Vermont.

And yes, I have no idea why a public university would want to buy up a law school that’s losing money and students. Texas A&M, in fact, lost 33 students this year (~$770,000 netting out full-time and part-time students and assuming they’d pay full tuition). It’s like, they must be asking for a reorganization at some point down the road to say nothing of the fact that public law schools are obsolete.

As for tuition … it went up!

Full-Time Law School Tuition Dispersion (Excl. P.R., 2013 $)

(Clicking on this chart shall embiggen it.)

…As did the number of law schools that charge more than the $20,500 annual Stafford loan limit. Welcome to Grad PLUS country, travelers.

No. Law Schools With Tuition Exceeding Annual Stafford Loan Limit

Okay, we know at this point that a lot of people aren’t paying full price for legal education anymore, except if they lost their scholarships. Nevertheless, someone has to be paying for the merit aid, and despite the applicant crash, as of two years ago inflation-adjusted revenue from full-time students paying full tuition hadn’t stopped increasing. Even the median law school hauled in more money from full-time, full-paying students than before (~$7.8 million).

For tuition increases, though, the outlier of the year is Thomas M. Cooley Law School, which increased its full-time tuition by $6,400 (17 percent). Meanwhile, its full-time enrollment fell from 604 last year to 386 this year. The number of full-time matriculants this fall was 49, down from 115 last year (57 percent). Wow.

On the other side of the cost curve universe, Arizona’s resident tuition fell by 10 percent, a record low going back to … 2009, when you were listening to the soundtrack to Hannah Montana: The Movie.

I haven’t carefully combed the numbers for this year, but researchers should know that Southern University Law Center reported its semester tuition, not annual.

For private law schools, full-time tuition increases occurred on the more expensive end, but they’re slowing down in tandem, just not as quickly as the inflation rate.

Full-Time Private Law School Tuition Increases by Tuition Quintile (Current $)

That’s all I’ve got. Peace.

No Progressives, the ABA Does Not Control the Supply of Lawyers

You can trash the ABA and its Section of Legal Education and Admissions to the Bar, which accredits law schools nationally, for many reasons. You cannot, however, trash either for restricting the supply of lawyers in the United States because they are not licensing authorities. They certainly do not restrict the number of law schools. But if you’re Michael Lind writing for Salon, then you’re free to make all kinds of unsubstantiated claims to the contrary.

Lind’s title succinctly describes his argument, “College-Educated Professionals Could Doom Progressive Politics,” and he gives three reasons. One, professionals won’t support higher taxes on themselves. Two, they extract rents by restricting the supply of professionals, e.g. lawyers, doctors, and for some reason tenured university professors. Three, Lind’s personal experience tells him that these folks aren’t really interested in working class issues.

I normally like Michael Lind. He’s even mentioned Henry George approvingly in his Salon articles. This piece, though, is a disaster that substitutes prejudice for reason—and not just because he walks back from supporting land taxes to calling for higher income and, ugh, consumption taxes.

Support for Higher Taxes

Since Lind’s only evidence that professionals don’t support higher taxes on themselves is Democratic politicians fiscal proposals (tax hikes for households with incomes greater than $250,000, in other words the top two percent), there’s really nothing to discuss here. Household income isn’t the same as individual earnings, which I’ll get to below, and plenty of these households don’t include highly paid professionals. It’s not even clear to what extent these households’ incomes are due to investments and not professional earnings.

To editorialize, many professionals, even highly paid ones, aren’t wealthy in the sense that they have significant workplace autonomy and easy alternatives to their current jobs. Many of them even have hefty student loans that cut into their discretionary incomes, IBR or no. These people might understandably prefer taxes on households with higher incomes, whatever the source.

Supply Restrictions

Lind writes:

Try to find a progressive activist denouncing the monopoly rents of the American professoriate, the American Bar Association, or the American Medical Association [Yes, this sentence didn't end in a period.]

The dirty secret of the American professional elites is credential rents. By restricting the supply of practitioners — you generally can’t be a tenured professor, a practicing lawyer or a doctor without the right degree — the guilds that the professions control artificially drive up the price of college education, legal services and physician services.

As I understand it, the physician shortage in the U.S. is due in part to residencies being funded out of Medicare and Congress not increasing the dollar amounts. Maybe the AMA can ease the rules in other ways, maybe not, but I don’t think it’s pure black hat stuff. I could be wrong though. This blog isn’t defending all professionals.

The supply of lawyers, on the other hand, is not restricted by the ABA. The “generally” Lind uses is a bit broad here. For example, California allows foreign-trained lawyers to take its bar exam (same with New York) and those states have the highest-paid lawyers in the country nevertheless. California also has a slew of non-ABA-accredited law schools. You’ve seen these points here before, so I won’t repeat them, but if there were a lawyer shortage, that’s where you’d see cheap lawyers, not expensive ones.

As for tenured professors … Wow, this one was way out there. Tenured faculty don’t drive up college tuition prices. That’s caused by loose federal student lending, lost public university subsidies, and lack of job opportunities for high school grads. There are plenty of people who teach at the college level for very little, and it ain’t because they lack the credentials.

Lind then states that these professionals maintain their solidarity with the poor by demanding more subsidies to low-income consumers, which is a mixed point. It turns out that poor people can’t afford things like health care, which is why progressives want to give them nationalized insurance. Same goes with legal services. I’ll demur on subsidies for higher education, but it doesn’t occur to Lind that lawyers might have high incomes because rich people and corporations like paying them lots of money. Conspicuous consumption in services provided by superstars and all that. If you don’t like it, the problem is the rich clients, not the superstars.

Lawyers also make money because the economy is poorly managed and industries are badly regulated. For example, many lawyers will make money on recalls of defective hip replacements because the manufacturers didn’t test them and the regs didn’t require them to. Others will make money because large Silicon Valley tech firms allegedly fixed their workers’ wages. You can quibble with how much these lawyers are paid, but it’s not their fault if they make money in high-profile cases. Talk about subsidies.

This is my favorite part:

Doctors, lawyers and professors tend to think of themselves as altruistic servants of the public good. At the same time, many insist on being compensated well enough to belong to the top few percentiles in income, rather than being paid like teachers, nurses, police officers and firefighters. This contradiction generally does not bother professionals, but it should bother progressives.

Here are some median salary numbers courtesy of the BLS and their estimated earnings percentiles in 2012:

Teachers: For elementary and middle school, $56,180; for secondary school, $57,710 (~80th %). Postsecondary teachers tend to earn between $50,000 and $100,000 (~93rd %) (law teachers get more, but that occupation’s grown quite a bit over the last decade because of the bubble, so no artificial shortage there).

Nurses: $67,930 (~85th %)

Police Officers: $57,770 (~80th %)

Firefighters: $47,850 (~74th %)

Lawyers: $130,880 (~96th %)

Doctors: $190,060 (~98th %)

Earnings for detailed occupations vary, but the bottom 10 percent of lawyers on a wage and salary basis make $54,310, which from the above list is less than all but the median firefighter. Self-employed lawyers in smalllaw and law grads who could never find work in the profession probably do much worse. Maybe they suffer from enough false consciousness that they think they’re in the two percent by household income?

Lind’s Personal Experience of Professionals’ Uninterest in the Poor

I base my observation (admittedly a personal one) on a quarter-century of experience in journalism and the nonprofit sector. If you want to fill an auditorium at a think tank, magazine office or other venue, hold a panel on one or more of the non-economic issues I just mentioned [global warming or freedom from NSA surveillance] and the seats will fill up quickly with enthusiastic, affluent, mostly white upper-middle-class progressives. If you want to hold a panel on the minimum wage or workplace tyranny, expect to have a lot of empty seats. To avoid embarrassment, you might reserve a smaller room.

Isn’t the stereotype of university professors that they’re all tweed-jacket-wearing Marxists? The other problem here is that this isn’t evidence that professionals don’t agree with progressives about those issues, just that they don’t want to attend lectures on them. (Incidentally, I attended a lecture on the minimum wage at the Henry George School last year, and I’m a cheating credentialed professional. I’ll accept my progressive cred by e-mail, thankyouverymuch).

**********

I’m not being hard on Lind just because his article is a lazy swing at supposedly liberal professionals that he happens to dislike. The reason Lind and those who think like him rile me so much is this: I don’t expect people to go to law school based on spurious studies saying they’ll make an extra million dollars. Nor do I think anyone who does will be surprised when conservatives unhelpfully tell them they were absolutely liable for their employment outcomes, and if they don’t like it they should have conducted an After the JD study of their own and interpreted the data better than even the AJD’s own Ph.D.-wielding researchers have.

Rather, I think would-be lawyers expect progressives (whom they tend to identify with) to not use them as propaganda targets to score points with perceived working class constituencies. I’m reminded of when the New America Foundation, which Lind co-founded, did just this when it sensationalized the changes to the already-generous IBR by saying the graduates of a high-debt, poor-outcome law school were essentially welfare beneficiaries because they were so amazingly educated. The rich lawyers get all the goodies while Pell languishes!

Moreover, even if lawyer-licensing requirements are loosened, which I agree they should be, it won’t result in cheap prices for consumers. Letting in foreign lawyers, a policy futilely advocated by Dean Baker and already implemented in many lawyer-heavy states, will only create a lot of malemployed foreign lawyers. Don’t expect Michael Lind and the progressives to explain why prices haven’t dropped or help clean up the mess anymore than the “absolute-liability” conservatives or million-dollar-law-degree professors will the current one. Meanwhile, the effort progressives spend attacking their educated constituents pointlessly alienates them.

The message that Lind et al. send to law applicants and grads is that they can expect no ideological allies if things don’t work out for them. It even tells them that if they do succeed at law, it’s because they cheated. If there’s a reason not to go to law school, political isolation is it.

LSAC Data: More White (Male) Flight From Law Schools in 2013

The Law School Admissions Council (LSAC) tracks ethnic and gender data on people who apply to law school. Its data aren’t nearly as detailed as what appears in the Official Guide, which provides the same information by law school and has a “two or more races” category that prevents over-counting of applicants/admits/matriculants by ethnicity. That is, starting in 2012, the LSAC utilized “maximal reporting,” which ensures that the sum of applicants/admits/matriculants by ethnicity exceeds their actual totals.

I covered the demographics of who’s not applying to law school a few months ago in an Am Law Daily piece titled, “White Flight Hits Nation’s Law Schools,” but those data only applied to the 2012 academic year. The LSAC recently updated its ethnic and gender numbers for the entering class in 2013. For reasons stated above, I can’t compare them accurately to 2010, which I’ll do when the Official Guide comes out this summer, but I can give you a rough cut compared to last year.

In 2012, 67,900 people applied to law school; in 2013 only 59,400 did, an 8,500-applicant drop. There were 41,400 matriculants in 2012, 37,940 in 2013, a 3,460-matriculant drop.

Here’s the contribution to the decline in applicants by ethnicity.

Contributions to Applicant Decline by Ethnicity in 2013

And here’s the same thing for matriculants.

Contributions to Matriculant Decline by Ethnicity in 2013

In 2013, men comprised 54 percent of the applicant decline; for women it was 45 percent. For matriculants, the attribution to the decline is starker: 61 percent were men; 38 percent were women.

For fun, here’s the percent of applicants admitted by ethnicity going back to 2000. The LSAC changed some of its ethnic classifications in 2010, and it began using maximal ethnic reporting in 2012, which explains some of the gaps and dashes in the categories.

Percent Admitted Applicants by Ethnicity

Based on my comparison between 2012 and 2010, I predict the decline in white and male enrollments will not be distributed evenly among law schools in 2013. More prestigious schools will see little difference in their student bodies’ ethnic and gender compositions while the opposite will hold true for less reputable schools.

I admit I am somewhat surprised that even by 2013 white applicants and matriculants contribute so overwhelmingly to the decline, even in just one year. The proportions will stabilize at some point, but I think “law school white flight” a clear indicator that the positional value of a law degree is collapsing. It’s a sharp rebuke of how the profession has failed to identify and resist incentives that reward signals over substance.

On the Am Law Daily: ‘ABA Task Force Report: Part Good, Part Baffling’

You can find my latest Am Law Daily article here:

ABA Task Force Report: Part Good, Part Baffling

Per the discussion on my first cut at the topic, I added a little bit more on the possibility of limited-licensing programs reducing costs. There’re other changes to the original post.

http://www.americanlawyer.com/home/id=1202643728147/ABA+Task+Force+Report+Part+Good+Part+Baffling%3Fmcode=1202617075486&curindex=3

Which Law Schools Saw the Biggest Full-Time Enrollment Drops in 2013?

…Is the question of the day. The bigger question is, enrollment drop since when? Most of the time media outlets will report law schools’ cumulative percent declines since the overall enrollment peak in 2010, but those aren’t necessarily descriptive. It might be more valuable to measure enrollment declines since previous trough years. For the mean average law school, those would be 2007 and 1999.

Full-Time Law School Enrollment (ex P.R.)

(Source: Official Guide, 2013 data here (PDF), author’s calculations)

You might also want to ask, why not include part-time or post-J.D. students? There are a bunch of reasons, and laziness isn’t one of them. One, full-time programs are the bread and butter of law schools. Two, we care more about the younger crowd, who tend to be full-timers and are more likely to pay full tuition. Three, in any given year part-timers are not even 20 percent of all J.D. students. Nowadays, their share is even less… I could go on but I won’t.

If you remove the 23 law schools that were accredited since 1999 (!), the two average trough years remain the same, and the most-recent trough year for all law students moves from 2006 to 2007, which makes this analysis cleaner. Yay!

So, here’s a table of cumulative law school enrollment declines that’s sorted by the average of law schools’ 1999 and 2007 declines (not shown). Why that average? Because we want to see which law schools are really breaking from their enrollment trends. Schools like Quinnipiac, for example, have seen large enrollment drops since 1999, but not so much in 2007, meaning they shrank significantly in the previous decade and not more recently. I’ve also included the commonly used cumulative decline since 2010, as well as a ranking for that on the rightmost column.

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# LAW SCHOOL 1999 DECLINE 2007 DECLINE 2010 DECLINE 2010 RANK
1. Catholic -47.7% -43.7% -39.1% 5.
2. Tulsa -42.5% -43.8% -31.0% 15.
3. Seton Hall -42.6% -33.9% -32.2% 14.
4. Iowa -38.1% -35.1% -28.4% 21.
5. Case Western Reserve -32.6% -38.3% -33.0% 10.
6. Hamline -30.8% -37.4% -32.9% 12.
7. Western New England -25.9% -40.8% -39.3% 4.
8. Cleveland State -31.8% -34.8% -27.6% 23.
9. Wayne State -35.9% -30.6% -30.7% 17.
10. Golden Gate -20.9% -37.5% -45.5% 1.
11. New Hampshire -24.5% -32.3% -35.3% 8.
12. Kansas -32.1% -24.6% -25.6% 27.
13. Dayton -28.8% -24.1% -38.5% 6.
14. Widener -29.6% -21.3% -30.9% 16.
15. Capital -21.1% -29.0% -32.9% 11.
16. McGeorge -29.3% -20.3% -32.3% 13.
17. Samford -30.2% -17.4% -16.7% 62.
18. Florida, University of -20.1% -26.8% -9.6% 100.
19. Regent -20.3% -24.7% -19.6% 48.
20. Texas -25.9% -19.1% -9.4% 102.
21. Thomas M. Cooley -16.6% -27.9% -44.1% 3.
22. Temple -23.8% -20.3% -24.6% 32.
23. Wisconsin -20.3% -22.8% -17.5% 56.
24. Quinnipiac -49.8% 7.2% -25.9% 26.
25. Toledo -24.1% -18.4% -22.2% 42.
26. Missouri (Columbia) -27.7% -14.5% -13.1% 84.
27. Washburn -17.5% -23.8% -25.3% 28.
28. Ohio Northern -17.2% -24.1% -24.6% 31.
29. Boston University -24.2% -17.1% -17.7% 55.
30. Lewis and Clark -16.7% -23.8% -22.7% 39.
31. Gonzaga -10.8% -29.5% -23.1% 36.
32. Houston -18.8% -21.1% -11.7% 91.
33. New York Law School -9.9% -28.8% -44.4% 2.
34. Widener (Harrisburg) -8.1% -30.5% -38.3% 7.
35. Vermont -13.2% -24.0% -30.5% 18.
36. Southern Methodist -28.0% -6.8% -4.6% 140.
37. Albany -15.2% -19.2% -23.2% 34.
38. Villanova -15.9% -18.3% -22.4% 40.
39. Duquesne -8.0% -26.2% -23.6% 33.
40. Tulane -26.8% -7.3% -9.4% 103.
41. Memphis -19.5% -14.2% -16.9% 60.
42. California Western -9.1% -23.0% -26.1% 25.
43. Brooklyn -8.3% -23.4% -29.7% 20.
44. Oregon -13.8% -17.4% -17.1% 58.
45. Pittsburgh -13.9% -17.4% -20.2% 47.
46. Oklahoma -20.6% -9.4% -14.0% 78.
47. Texas Southern -20.3% -8.6% -6.7% 127.
48. Syracuse -20.7% -8.2% -4.7% 137.
49. Seattle -6.8% -21.9% -18.3% 53.
50. George Mason -0.5% -27.8% -28.1% 22.
51. SUNY Buffalo -8.2% -18.6% -12.4% 86.
52. Penn State -9.4% -17.1% -23.0% 37.
53. Rutgers (Camden) -16.2% -9.8% -11.7% 92.
54. St. Mary’s -16.4% -9.4% -6.2% 129.
55. San Francisco -7.6% -17.1% -21.7% 45.
56. Ohio State -10.0% -14.2% -17.2% 57.
57. St. Louis 1.6% -25.5% -30.1% 19.
58. West Virginia -8.9% -14.2% -7.3% 123.
59. Arizona -11.8% -10.8% -13.9% 81.
60. Willamette -12.3% -9.6% -15.8% 67.
61. Creighton -6.6% -15.3% -16.8% 61.
62. Alabama -15.9% -5.5% -8.6% 110.
63. California-Hastings -5.9% -14.3% -16.5% 64.
64. Illinois -12.0% -7.5% -15.2% 71.
65. South Carolina -12.6% -6.9% -9.1% 105.
66. Brigham Young -8.8% -9.8% -7.0% 125.
67. Boston College -12.1% -6.4% -8.5% 112.
68. Florida State -4.1% -14.3% -15.9% 66.
69. Akron -12.6% -5.2% 4.7% 179.
70. Connecticut 0.2% -16.9% -8.6% 111.
71. Missouri (Kansas City) -7.0% -9.2% -7.6% 117.
72. California-Davis -2.3% -13.5% -15.3% 70.
73. Denver -1.3% -14.4% -4.7% 138.
74. Utah -4.1% -10.8% -11.9% 90.
75. Virginia -3.9% -10.8% -5.2% 134.
76. Tennessee -8.7% -5.8% -8.3% 113.
77. Santa Clara 0.2% -14.3% -16.7% 63.
78. Pepperdine -9.2% -4.9% -9.7% 98.
79. Southern Illinois -10.5% -3.4% -10.5% 97.
80. Mississippi -2.9% -10.8% -10.7% 96.
81. St. John’s -2.9% -10.3% -12.2% 88.
82. Notre Dame -5.5% -7.6% -7.8% 115.
83. DePaul -8.3% -3.4% -15.6% 68.
84. William Mitchell 10.4% -21.9% -17.1% 59.
85. City University -2.8% -8.3% -13.7% 83.
86. Richmond -4.0% -6.4% 0.7% 171.
87. Northeastern -1.6% -8.8% -9.5% 101.
88. Michigan -1.6% -8.5% -7.4% 122.
89. Cincinnati -7.0% -3.1% -15.4% 69.
90. Arkansas (Fayetteville) -0.5% -9.1% -5.1% 135.
91. Wyoming -6.0% -3.1% -4.3% 141.
92. District of Columbia 12.5% -20.3% -26.2% 24.
93. Indiana (Indianapolis) 2.7% -10.2% -2.4% 154.
94. Minnesota 2.3% -9.1% -4.1% 143.
95. San Diego 3.1% -9.4% -16.2% 65.
96. Georgia -3.0% -3.3% -11.7% 93.
97. Hofstra -0.2% -5.6% -13.1% 85.
98. Nova Southeastern 0.0% -5.7% -18.8% 52.
99. Kentucky 0.0% -5.6% -4.1% 145.
100. Hawaii 1.7% -7.0% -19.0% 51.
101. Nebraska 0.0% -4.8% -8.3% 114.
102. Vanderbilt 1.1% -5.8% -3.4% 150.
103. Loyola Marymount (CA) -1.7% -2.8% -3.8% 146.
104. Louisiana State -8.2% 3.7% -5.0% 136.
105. Drake 8.0% -12.3% -19.5% 49.
106. Pace 6.7% -10.3% -22.1% 43.
107. Rutgers (Newark) 3.2% -6.3% -14.3% 77.
108. California-Los Angeles 1.9% -4.9% -2.4% 153.
109. George Washington 5.9% -8.9% -8.7% 109.
110. New Mexico -1.7% -0.9% -2.0% 157.
111. Illinois Institute of Technology -3.9% 1.6% -2.8% 151.
112. Howard 2.8% -4.9% -14.0% 79.
113. Oklahoma City 14.0% -15.6% -25.0% 29.
114. Maine -0.8% -0.4% -9.0% 107.
115. Maryland 4.2% -5.2% -12.4% 87.
116. Washington University 13.6% -14.2% -23.1% 35.
117. Southern California -1.0% 0.7% -7.5% 118.
118. Loyola (LA) 16.9% -17.0% -14.7% 75.
119. California-Berkeley 1.1% -1.2% -6.8% 126.
120. Texas Tech 7.6% -7.5% -4.6% 139.
121. Stetson 8.7% -8.4% -19.1% 50.
122. Colorado 4.7% -3.0% -5.9% 131.
123. Mississippi College 18.6% -16.9% -18.1% 54.
124. Montana 6.4% -2.0% -2.7% 152.
125. Pennsylvania 4.2% 0.5% -2.0% 156.
126. Harvard 5.2% 0.4% 0.5% 169.
127. South Dakota 12.5% -6.8% 2.0% 174.
128. Duke -2.0% 7.9% -2.3% 155.
129. Northern Illinois 11.9% -5.8% -9.0% 106.
130. New York University 6.8% -0.4% -0.9% 163.
131. Mercer 7.2% -0.7% 1.4% 173.
132. Miami 15.6% -8.8% -14.4% 76.
133. Baltimore 8.1% -0.9% -10.8% 95.
134. Columbia 6.9% 1.0% -7.1% 124.
135. Indiana (Bloomington) 4.9% 3.1% -1.2% 161.
136. Suffolk 5.4% 2.9% -3.6% 148.
137. North Carolina 5.4% 3.0% -7.5% 119.
138. New England 14.2% -5.5% -15.1% 72.
139. Chicago 8.3% 0.8% -3.5% 149.
140. South Texas 10.4% -0.2% -7.4% 120.
141. Idaho 7.5% 2.9% -9.2% 104.
142. Cardozo 7.4% 3.7% -4.1% 144.
143. Washington 8.9% 2.5% -1.6% 159.
144. Southwestern 13.4% -1.7% -7.4% 121.
145. Stanford 5.3% 6.7% 0.5% 170.
146. Wake Forest 6.4% 6.6% -1.0% 162.
147. Arizona State 17.9% -4.7% -7.7% 116.
148. Cornell 10.6% 3.6% -1.8% 158.
149. Whittier 5.7% 8.9% -14.7% 74.
150. Yale 8.5% 6.7% -0.6% 167.
151. Northwestern 17.4% -1.0% -6.6% 128.
152. William and Mary 15.8% 1.0% -0.8% 165.
153. Arkansas (Little Rock) 17.8% -0.3% -13.9% 80.
154. Georgia State 18.7% -0.8% 2.6% 176.
155. Washington and Lee 14.8% 6.1% 2.9% 177.
156. Fordham 29.0% -6.9% -8.9% 108.
157. Valparaiso 26.0% -1.2% -9.6% 99.
158. Western State 16.7% 8.1% -11.9% 89.
159. North Dakota 28.2% -3.2% -5.9% 132.
160. Touro 37.3% -11.7% -24.6% 30.
161. John Marshall (Chicago) 34.9% -9.1% -13.8% 82.
162. St. Thomas (FL) 27.9% -0.3% -15.0% 73.
163. Georgetown 25.3% 5.5% 4.2% 178.
164. Thomas Jefferson 43.5% -5.7% -20.2% 46.
165. Marquette 30.6% 9.6% -0.7% 166.
166. Loyola (IL) 31.0% 9.7% -1.6% 160.
167. American 42.0% -0.5% -0.2% 168.
168. Louisville 30.6% 12.4% -4.2% 142.
169. Emory 31.7% 14.4% 2.4% 175.
170. Michigan State 38.8% 9.1% -5.6% 133.
171. Roger Williams 81.0% -24.5% -22.2% 41.
172. Texas Wesleyan 59.0% 5.9% -3.7% 147.
173. Campbell 42.1% 24.5% -6.2% 130.
174. Southern University 52.1% 27.9% -0.8% 164.
175. Northern Kentucky 80.4% 9.2% -11.5% 94.
176. Detroit Mercy 115.5% -24.5% -22.0% 44.
177. North Carolina Central 94.5% 3.8% 1.0% 172.
178. Chapman 326.3% -11.0% -22.7% 38.
179. Florida Coastal 367.9% -9.9% -34.1% 9.
TOTAL -1.0% -10.0% -13.5%
MEAN AVERAGE 4.0% -10.0% -13.8%
MEDIAN AVERAGE -1.6% -8.6% -11.9%

Some observations:

  • Florida Coastal is the real oddball because it’s been league average since 2007 but is way higher than 1999 when it began its expansion phase. Nevertheless, it’s in the top-10 for cumulative full-time enrollment declines since 2010. I’m fine with this result as the goal of this exercise is to find which “established” schools had the most consistent enrollment declines, and newer schools, especially freestanders and for-profits, aren’t very typical. Nor, for that matter, are schools that rely heavily on part-time students.
  • A bunch of the schools at the top of the list never really benefited from the 2010 peak, which shouldn’t be too surprising if you think about it.
  • Elite law schools tend to be at the bottom of both rankings columns, showing that they have much more control over their student bodies than non-elite schools.
  • I’m a little surprised to see Iowa and Wisconsin so high up the list. Texas’ case is a little different, I think, because it may’ve tried to become more selective over the years.
  • Can’t say the same about Case Western or Seton Hall, given what some of their faculty have been saying publicly, but that’s just synthesis via cynicism.
  • Also can’t say the same thing about Boston University; it consistently has a low acceptance rate and a low matriculation yield, implying that it’s everyone’s safety school. There are a few schools in U.S. News‘ 10-30 that are fairly similar (Southern California, Boston College, George Washington, Georgetown, Duke, etc.), but they appear to be doing better than BU.
  • Another way I may do this exercise in the future is to sort the schools by statistical area. It might help illuminate which local schools are more popular than others, regardless of what the rankings say.
  • As many as 11 law schools have seen a positive cumulative enrollment changes since 2010.
  • 83 schools have positive cumulative enrollments since 1999, but don’t worry, almost all of them have larger full-time faculties and the ones that don’t may’ve submitted erroneous faculty data to the Official Guide.

That’s all I’ve got. Peace.

ABA Task Force (final) Report: The Good, The Baffling

So I’ve read through the ABA Task Force on the Future of Legal Education’s (final) Report and Recommendations (PDF). Some of its points are good, others baffling. Here’s a list of topics that jumped out at me and my thoughts on them; page numbers are in parentheses, but they’re not necessarily exhaustive.

1). The new report no longer describes the training of lawyers as a “public good” and now says it provides “public value.” (6-7)

The good: Wha~?

The baffling: I gave the task force grief last year for misusing the term “public good” when describing the fundamental, irresolvable, competing tension over the alleged good things the legal education system does for society versus what it supposedly does for law students. Reading through the report, I tried to give the task force the benefit of the doubt and determine how “public value” differed from “public good,” but it was pointless for two reasons. One, an “uncorrected” “private good” appears on page 25. Oops. Two, “private good” and “private value” must be synonymous—what other definition could there be?—so by analogy don’t “public good” and “public value” mean the same thing too? The new “value” terminology is undefined (unlike other terms, e.g. on page 5), so I don’t know why the task force bothered switching the words around or keeping the concept at all.

Indeed, for all its careful efforts to craft this private/public distinction, the task force pretty clearly comes down against formal legal education as providing public value. It supports limited licensing of lawyers (3, 14, 24-25), fewer undergraduate requirements (33), fewer law school requirements (28), the uniform bar exam (33), more law school “heterogeneity” (23-24), and substantial accreditation reform allegedly aimed at reducing the cost of legal education (2-3, 12, 24, 31). The task force even implies law schools aren’t providing students with core lawyering competencies (26) and that law schools aren’t benefitting society by absorbing federal loan dollars (22). By contrast, law schools provide public value in the form of … faculty scholarship? (7) Post-baccalaureate law programs aren’t needed for that.

2). “The financing of law-related training should be re-engineered.” (22)

The good: The task force prioritizes reforming the federal student loan program, stating, “The current system of law school education harms both students and society.” I’ll take the task force at its word that it’s unable to give the final word on how the Direct Loan Program should be modified and that another task force should be formed to address it. (30) I doubt that a subsequent task force would defend the Grad PLUS Loan Program as adding educational value.

The baffling: Does anyone benefit from how law-training is financed? If so, who? The loan program is not a negative sum system; the loan dollars go to law professors, universities, and lucky students who receive merit scholarships. Arguably it gives legal employers a steady supply of docile workers who have few alternatives to pay off their loans, but that’s indirect and not universal. The task force is surprisingly uninterested in why a social program doesn’t help society, to say nothing of its intended beneficiaries, i.e. poor people and minorities. The task force apparently misunderstands the implications of its own conclusions.

But the Bennett Hypothesis isn’t just an elegant, analytic explanation for why legal education becomes more expensive when you loan people unlimited money to buy it. It emerges from a social theory of positional goods, which are goods whose benefits to their owners by definition come at equal cost to everyone else who lacks them—and frequently a net social loss through rent-seeking by their sellers. That law schools absorb loan aid strongly indicates a moral problem with what legal education is, not just a miscalibration in the system that requires a kind of technocratic report by another task force.

If the task force doesn’t want to “moralize blame,” (9) then it shouldn’t be adopting frameworks that do so. In for a penny, in for a tuition bubble.

3). Demand for law graduates’ work in part determines their wages.

The good: Unlike some of its peers, this task force has actually heard of the law of demand. For example, on page 13 it writes, “The economy of law and related services and the associated employment market have changed sharply in recent years … These changes have had a substantial and adverse impact on employment opportunities for new and recent law school graduates.” It also says that there’s a “low prospective return on investment” for opening a rural practice. Nowhere did it say anything as absurd as, “Law graduates pass their student loans onto clients.” I call this progress.

The baffling: Nevertheless the task force still operates under a frustrating sort of “supply-side-ism” that just can’t be shaken. For instance, the no-rural-lawyers bogey has everything to do with demand for lawyers and absolutely nothing to do with legal education. The task force proposes looser licensing standards because fully trained lawyers aren’t “cost-effective” (2, 13). There’s no reason to believe this. Demand for legal services (and the (over)supply of lawyers) is what sets lawyers’ wages; therefore, it will also set limited-practitioners’ wages. More training does not make lawyers inherently more expensive than less-trained practitioners. At best perhaps people already living in poor or rural communities would be interested in obtaining limited licenses while principally working other jobs. That’s fine, but it’s not evidence that ABA-educated lawyers are “overtrained” and are thus too expensive for rural and poor folks to afford.

Additionally, since we’re on the topic, it’s been nearly seven years since The Wall Street Journal first pointed out that demand for legal services has been flat for many years, yet even in 2014 we have bar authorities saying, “The Great Recession did it.” No it didn’t. It exposed the truth of what had been going on for a long while, and the WSJ’s findings have only been repeatedly corroborated by analysis of BLS and state government data of law graduate and attorney overproduction. After being deregulated in the 1970s, and aided by an expansion of the legal education system, demand for private legal services grew until around 1990. It only slightly recovered during the stock bubble, and it’s been declining for ten years. This information is publicly available (pending BEA data revisions) and largely beyond dispute. Why bar authorities won’t acknowledge it is to me the biggest baffler on this list.

4). Where’s the signaling?

The good: The role that signaling plays in legal education appears in bits throughout the report.

The baffling: …And only in bits. The task force says law schools compete for highly credentialed students (2, 22, 23), but it doesn’t say why. The U.S. News rankings transmit misleading information to law school applicants (10), but the task force doesn’t tell us why the magazine is so popular if its representations are so misleading—or why law schools continue to supply it with information if that’s the case. Likewise, the shift towards the “consumer outlook” (9-10) on the part of applicants apparently occurred out of the blue and has nothing to do with how law schools broker jobs for their graduates based on their pedigree. Law schools’ costs grow because they’re under “pressure to deliver services and engage in functions other than core instructional services,” (11) but we aren’t told where that pressure comes from. There’s absolutely no mention of legal employers relying on any rankings, much less whether they evaluate job applicants based substantially on the law school they attend. If signaling plays any role in legal education, it calls into question whether law school builds any human capital at all, which would suggest that law schools don’t really provide any “public value.” That’s okay, though, because the task force’s recommendations pretty much say that too as noted above.

Signaling pathologies infect the legal profession like a body horror. They cannot be excised either, unfortunately, so long as wealth concentration ensures that some lawyers make very large amounts of money while others never meaningfully enter practice. Legal employers, which the task force says have abandoned their traditional role of training law school graduates (16), have always benefited from a surplus of eager, pre-graded law students willing to fill their openings, so they have no incentive to reform the system.

That said, the task force’s various recommendation of easing licensing requirements would mitigate some of the risk prospective lawyers would take on. However, the odiousness of signaling means that the problem won’t be the marginal law school after the crash but the most elite ones that survive it.

Speaking of which…

5). Easing licensing requirements

The good: Just about all of it. I don’t think it’ll create any jobs or reduce any debts, but it’s definitely a policy I’ve advocated, so the task force deserves credit.

The baffling: I get the sense that these reforms are pushing on a string. Jobs really are the independent variable here, but I’m just nitpicking.

6). The task force seems to think decentralization of lawyer education and licensing is good (1, but contra 24)

The good: Sure…

The baffling: …But I think decentralization has just enabled various institutions to blame one another for unemployed law grads and reduce the perception that the profession is able to reform itself. Decentralization might be an institutional reality, but I don’t see it as a plus.

7). Faculty “culture” causes resistance to change in law schools (4, 15-16, 27)

The good: Wha~?

The baffling: How do we measure “culture”? How is faculty “culture” not dominated by unaccountability for federal loan dollars? This, along with the “public value” stuff, makes me think that the task force is just throwing a deflated life raft to the law schools.

8). The final report is a manual for people of good faith. (4)

The good: Um. Okay, my other comments notwithstanding.

The baffling: How do we know when someone’s not acting in good faith? What do we do then? There’s plenty of stuff coming out of law schools that I don’t think is good faith, and I’m not even talking about the employment statistics. I won’t repeat the examples I put down when the task force’s first report came out, but it ain’t risk-averse, conservative faculty culture that caused them. It’s the free money.

9). Stuff unmentioned

The good: None. These things should’ve been mentioned.

The baffling: Here’s my list:

  • As noted above, the task force report implies legal employers have apparently played no role in maintaining the current legal education and law licensing system, nor have they benefited from it.
  • If the task force wants limited licensing and other looser licensing requirements, then why doesn’t it discuss apprenticeship or articling?
  • Nothing on restoring bankruptcy protections to student loans, especially in light of poor job prospects and graduates testifying they didn’t receive any training in core lawyering competencies?
  • What about public law schools that have gone off their states’ subsidies? What’s the point of such schools if they aren’t providing affordable legal education to their states’ residents? Do some states have too many public law schools?
  • Should bar exams be reformed too? The uniform bar exam is fine, but do the lawyers of the future need to know about the difference between sublateral and subjacent support when they’ll be practicing immigration law?

In all, the ABA Task Force on the Future of Legal Education’s (final) Report and Recommendations avoids some of the sloppy mistakes its peers have made, but there are still plenty of inconsistencies and notable omissions to spin some heads.

How Much Is the Land in America Worth? (Redux)

The land-taxers I know are pleased with Wonkblog’s decision to hand “land value taxation” its coveted “most worthwhile yet hopeless policy crusade of the year” award for 2013. I guess the land value taxation pilot program Connecticut approved last June isn’t good enough. However, Wonkblog courteously acknowledged Mason Gaffney’s work on the subject.

Aside from linking to the Slate post on the topic that I discussed back in October, Wonkblog linked to another one from December in which Matthew Yglesias informs us that his correspondents told him that the Federal Reserve’s Flow of Funds report contains enough data to calculate the value of privately held land in the U.S. The number? $14.488 trillion. He concludes:

So who cares? Well, you should care. This number is high enough that it tends to confirm that [sic] view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges could replace all taxes on labor and investment and still fund an ample welfare state and public sector.

Lamentably, Yglesias doesn’t show his readers why $14.5 trillion in land value “tends to confirm that view that taxation of land and other natural resources … could replace all taxes on labor and investment.” Indeed, his statement implies that the only thing standing between handing every American a citizen’s dividend equivalent to median household income is a posse of mustachioed landowners.

Alas, this is not how land value taxes work, but Yglesias’ vague editorial provides an opportunity to discuss the difference between “land value” and “land rent.” Land rent is the annual amount one pays to use land. Land value is the purchase price of real estate absent improvements. Land rent is like annual income; land value is like lifetime income once you’ve accounted for your JD premium. The ratio of land rent to land value is the “capitalization rate,” a percentage that differs among cities. Basically, it’s the discount rate; the higher it is, the lower the land value.

When Georgists talk about taxing land rent, the calculation is easy: Just multiply the rental value by the percent to be taxed. Let’s say we have a parcel that rents at $100,000 annually. Divided by a capitalization rate of 5 percent, its land value is $2 million. If we want to tax 80 percent of the land rent, we get $80,000 in land rent tax. Easy-peasey.

Now, like the typical Slate reader you’re thinking, “Why not tax land values instead? Wouldn’t an 80 percent tax on that yield $1.6 million?” And it’d be a good question—two even. The reason is that the amount taxed gets subtracted from the rental value, so as the land rent tax goes up, the land value drops. The rental value, however, remains the same. Here’s the equation:

Land Value = (Rental Value ­– Tax Amount) / Capitalization Rate

So taxing $80,000 from our parcel leads to a net rental value of $20,000 divided by a 5 percent capitalization rate and we get a land value of $400,000, not $2 million. If we want to express the land value tax as a percentage, then we modify the equation:

Land Value = Rental Value / (Capitalization Rate + LVT Rate)

…And then solve for the land value tax rate. In our case, it’s a 20 percent land tax on a $400,000 parcel, not an 80 percent tax on a $2 million parcel. Got it? Good.

********************

So we have a $14.488 trillion chunk of land that Yglesias believes tends to confirm the view that land taxes can finance an ample welfare state and public sector. Unfortunately, he gives readers neither his estimate of the land’s rental value nor that of the capitalization rate he used to close the accounting identity detailed above.

I can help. I’ll assume a generously low capitalization rate, 3.88 percent, the same as the current yield on 30-year T-bills (the aforementioned Gaffney recently demonstrated that wealthy people get much lower discount rates than poor people). We get a mere $562.1 billion in taxable land rent, which isn’t even enough to cover the federal deficit.

Now’s the part where Slate readers might question why Yglesias thinks this is sufficient to finance an ample welfare state and public sector, but they wouldn’t realize that government at all levels collected about $4.3 trillion in taxes in 2012. Add that back to annual GDP and we have $21.1 trillion to work with. How much of that is land rent? Again, we’ll have to fill in the annual rental value because Yglesias does not. Let’s say it’s only 20 percent, and we get $4.2 trillion in taxable land rent and at our 3.88 percent capitalization rate, $108 trillion in pretax land value.

You can tweak the capitalization rate and the percent of land rent as a share of GDP, but I think 20 percent is too low, if only because by the time you tax the land value down to $14.5 trillion as we do now, governments get less revenue than under the current tax system. This is implausible. Raise the percentage of GDP that goes to land rent to 30 percent, and you have well over the $5.7 trillion U.S. governments currently spend. Anything more is Hanukkah.

Of course, none of these calculations account for the increases to national income by recovering the deadweight losses imposed by our current tax system or the costs of administering it. Nor do we know if the Fed’s assessments undervalue land, which I—as does Gaffney—bet they do because hiding wealth in land is a time-honored practice. So yes, we should be confident that there’s enough land value (plus other rents, like spectrum rights, mineral rights, IP rights, etc.) to finance government and the welfare state, but a $14.488 trillion land value assessment alone is insufficient to prove it.

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