More than three years ago, Frank the Underemployed Professional commented:
It’s too bad that there isn’t a good way to numerically quantify the monetary value of having a law degree. If we could do that and plot it over time, I’m sure it would decrease precipitously as the cost of tuition increases.
I thought of Frank when I put together a time-series chart of law graduate earnings for my last American Lawyer piece. It was really only one step away from being a comparison between law school costs and earnings outcomes. So after a little tinkering I think I can give as close an answer as anyone’s going to get.
Behold, on this day I give unto thee the law school outcomes “uninfographic”:
(Click to Enlarge)
Why an uninfographic? Because it tells so much yet requires even more explanation. The data come from three sources: the National Association for Law Placement’s (NALP’s) Employment Report and Salary Survey (ERSS) (many older years courtesy of moldy paper editions of the Official Guide), the ABA’s Section of Legal Education and Admissions to the Bar, and the Census Bureau’s Person Income Tables. I’ll go through each of these sources.
NALP’s ERSS tracks law graduates’ employment status outcomes, their job types, and their median salaries if they work full-time. It’s been doing this for nearly thirty years, but I’ve only managed to find data going back to 1991.
The salary data are not drawn from a random sample, and for most employment statuses only a minority of graduates report salaries. The median salary is very likely well above what the median graduate earns unless non-reporters and those in part-time positions are somehow earning more than grads employed full-time. Assuming this isn’t the case, the overall median figures shown here are roughly in the top 20-25 percent of total graduates between 2007 and 2012. Moreover, as demand for lawyers slackens, the median becomes even less representative of the class, a phenomenon I suspect is true for the 1990s legal sector recession. Oh, and did I mention that the median salary is also smack dab in the middle of a bimodal distribution?
What follows is a breakdown of each employment status by the range of graduates reporting salaries, the range of full-time workers in that status category, and the range of total workers in that employment status. Again, these ranges go from 2007-2012.
Employed Full-Time (black with circles):
- 18,400-23,300 full-time salaries
- 31,100-34,800 full-time workers
- 35,700-37,500 total
- 43,500-46,400 graduates
Bar Passage Required (blue with diamonds):
- 16,000-21,300 full-time salaries
- 24,900-30,000 full-time workers
- 27,200-31,100 total
JD Advantage (red with squares):
- 1,100-2,200 full-time salaries
- 2,500-4,700 full-time workers
- 3,100-5,900 total
Other Professional (green with triangles):
- 670-780 full-time salaries
- 1,700-1,800 full-time workers
- 2,000-2,300 total
Non-Professional (purple with x’s):
- 40-80 full-time salaries
- 280-330 full-time workers
- 530-810 total
Not Working (FYI):
- 900-1,200 Advanced Degrees
- 1,700-4,700 Seeking Employment
- 700-1,300 Not Seeking Employment
Not Reporting (FYI):
- 2,000-3,200 Not Reporting
The ABA Section of Legal Education collects graduate debt data from each law school (black with crosses for public law schools, black with dashes for private law schools), which excludes accrued interest. It then averages these without weighting them by the number of graduates with debt per school. Part of the rapid rise in law school debt is due to some law schools misreporting their 3Ls’ disbursed debts rather than their graduates’ total debts. The larger factor, I believe, is students’ decisions to rely more on Grad PLUS loans, which law students can use for living expenses as well as tuition not covered by Stafford loans.
I thought about using median law school tuition instead of graduate debt but decided against it. On the one hand, tuition data go back further and they show just how much more expensive public law schools have become. On the other hand, mean debt figures include tuition discounts, private loans, and living expenses.
The Current Population Survey tracks full-time workers by education level attained and age, and it provides specific data on earnings of those who work full time, defined as those working 35 hours or more per week. Shown here is median earnings of full-time workers aged 25 to 34 with a bachelor’s degree (black with x’s). I included it to show a baseline alternative to law school. Unfortunately, it’s an age range and not a starting salary, so it’s not perfectly comparable to the NALP data, but at least it’s a “true” median and not the 75th to 80th percentile due to poor sampling like NALP’s.
Between 1994 and 2012, 73 to 78 percent of 25 to 34 year-olds with bachelor’s degrees who reported earnings worked full-time. Including people in that age range without earnings, it ranges from 65 to 71 percent.
1). Strikingly, law graduates in full-time, non-professional positions make less than the median full-time college graduate in the same age range. Even the 75th percentile full-time non-professional salary (not shown) is less than the median full-time college grad. This is a strong indicator that law grads who do not find good jobs quickly do not benefit much from going to law school. In any given year, roughly 20 percent of all graduates are in a non-professional position or less (i.e. unemployed or not reporting, which I don’t take to be a good outcome).
2). Many graduates in better-than-non-professional jobs earn less than the college median nonetheless. Of course, as we’ve learned from the After the JD research, there’s a lot of attrition for law grads in private practice, with some leaving law entirely for positions that don’t really need legal education. Others find themselves in smaller practices with reduced earnings. The turnover factor increases the likelihood that there are better alternatives to law school.
3). I’m sure I say this every other post, but the Grad PLUS Loan Program needs to die. Although some law grads may’ve benefitted from it instead of taking out private loans (or even skipping law school), its primary contribution to humanity is to bail out law schools by providing them with students who would have been unable to attend for want of money for living expenses and excess tuition. Those students now have much higher debt-to-income ratios and no real choice but to go on IBR, which is turning into a policy piñata. Even if you ignore the discussion of whether law schools absorb federal loans, I’m still astonished that to my knowledge no law school has ever discouraged students from taking out giant sums of money for living expenses.
4). Recent graduate full-time starting salaries have fallen to their mid-1990s level. Looking at the ABA data for 2013 grads’ employment outcomes, it doesn’t look like this summer’s edition of the ERSS will show much improvement. Anyone predicting recovery in demand for lawyers is invited to explain what mechanism will bring that about. It certainly won’t be household spending on legal services that’s for sure.
5). Due to the aforementioned bimodality of the NALP data, the 25th percentile full-time employed law graduate reporting a salary (not shown) was only $5,200 higher than the median full-time college grad in 2007.
By 2012, the gap had fallen to $668.
Assuming a hierarchy of earnings with full-time jobs over part-time jobs over non-reports over unemployment, the 25th percentile salary was the ceiling for roughly 60-66 percent of law graduates from 2007 to 2012. Even I don’t want to believe the outcomes can be that bad.
That’s all I’ve got to say on the subject for now.
Filed under: National Statistics, Original Research | Tagged: Legal Education ROI, Legal Sector, student loans | Leave a comment »