Month: November 2012

If Law School Is Worth The Money, Why Subsidize It?

Lawrence Mitchell, “Law School Is Worth the Money,” New York Times Op-Ed.

For at least two years, the popular press, bloggers [Two years? The first scambloggers started in, like, 2007] and a few sensationalist law professors have turned American law schools into the new investment banks. We entice bright young students into our academic clutches. Succubus-like, when we’ve taken what we want from them, we return them to the mean and barren streets to fend for themselves.

The hysteria has masked some important realities and created an environment in which some of the brightest potential lawyers are, largely irrationally, forgoing the possibility of a rich, rewarding and, yes, profitable, career.

Seeing the shrinking class sizes, Lawrence Mitchell, dean of Case Western Reserve University School of Law, proclaims, “The line must be drawn here!”

It’s a bold statement that amusingly contradicts other, telepathic deans who swear that the people who aren’t applying to law school just wanted to make money anyway, so good riddance. I like bold, especially coming from a dean of a law school where 15 percent of its 2011 graduates were unemployed or didn’t return their surveys, another 16 percent claimed to work in solo-10-lawyer firms, and tuition has inflated 47.7 percent over inflation since 1999. (Just shy of the buy-two-year-get-one-free club)

Yet, the dean is ready for these empty-calorie retorts:

[T]he focus on first jobs is misplaced. We educate students for a career likely to span 40 to 50 years. The world is guaranteed to change in unpredictable ways, but that reality doesn’t keep us from planning our lives. Moreover, the career for which we educate students, done through the medium of the law, is a career in leadership and creative problem solving. Many graduates will find that their legal educations give them the skills to find rich and rewarding lives in business, politics, government, finance, the nonprofit sector, the arts, education and more.

Once it’s clear that large numbers of graduates aren’t working as lawyers at graduation, we pivot to an argument from ignorance: We don’t know what will happen to law school graduates after 6, 9, 33, 50 years, therefore they must be in occupations making substantial use of their law degrees.

And what happens if they’re not? It’s a lot easier to shift the responsibility of a failed career onto a graduate many years into the future than the February following graduation, so deans not wanting to appear like succubi should recognize that making unfalsifiable claims while getting paid a six-figure income regardless of their graduates’ outcomes jeopardizes their credibility. On the bright side, one doesn’t need to go to law school to make the same fallacies that bedevil intelligent design creationists. It also, apparently, doesn’t prevent it.

Those interested in the only longitudinal study of law graduates I’ve come across are welcome to read about how large percentages of 1970s law graduates no longer practice law. However, in the lingo of investment banks: Past performance is not an indicator of future success. Given the prolapsed economy and the permanent contraction in the legal services industry, we can make pretty grim predictions of how the world will change for new law graduates rather than old.

What else will these thousands of students who have been discouraged from attending law school do? Where will they find a more fulfilling career? They’re not all going to be doctors or investment bankers, nor should they.

Funny, not 24 hours ago, my scambloggity peers united in celebration at the news in my previous post that law school classes are the same average size as when the students were protesting Vietnam. What are the non-applicants doing with their lives? Sadly, probably the same thing they’d be doing if they’d graduated from law school. It’s not their fault the United States has given up on creating living wage jobs for young people, but law schools won’t create them either. Supply does not create demand, and America’s young can expect no help from subsidized law schools in resisting the orthodoxy that callously promises everything and delivers nothing, as Dean Mitchell’s op-ed attests.

[T]he United States Bureau of Labor Statistics reports projected growth in lawyers’ jobs from 2010 to 2020 at 10 percent, “about as fast as the average for all occupations.”

Dean Mitchell neglected to include the next sentence in the BLS’ Occupational Outlook Handbook entry on lawyers, “Employment of lawyers is expected to grow by 10 percent from 2010 to 2020, about as fast as the average for all occupations. Competition for jobs should continue to be strong because more students are graduating from law school each year than there are jobs available.” [Emphasis LSTB]. I fancy myself as generous to those whom I disagree with (almost always deans and professors) and leave the harshest personal criticism for my scamblogging peers, but this is really bad.

Debt, too, is a problem. The average student at a private law school graduates with $125,000 in debt. But the average lawyer’s annual salary exceeds that number. You’d consider a home mortgage at that ratio to be pretty sweet.

We’re back to the unkillable zombie of JD-lawyer equivocation. Law school applicants (should) want to know what income the law degree will get them, not how much they’ll make as a lawyer, but don’t worry, applicants don’t know to frame the question that way (or if they do, they know better than to apply), and the law schools are willing to indulge their mistaken belief that they’ll work at law firms at a decent wage and not as doomed solo practitioners mailing 10 percent of their incomes to the Department of Education.

The graying of baby-boom lawyers creates opportunities. As more senior lawyers retire, jobs will open, even in the unlikely case that the law business doesn’t expand with an improving economy.

My hypothesis: Run, don’t walk from aging professions. If there were jobs available, then younger people would have filled them before their seniors grayed in the first place.

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There’s more from Dean Mitchell’s op-ed I could pick at—especially his story about the woman who refused to borrow even $5,000 to study law (Ha!)—but I’ll spare all parties the added agony. Law schools see themselves as institutions of integrity and justice, but they are in fact enormous wealth transfers from the populace that leave reduced living standards for most graduates in their wake. Much like a twist on the infamous Milgram experiment, law school deans were told they were doing real good for society every time they pushed the button, until some scamblogger chucked a rock at their windows and showed them the button is connected to the poverty-creation discharge pipe.

But to throw a bone to those whom I disagree with, if you want to do some good, use your elite clout to advocate restoration of bankruptcy protections for your graduates and termination of the Direct Loan Program for your current and future students. Tell America to stop your unlimited subsidies to level the playing field.

If you want to prevent the alienation, stop alienating people.

Number of 1Ls Per Law School Drops to 43-Year Low

Debra Cassens Weiss, “1L Enrollment Dropped at Three-Fourths of Accredited Law Schools This Year, Preliminary Stats Show,” ABA Journal.

ABA, “ABA Section of Legal Education Reports Preliminary Fall 2012 First-Year Enrollment Data.”

2011 saw the lowest ratio since 2000, but 2012 takes us back to when law school was probably far out: 1969!

The last time the total number of 1Ls was this low was 2001 (45,070), but since then the ABA has accredited 18 law schools (and, like, five branch campuses, which aren’t counted). It won’t be until much later that we know what the breakdown is between full-time and part-time students, to say nothing of full-time matriculants, which is the core number of “traditional” law students who begin in the fall.

The distribution of the decline isn’t uniform, and according to the ABA Journal, “Ninety of the 149 schools with lower enrollment had declines of 10 percent or more, according to a press release. Forty-eight schools, on the other hand, had an increase in enrollment, and at eight of those schools the increase was up 10 percent or more.” Quick readers will realize that 149 and 48 do not add up to 201, and the ABA’s press release adds that four law schools saw no change. Within them, 39 only saw a five-student or less change from 2011.

I’m curious which schools have opened the doors to anyone with an LSAT score and a pulse. Wait, do you still need an LSAT score? (Do you still need a pulse?)

Here’s the ratio to applicants:

Not quite a record low, but the squeeze is on.

That’s all I got.

Some LSAT Tea-Leaf Reading & Some Student Debt Stuff in The News

A while back I expressed dismay at the lower-than-expected drop in LSATs in June 2012. The October numbers are in, and the decline renews! Sometimes I like being proven wrong. Obviously, LSATs aren’t the same as applicants, but: no LSATs, no applicants. We also have no idea how many people are first-time takers vs. repeaters. In recent years, it’s been a steadily declining percentage due to increased incentives to retake the test, so it ought to be less than two-thirds for October takers, say 24,000 maybe.

I still see snippets here and there of how this is “the market correcting itself,” as though scambloggers are merely deterministic market outcomes and not rebukes of market failure. Indeed, even if there were half as many applicants as in 2012 (67,957), it would still be too many—but a welcome result. When exactly is the market going to correct for all those unemployed 2012 grads?

*****

In other news, the New America Foundation is continuing its war against those high-earning student debtors who dump their loans on Income-Based Repayment and screw over the taxpayer. “Subsidized Stafford Loans Obsolete and Regressive Due to New Income Based Repayment.”

If lawmakers end the Subsidized Stafford interest benefit for undergraduates to provide more funding for Pell Grants—and they should—expect student and borrower advocates to again argue that the changes will increase student debt burdens. Except this time, the critics will have to include a big caveat that will undermine their case.

Subsidized Stafford loans now provide regressive benefits. That is, they target benefits to borrowers earning higher incomes in repayment. That is due to the new Income-Based Repayment (IBR) plan for federal student loans that took effect this month.

There’s another lesson in here, too. Federal student aid is an incoherent mix of complex benefits and rules that overlap and cancel each other out in ways that virtually no one understands. For that we may thank the lawmakers (and the advocates who encourage them) who have added to, tweaked, and changed eligibility rules for these programs time and time again without even a hint of a broad plan. It’s time for a wholesale redesign of federal student aid.

Instead of a “wholesale redesign,” why not terminate the Direct Loan Program and restore the bankruptcy protections? It’s not like everyone needs a college degree.

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Speaking of which, I think those interested in student debt issues should take a gander at The Debt Resistors’ Operations Manual (PDF), written by “an anonymous collective of resistors, defaulters and allies from Strike Debt and Occupy Wall Street.” I’m ambivalent about anonymously led movements. On the one hand, yes, these people (might) have jobs and can be terminated by disapproving, conformist employers. On the other, it’s hard to take faceless, leaderless, heroless organizations seriously. “The Occupy Number Undetermined” doesn’t sound as bold as “The Chicago Seven,” and I’d hate for the FBI to know more about these people than their own constituents do.

Some of what the Operations Manual says about student debt is good; much I disagree with. I won’t repeat much of the good stuff, so don’t think I’m as critical as I sound.

Neoliberal policy-making has transferred the financial burden [of higher education] onto individual students. This means your future salary will be used to pay back the debts you got stuck with to prepare yourself for employability in the first place. Having to pay for education through debt is a form of indenture. And unlike traditional forms of indenture, it can take a lifetime to regain your freedom.

Bitterness towards student loans is amply justified, but this passage captures my primary criticism of the Operations Manual: ALL DEBT IS EVIL! Well, no. It’s not. Capitalism is good; financialism isn’t. Debt itself isn’t evil anymore than inflation, the military, or clean water are. Likewise, borrowing money to buy knowledge you can’t really get efficiently off the Internet to work at a job that pays better than what you’d get out of high school is fine if it works.

After some Sallie Mae bashing (which is understandable):

But don’t be fooled, these “federal” loans are still serviced by a group of select private institutions, including Sallie Mae. In addition, federal loans have unjustifiably high rates of interest (6.8%). Is the government profiting? Yes, and the proceeds are used to pay the bill for wars and Wall Street bailouts.

The servicers get a lot less under the Direct Loan Program than they used to under the FFELP, but the government’s sin is as much failing to underwrite its loans as setting interest rates. Although, I think the Operations Manual could come down harder on the last line: The Direct Loans Programs’ stated purpose is paying for the Affordable Care Act (not TARP & drones), but ultimately it represents an ideology of a government that prefers moving money onto the books via secret taxes because it can’t conduct a sincere discussion of fiscal policy.

It won’t end well. Secret taxes mean secret opportunity costs hidden from GDP calculations due to government malinvestments in unneeded educations and people mailing 10 percent of their paltry discretionary incomes to the government instead of buying and investing in stuff. Rambling back a little, this is the problem I have with the New America Foundation: It says we need to stop tweaking with loan programs (mere weeks after publishing a 50-page policy paper advocating tweaking with IBR), but it’s uninterested in the enormous losses on student loans that the government faces in the coming years. Unfortunately, the anonymous collective isn’t interested in this dimension either, which, again, is understandable given its goals, but it might persuade more people that reform is necessary by broadening its perspective beyond alienation over debt.

As to which reforms it advocates, I’m not so enamored with the Operations Manual‘s suggestions of linking up with Student Loan Justice, Forgive Student Loan Debt to Stimulate the Economy, or the Occupy Student Debt Campaign (OSDC). Okay, I’m fine with Student Loan Justice, but I find Forgive Student Loan Debt to Stimulate the Economy’s claims unsubstantiated. It’s hard to believe that student loan cancelation would stimulate the economy when the bulk of it is owed by only 40 million or so people, can be IBRed (but if you make a lot of money, the New America Foundation has you in its sights), and can be serviceable with a normal level of jobs and moderate wage inflation. Obviously someone would have to pay for the write-down, but if the Fed can print $40 billion a month indefinitely for QE3 without any adverse consequences, I’m sure it can buy student loan debts and shred them. Whether it will lead to a consumer buying binge is less likely.

The OSDC’s claims, by contrast, are straight-up liberal interventionism.

OSDC believes that our public education system must be free, that any future student loans must be offered at zero interest, that all university in­stitutions must be transparent and accountable, and that all current student debt must be cancelled. These principles, or principles like them, should be the foundation of any student debt movement.

Who’s going to pay for all this free higher ed.? Sales taxes on the poor? Higher income taxes for the rich? How is it going to create jobs for graduates? What’s going to stop public universities from spending even more money? Bear in mind public university salary information is often a matter of public record, and no one seems to care that many public employees are hauling home six-figure incomes as professors. This problem won’t go away so long as high school graduates have no employment alternative to college, but the OSDC doesn’t realize that the student debt crisis masks the job polarization crisis. Even with no student loans, we still have significant long-term problems.

Although the remainder of the Operations Manual focuses on the other types of debts Americans are likely to encounter (and to its credit it discusses municipal debt, typically though, without pointing out that that taxing land rents is the most stable way for cities to raise revenue and promote growth), the one debt the it doesn’t discuss directly is the trade debt, outside a quote from Debt: The First 5,000 Years. We import more than we export, and in order to do this the public sector, the private sector, or both must borrow capital. Much of this is energy imports so people can drive to work and cause global warming. A lot of our short-term economic problems, including our personal debt woes, would be solved if we were serious about reversing the current account deficit, which is somewhere around three percent of GDP dubiously thanks to the housing bust. There was some discussion of that leading up to the presidential election last month, but it was mainly China bashing. Too bad Occupy the National Income and Product Accounts doesn’t motivate people the way offers of free lecture courses does.

Who Are American University’s 79.6 Percent?

I’m sure readers are aware of the Washington Post Magazine‘s “The Case Against Law School,” which carefully goes through all the BLS data that readers of the LSTB found out about at least a year and a half ago. (Just stroking your vanity, reader) Among other points, the Post Magazine calls out American University for expanding its facilities even though only 35 percent of 2011 graduates had found full-time long-term lawyer jobs.

It’s one thing when this information is publicly available on the ABA’s Web site, but when mainstream sources start converting them into fractions and publicizing them, then the unenviable task of defending the system falls to the deans, such as American University’s Claudio Grossman.

The Post focused on a single employment statistic that is grossly misleading and relied on a number taken from only one of 16 primary employment categories collected by the American Bar Association … In the case of American University Washington College of Law, a far more appropriate statistic than the one The Post cited is 79.6 percent, which reflects the true employment data and career choices of our 2011 graduates. These graduates are employed in positions requiring bar passage, in positions in which a law degree provides a distinct employment advantage or in other professional positions where developed legal skills are highly valued, or they are pursuing advanced degrees.

Superficially, I think the Post is justified in using law schools’ “Employed Bar Passage Required Full-Time/Long-Term” as their success rate. For 2011, the average law school’s was 54.1 percent (average deviation, 11.6 percent), which places American University unusually far down in the scale.

But what are these 79.6 percent doing? (Actually it’s 79.7 percent.)

Most of the remaining employment status categories aren’t as glamorous as Dean Grossman makes them sound. For one, “pursuing advanced degrees” is not an employment category at all. It means that 3Ls had no jobs lined up in the fall of their third year so they triple-downed on more degrees as a backup plan if nothing good emerged by graduation. Their alternative outcome, unemployment, has been blessedly shifted off the law school’s books. So take 5.6 percent away and make it 74.1.

And how many of those 74.1 percent were employed part-time, which isn’t much of a success for three years of legal education costing $130,000 in tuition alone? I count 53 out of 467 graduates. Take 11.3 percent: 62.8. Employed full-time short-term isn’t a very impressive outcome either. That’s another 10.5 percent, what’s left rounds to 52.2 percent.

Two graduates out of 27 are working full-time long-term at American University itself, but we’ll leave them in the total. Who knows? Maybe they were hired as law professors. Another 34 of the remaining 244 graduates are in clerkships, which are counted as full-time long-term even though they are jobs with indefinite employment periods, but I’ll be generous and leave them in too.

One could do this kind of calculation for all the law schools, but in the end I think relying on full-time long-term lawyer employment isn’t “grossly misleading” at all. Taking all the law schools together, this employment status correlates negatively to every other one for which the ABA collects data, especially unemployment, which is tautological yet not trivial. Apparently, the more a law school’s graduates are employed full-time long-term as lawyers, the less likely they are to be doing anything else.

(Note: The “Other Employment Statuses” include all part-time and short-term jobs as well)

More crucially, it doesn’t even correlate to categories like “JD Advantage” or “Professional Position,” which is important for superficial versatile JD arguments, which Dean Grossman provides with full force.

A legal education is important preparation for a wide array of career choices, including employment in highly competitive jobs and fellowships in legislative and political offices, in federal agencies, in the many public-interest, trade-association, corporate offices and international organizations in and around Washington.

If this is true for American University graduates, the dean will have to do more to demonstrate why his school’s graduates are the exception. If the J.D. were versatile at graduation, then we’d expect more positive correlations with bar passage required jobs. I can see why some of the 52.2 percent of a D.C. law school’s graduates might find themselves in Washington-ish jobs rather than law firms, but without a clearer breakdown on what the 35-79 percent of graduates are actually doing, the Post Magazine is well within bounds relying on that one employment status.

Election Day Research on ‘Job Polarization’

So there was an election the other day, and some Demmers won while some Pubsies lost. Florida is still undecided, which is pretty funny. I’m pleased the Pubsies lost, but the biggest problem I have with the winning Demmers is that I still can’t tell if they have a thought-out, long-term understanding of the planet’s and our trans-continental superstate’s problems. It’s like they’re winging it. A bellwether of what I mean is an article that popped up on Election Day on economist Mark Thoma’s Web site, Economist’s View.

Henry Siu, Nir Jaimovich, “Jobless Recoveries and the Disappearance of Routine Occupations,” Vox EU.

It’s some good social science: The authors project the job recoveries from the 1991, 2001, and 2009 recessions as if they included routine jobs’ bounce back in prior recessions. It’s pretty stark stuff.

It may be that there are fundamental differences between 70’s-ish recessions and the ones I remember, but I think the authors’ findings are otherwise sound.

Structural change in the labour market is clearly manifesting itself in the business cycle. The long-term decline in routine occupations is occurring in spurts – employment in these jobs is lost during recessions …

The loss of routine jobs in recent recessions has given rise to jobless recoveries. Aggregate employment struggles to rebound following recessions since middle-wage, routine occupations no longer recover. Moreover, employment growth following recent recessions has been unevenly distributed across pay, concentrated in high- and low-wage occupations. A recent report by the National Employment Law Project (2012 [PDF]) indicates that the recovery from the Great Recession has been particularly lopsided, with the majority of jobs added being low-paying jobs.

Here’s what the National Employment Law Project is talking about:

Job polarization is going to be a growing issue in the coming years. Already, we’ve seen economists essentially saying that the solution to the problem of Morlok Material Movers is training them to be Eloi Lawyers. It won’t work (Siu and Jaimovich are wise enough not to comment either way), and the result will be more credential inflation, i.e. Morlock Material Movers who are also lawyers but are on IBR, unlike their colleagues who have more discretionary income but diminished understanding of Privileges and Immunities Clause precedent.

(Incidentally, I’m not using lawyers as an example here because I research legal education; rather, theirs is the best non-routine occupation to alliterate with ‘Eloi’. Lawyers are actually an exception to job polarization in that one would expect them to have higher wages after a recession because you (probably) can’t build a robot that can attend status conferences, but law practice is a non-Eloi-ish occupation for reasons you can find on just about every other post on this blog.)

Thus, the problem for the Demmers (I doubt the Pubsies will ever care about job polarization) is addressing their pessimism towards the low-wage workers’ lots. Instead of overeducating them, it’s a lot wiser to think of ways to ensure their jobs pay better. We can’t all be “entrepreneurs” who “innovate” by founding the next Twitter, which only employs 200 people.

I fear Demmers will try to solve the problem by taxing capital, which would disrupt the productivity that drives the polarization and gives us new Twitts. This is why I prefer taxing land values instead. Speaking of which, here’s the trailer to the upcoming Henry George documentary.

Chronicle Publishes Law School Dean’s Argument From Authority

Via the ABA Journal, Katherine Mangan, “America’s Longest-Serving Law Dean Defends the Value of a Law Degree,” Chronicle of Higher Education.

The news is Rudy Hasl, the dean of Thomas Jefferson School of Law, whose former career services staff claimed under oath that she was told to juke graduate employment data, is stepping down after 32 years of law school deanery. To honor him, the Chronicle captures his parting thoughts because he’s a law school dean, which means anything he says should be taken with equal validity to what anyone who researches the issues says.

This has been a tumultuous period for law schools. It’s not that we haven’t gone through similar periods. It’s just that the trough is a little bit deeper and the issues are a little more difficult than they were in previous times when we reached those bottoming-out periods.

So the problems are quantitative, not qualitative. The fact that the applicant nosedive is occurring during a period of McJobbery for college graduates instead of high employment doesn’t faze the dean. However, we have to credit his gall for looking at employment data and saying, “BAH!”

I remind students that what law schools are providing is a set of skills that are valued in our society and that will ultimately lead to a meaningful employment opportunity. To try to measure that by what job you have on graduation, or even nine months later, doesn’t make sense.

In 2010, only 46.2 percent of TJSL’s graduates were employed long term; 19 percent were unknown. In 2011 that dropped to 37 percent and 3.4 percent, respectively, but don’t worry 31.4 percent of them were unemployed and seeking. While we should credit TJSL for doing a better job of finding its unemployed graduates for the purposes of the employment survey, it doesn’t look as though society values their skills much.

Whether legal education “leads to” a meaningful employment opportunity is a claim that’s difficult to substantiate. Those making it must demonstrate that (a) the graduate’s job requires a law degree, or (b) the substantive knowledge gained in law school is a substantial factor in the graduate’s employment. Contributions that supplemental knowledge like computer programming or chemical engineering adds to a job must be discounted as well. This does not bode well for law degree holders, which is not to say they’ll be unemployed forever (the economy has to recover someday, right?), just that many of them will find their earnings no higher than college graduates’. They’ll be IBR-ing away their law school loans while think tanks tell them that people in their positions should pay more because they’ve gotten a free lunch.

The good news for TJSL, though, is that under Dean Hasl’s stewardship the law school is solving the profession’s “diversity problem.”

The legal profession has been slow to respond to the increasing demand for diversity. Students of color made up 10 to 12 percent of the student body when I arrived here, at Thomas Jefferson School of Law, in 2005, and they’re a little over a third of our student body today. For me it’s an important social issue that we produce individuals who can work within their communities to provide service and develop leadership … I’m optimistic that we’re producing graduates who will be quite attractive to firms and have a great future ahead of them.

Tell that to all of TJSL’s unemployed graduates. They’re unlikely to ever work in firms, and in 2011 only 11 out of 236 graduates were employed full-time/long-term at law firms larger than 10 lawyers. A mere two of them were at firms larger than 50. Law school deans’ optimism is not valid grounds for future predictions, nor does it put food on graduates’ tables.

The we-need-more-minorities plea never fails to displease me. The idea that minorities are better off and can better serve their communities with mountains of law school debt is toxic garbage. Those interested in making the profession more accessible can do so by … making the profession more accessible: eliminating the three-year graduate education requirement, focusing licensing along practice lines rather than generalist lines. These policies would make it a lot easier for minorities, and everyone else, to become lawyers, and the only people who lose out are the handsomely compensated deans.

Speaking of which, Rudy Hasl did quite well for himself a-deaning. According to Guidestar, in 2011 TJSL paid him $366,514 in base compensation plus $51,332 in other compensation. If you think that’s too low for a law school dean, fret not, for TJSL also extended him a $977,179 loan for “housing assistance”—something I’ve never seen in my admittedly scant experience with Guidestar reports. Such a large loan for “housing assistance” suggests that he’s not living in the 21st century’s answer to Pruitt-Igoe (a fucking depressing documentary I wholeheartedly recommend).

Maybe instead of allowing Dean Hasl to dictate an editorial with unsubstantiated claims to readers, the Chronicle should ask him how he intends to repay such a generous loan while in retirement.