Month: December 2013

Internet Era Has Neglible Effect on Legal Sector Productivity

…Is an unusual finding I made a while back, and it’s a reason not to go to law school. You can read about it on my most recent Am Law Daily article:

No, It’s Still Not a Good Time to Apply to Law School

In the meantime, I saw the Breeders last week, the night before my lecture at The Henry George School of Social Science, which went well thanks for asking. The Breeders are probably the only early ’90s band I’ve had any real interest in seeing. (The Pixies were a bit before my time.)



I was standing probably 20 feet east by southeast of the bootlegger of this video. I was behind a tall young man wearing a bright orange tuque, indoors. I think people who do that should be arrested and given the indelible mark of the hipster.

The best part of the video is that it’s titled “Canonball,” meaning it complies with Church doctrine.

Saved by the Magna Carta

The Brooklyn Daily Eagle lists Brooklyn Law School dean Nick Allard’s predictions for 2014.

2. Significantly, in 2014 the ABA will lead the way to restoring the national reputation of law as an honorable, noble profession. For example, next year the ABA will begin a national two-year conversation around its activities to celebrate the upcoming 800th anniversary of the Magna Carta. Even children will learn that we are a nation of laws, and many will be able to answer the trivia question: “Who signed the Magna Carta on a grassy field in Runnymede in 1215?” Answer: “No one — it was ‘sealed’ by King John.”

So the ABA does have ace in the hole! That’ll show those right-wing tort-reformers! Step off, Snowden.

1. Ten years from now, people will look back at 2014 and say it marked the start of the new world of law: a renaissance where the respect and reputation of lawyers and law schools began to rise by measurable benchmarks.

Now, now, don’t gainsay this prediction too much, folks. Who among you in January 2004 predicted that the government would preemptively bail out the law schools by nationalizing graduate student lending without any accountability mechanisms?

Yeah, I thought not.

Speaking of measurable benchmarks:

6. On the job front, the employment rates reported in 2014 will be substantially higher than in 2013.

I guess it depends on the definition of “substantially higher.” We shall see.

5. … Law schools will finally begin to attack their irrational and inequitable business model by taking on the heretofore unmentioned elephant in the room, the huge amounts spent on merit scholarships that drive tuition up paid by students who do not receive the scholarships.

That would be a miracle indeed.

Anyway, Merry (Federal) Christmas! And to you non-Christians and non-Americans, Happy Wednesday!

New BLS Employment Projections: Only 196,500 New Lawyer Jobs by 2022

Despite the shutdown, the Bureau of Labor Statistics managed to update its employment projections for 2012 to 2022 a tad earlier than I expected. You can find them here.

One bit of good news for the legal profession is that between 2010 and 2012, the BLS estimated some growth in the number of lawyers employed in the U.S., 728,200 in 2010, 759,800 today. It’s about the same as in 2008 (759,200). However, back in 2002, the BLS projected 813,000 lawyer jobs for 2012, so once again, the projections were overoptimistic.

BLS OOH Lawyer Employment Projections

The bad news is that the projected number of employed lawyers in 2022 (834,700) is lower than in previous years, e.g. 857,700 in 2018. Moreover, the job growth rate is declining. In 2020, the BLS projected a total of 212,000 jobs due to growth and replacement. Between 2012 and 2022, the total is 196,500 lawyer positions. Dividing by ten, this means that 19,650 jobs are predicted to be created annually. Despite the law school applicant nosedive, the number of jobs law graduates and lawyers will be competing over appear to be diminishing, mainly due to fewer positions being replaced.

Here’s the master lawyer oversupply and law graduate overproduction chart. The 2000 edition of the Official Guide lists the number of new lawyers, and I supplemented that with National Conference of Bar Examiners data on lawyer licensing (which includes some people who were admitted by examination in more than one jurisdiction, so there’s some overcounting).

Lawyer and Law Graduate Projections (1983-2022)

I’d comment more, but…

I have to give a lecture on college education and student loan debt at the Henry George School of Social Science at 6:30, TONIGHT (i.e. Friday, December 20, 2013). DETAILS HERE.

Number of 1Ls Per Law School Drops to 45-Year Low

Mark Hansen, “Law school enrollment down 11 percent this year over last year, 24 percent over 3 years, data shows,” ABA Journal.

ABA Section of Legal Education, “ABA Section of Legal Education reports 2013 law school enrollment data.”

Breaking last year’s record, the average law school now has fewer than 200 1Ls (196), between where it was in 1968 (173) and 1969 (204). (Accrediting Belmont obviously didn’t help the average.)

1Ls Per Law School (2013)

More surprisingly is that the rate of 1L decline is accelerating. Perhaps diminishing returns hasn’t set in after all.

1L Growth Rate (2013)

Legal education hasn’t seen this rapid a 1L crunch since the Korean War.

Twenty-seven law schools saw a 10 percent or greater increase in 1Ls, up from eight last year, so it appears more are choosing to enroll the bodies they get. Most schools still took a decline instead.

That’s all I’ve got.

Week 49: 51,300 Applicants Projected for 2014

The LSAC tells us that some people are still applying to law school.

No. Applicants Over App Cycle

No. Applications Over App Cycle

Applicants are already down 13.6 percent this year; 28 percent of the last year’s applicants had applied to at least one law school by this time last year. That gives us 51,344 applicants for 2014. I’m betting that the final applicant number won’t dip below 50,000 because last year the number of applicants accelerated in early 2013. However, I will point out that so far the preliminary applicant number has declined more this year than last year.

2011 (2010 wk. 48) – 19,696

2012 (2011 wk. 48) – 16,509 (-16.2%)

2013 (2012 wk. 49) – 16,241 (~-1.6%)

2014 (2013 wk. 49) – 14,171 (-12.7%)

One week early in the cycle might make a big difference, or application deadlines have been extended so much that people are delaying the process.

Nevertheless, to show how sudden the applicant collapse has been, there will be about as many applicants in 2014 as there were 1Ls in 2009 and 2010.

Applicants, Admitted Applicants, 1Ls

At the rate of decline, ~-8,082 fewer applicants this year, -8,530 last year, and -10,900 for 2012, the trend is slowing, so there will be a few more years of declines until then.

Heady stuff.

College Pays (Some Restrictions Apply, Void Where Prohibited)

Nancy Folbre of the TimesEconomix blog leads us to the College Board’s most recent exercise in post hoc ergo propter hoc human capital reasoning, “College Pays” (PDF). Its most insightful figure, 1.6, is on page 16: “Median Earnings (in 2011 Dollars) of Full-Time Year-Round Workers Ages 25-34, by Gender and Education Level, 1971-2011.”

Figure 1.6

Using median earnings and the 25-34 bracket are good moves. Full-time, year-round workers, however is a little dubious, though that’s the only consistent source the College Board had for 1971-1993 (Condition of Education 2004a, Supplemental Table 14-1), so I don’t mind it so much.

What I do mind, though, is the median-to-median comparisons because they hide college-educated workers who earn less than the median high-school graduate. Presumably college wasn’t that great an investment for them. On the other hand, I like the percentile-to-percentile comparisons found in Figure 1.5, which shows earnings ranges for all full-time, year-round workers ages 25 and up, except it’s not the more relevant 25-34-year-old bracket that the College Board used in Figure 1.6. Our loss.

Figure 1.5

For the record, at least 20 percent of 25-34-year-old college graduates who had any earnings (not just full-time, year-round workers) earned less than the median high school graduate the same age. Also, the Census Bureau omits people who earn nothing, which these days is about 12 percent of all college graduates and a quarter of all high-school graduates.

Percent Range College Grads Earning Less Than HS (25 - 34) Percent 25-34 With Zero Earnings

(Source: PINC 03, author’s calculations and did he mention that student loan debt has gone up?)

As always, the College Board’s actual findings are college pays off, if it pays off, when it pays off.


To editorialize on Folbre’s response, she correctly points out that the median college graduate today earns less than in 2000, to say nothing of 1971, and she notes that in fact many college graduates are simply displacing high-school graduates in the job market. Her metaphor is very similar to what I had in my mind:

Many college graduates are simply displacing less-educated workers from the jobs they once held, scrambling up the attic stairs to the roof of a bungalow whose first floor, inhabited by mere high school graduates, is now largely underwater.

I’d characterize it as people clinging to a ladders that’re sinking into the ocean, and the energy spent jumping from the “high school” ladder to the “college” ladder just to remain at the same altitude equals the rents transferred to universities.

Although Folbre isn’t a cheerleader like the College Board, her explanation for poor college payoffs is a bit iffy. To her, U.S. college-educated workers were hit with a supply shock of similar college-educated workers overseas, e.g. China quintupling the number of bachelor’s degrees it was conferring between 1999 and 2005. As the charts above show, however, plenty of college-educated workers haven’t been doing well for a while, which raises questions about the human capital hypothesis.

Trade doesn’t explain why 20 percent of high-school graduates between 25 and 34 have been in zero-earnings territory since the dot-com bust, much less 25 percent now. That’s obviously a lack of demand in the economy that’s best explained by the trade deficit rather than trade itself. Our trading partners are job-destroying neo-mercantilists, not comparative-advantage Ricardians.

Folbre also isn’t willing (in this post at least) to acknowledge other U.S. underconsumptionist policies of rewarding unearned incomes while taxing earnings, which is another monster problem that keeps workers chronically underemployed regardless of their education.

“College Pays, Sort Of” Indeed.

Iowa’s Unimpressive Tuition Cut

The University of Iowa College of Law’s tuition cut for resident students is getting a slew of good press, so I can’t resist the temptation to be a contrarian buzz-kill. Of the five tuition cuts I’ve been able to document, Iowa’s is only less trivial than Arizona’s. Next year resident tuition at Iowa will cost about as much as it did way back in … 2007-2008. Behold.

Public Law School Tuition Cuts (2012 $)

Yeah, I think I’d go with the $15,000 law degree Iowa was offering in the mid-1990s, thank you very much, but those days are gone with state subsidies of higher education, which, I editorialize, aren’t necessary for law schools anyway.

As for the other schools, in general cuts for non-residents mean the most for schools that take in large numbers of out-state students, e.g. Michigan or Virginia, particularly because out-state 1Ls usually establish residencies for their subsequent years. Cincinnati already offers a discount to some Kentucky residents, so it might not be that big a deal. I’m guessing most of Akon’s 1Ls are already Ohio residents too.

The only big cut here is Penn State’s $20,000 renewable grant to entering resident students. I won’t poo-poo it; it’s big. The question is how many Pennsylvanians who would otherwise go to Pittsburgh ($29,468 in 2012) will be motivated to go to Penn State instead for $21,088. Will applicants see it as a deal or desperation? I’m seeing it as the latter because I can’t see how the school will entice enough 1Ls to cover its losses. (Temple is the most selective Pennsylvania public law school but also the cheapest.)

Part of the problem with price deflation is it’s self-sustaining. Even if a school can successfully signal a price cut to applicants, and that hasn’t been established, then potential purchasers are motivated to hold back and wait for its price (or its competitors’) to drop again. Even if you (wrongly) believe that law school significantly increases people’s productivity—and tuition cuts raise the question of what previous students were really paying for—a drop in costs is an increase in the earnings differential per se and therefore worth the wait in many cases. Law schools need students more than potential applicants need law schools.

NYC Lecture Announcement

Readers of my latest Am Law Daily article may’ve seen an announcement at the end about my upcoming presentation at the Henry George School of Social Science. The notice just went out, so here’s the abstract:

College Education: Certain Debt, Uncertain Income. Soaring costs for education, together with limited job opportunities and stagnant wage growth, place substantial financial and psychological burdens on students.

Noted columnist and researcher Matt Leichter reviews tuition inflation, cuts in public funding and the business of lending to students. Mr. Leichter will also propose reforms to the system of financing college education.

Here’s the event info:

6:30 PM, Friday, December 20, 2013.

121 E. 30th St. (between Park Ave. & Lexington Ave.)

New York, NY 10016

I’m excited to present on the topic, and I hope that readers in the NYC-area will attend.