Lawyer Employment Grows in 2014, Wages Flat

…Which is unsurprising.

Last week, the Bureau of Labor Statistics (BLS) updated its Occupational Employment Statistics (OES) program data for 2014, and since the topic of what the BLS programs are actually measuring came up in the context of the latest analysis on the alleged J.D. premium, now is a good time to report on the data. Here is what lawyer employment looks like over time based on various BLS measures.

Lawyer Employment by BLS Measure

Aside from some growth in 2014, of interest is the discrepancy between the Current Population Survey’s (CPS’s) and the Employment Projection program’s (EP program’s) lawyer estimates. It’s been there for a while. Technically, the CPS is considered more reliable, but when discussing lawyer projections, the EP program’s numbers are appropriate. The CPS measures people in an occupation, not the number of job positions, which can be held by multiple persons. I think the CPS overstates the number of employed lawyers. Both measures include part-time lawyers and self-employed lawyers in all industries.

The CPS’s full-time wage and salary lawyer measure is similar to the OES program’s measure as they both exclude self-employed attorneys, but the OES program includes part-time workers. Finally, the number of legal sector attorneys is the subset of the OES lawyers working in the legal sector, and according to the link above, 71 percent of all lawyer positions are in the legal sector.

As for lawyers’ wages, they’re largely flat, but the median has fallen since 2009.

W&S Lawyer & Paralegal Hourly Wages (Constant $)

It’s useful to compare lawyers’ wages to paralegals’. This year, the top 10 percent of paralegals earned more than the bottom 25 percent of wage and salaried lawyers, but some of that is probably a comparison between full-time and part-time workers.

Detailed information on what the BLS programs measure can be found on the lawyer overproduction page, which I strongly recommend for anyone who is unfamiliar on the materials (*cough* law profs *cough*–Sorry, allergies). Although, it has not been updated regarding the BLS’s proposal to alter the replacement estimate used in the lawyer projections. That will come later. Lawyer employment in and of itself is not a bellwether for the future of the legal profession; it’s just worth tracking. Aside from the lawyer overproduction page, readers are advised to look at my criteria for predicting improvements in law graduate outcomes.

That’s all for now. Peace.

Site Update 2015-02-09: Law Graduate Overproduction Page

The update can be found here. (The 2011 edition has been moved here.)

To keep the analysis consistent with previous years, I used the class of 2013 even though data for the class on 2014 are available (and logged by moi). It’s a little problematic given that 2013 was the law graduate high tide, but that’s what happens when law schools enroll people without regard to employment outcomes.

I do not discussed the BLS’s proposed changes to its methodology for measuring occupational replacements. Assuming it’s approved, then for future versions, if the BLS separates annual replacement openings between those created by workers who leave the labor force and workers who move to different occupations, then I’ll use the labor force rate as the measure for “sustainable jobs.” It’s imperfect, but the same can be said of the current methodology.

I’ve also updated the site’s highly popular lawyers per capita by state page to include employed lawyers per capita and idle attorneys using the 2012 employment data. I am waiting on the ABA to update its national lawyer counts for 2014 and 2015. (They do plan on doing that right?)

At this time, I will brag that the Census Bureau’s press relations department cited my work on this topic last August.

Law School Cuts Its Tuition to Zero (and Other 509 Report Errata)

Students at Atlanta’s John Marshall Law School were surprised to find their tuition was free for the 2014-15 academic year.

Free Tuition!

Such generosity!

That’s the most amusing error in the law school 509 Information Reports I’ve found thus far. The ABA doesn’t audit the data law schools provide it, so people using them might want to know when it’s obviously incorrect. I’m tallying up the ones I find, but I won’t do so exhaustively. I figure the ABA just runs a program that spits all the data into the reports automatically, so I’ll confine my teasing to the schools for the mistakes.

Atlanta’s John Marshall is one of two law schools that have tuition problems. For those curious, looking on John Marshall’s Web site I get $38,100 in tuition costs, $198 technology fees, $1,340 for health insurance, and $194 in student bar association costs ($39,832 total). This is largely consistent with its charges last year ($39,578).

Another law school with a tuition typo is St. Mary’s, whose 509 report says it charges $33,100 for resident and $33,110 for non-residents, a patent ambiguity that doesn’t make sense for a private law school. Worse, when I look at its Web site, I get $33,010 ($32,340 for tuition, $670 for fees). That’s the number I’m going to go with.

Readers might also be curious about law schools’ enrollment breakdowns. I don’t track the ethnicities of full-time and part-time students, but I did do get their totals as well as the genders and ethnicities of 1Ls, total enrollments, and graduates. These numbers usually add up across the table, but there are a few cases that I’ve found that don’t.

The biggest offender is SUNY-Buffalo, which accidentally totaled its male and female students in its “Other” column (a new addition to the reports this year) instead of the “Total” column. This causes significant arithmetical errors that end up doubling the school’s enrollment over the year before. I have SUNY-Buffalo with 547 full-time students, 10 part-time students, and zero “other” students.

The tables for San Francisco and Minnesota also do not total properly due to problems in the “Other” column. As I have it, San Francisco has 425 full-time students, 102 part-time students, and no “other” students (by enrollment, not gender). Minnesota has 681 full-time students, 17 part-time students, and zero “other” students (ditto).

It’s unclear, but I think most law schools that used the “other” category meant it for gender and enrollment status while these schools had one category but not the other.

Hopefully these errors will be corrected either by the law schools or the ABA.

**********

While I have your attention, I thought I’d spill the beans on where undiscounted tuition costs went this year: pretty much nowhere. The median private law school charged about $200 more than last year in real dollars, but costs are moving up slightly on the very high end while nominal tuition cuts are manifesting at the low end of the scale. I can’t make a clear determination at this point, but anyone thinking that legal education is moving toward a two-tier market—one for cheaper law schools, the other for very expensive prestigious ones—might see this as year 1 for their hypothesis.

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

I suppose now’s the appropriate time to congratulate Columbia for being the first law school to breach the $60,000 mark. 23 others charge more than $50,000 annually, many of them are in U.S. News‘ top 20. In 2010, only three charged so much.

The next chart shows the overall slowdown of tuition cost growth over the last few years and the nominal declines within the lowest quintile.

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

I haven’t done a full analysis yet, but I think only Iowa has seen any direct correlation between nominal cost cuts and an increase in applications (and that’s a public law school). The rest still saw declines.

Peace out.

Household Spending on Legal Services Declines Too

But first, I should inform you that for the second year the ABA Journal has chosen to admit The Law School Tuition Bubble into its Blawg 100. It states:

Matt Leichter makes data-driven arguments in favor of changes to the legal education system. Anyone concerned about the levels of student debt and the state of employment in the legal industry would do well to visit his blog and examine his data firsthand.

I endorse this characterization, and you can endorse my Web site here.

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

Speaking of data about the legal industry…

A brief follow-up to Monday’s article on the legal services industry’s continuing contraction: It turns out a few months back the BEA updated its personal income and outlays tables. Although they can only tell us about household consumption of legal services, the data go back much further than the GDP by industry tables do, and arguably household spending on legal services does a better job of capturing the health of the legal services industry for lawyers who enter small practices. I discussed them before here.

There are a few relevant findings.

One, inflation-adjusted household consumption of legal services fell by 3.27 percent in 2013. It’s about 15 percent less than in the peak year, 2003.

Percent Change Real Personal Consumption Expenditures by Function

(Source: National Income and Product Accounts, Table 2.5.3., author’s calculations)

Two,  the peak year for legal services as a share of total household expenditures was 1990 (1.09 percent); in 2013 it had fallen to 0.85 percent. It’s comparable to 1983 or 1973.

Legal Services Share of Household Consumption Expenditures

(Source: NIPA Table 2.5.5., author’s calculations)

The point isn’t just that households are spending less lawyers, it’s also that legal services historically have been a trivial expense. Americans spend about twice as much on higher education than legal services (but they certainly didn’t use to!). By contrast health care surged from 6 percent in 1959 to 21 percent in 2013. Compare that to the public perception of lawyers.

Three, household spending on legal services as a share of the industry total has been declining since the early 2000s.

Personal Consumption Expenditures of Legal Services Share of Legal Services Industry

(Source: NIPA Table 2.5.5., GDP by Industry Value Added, author’s calculations)

All of these trends point to the withering of small-law. I am pessimistic of the outlook over the next several years.

Commerce Dept.: Legal Services Sector Contracts (Again) in 2013

Earlier this month the Commerce Department’s Bureau of Economic Analysis (BEA) updated its GDP by industry data. The chief finding for law-watchers is that in 2013 the legal services industry shrank by 2.9 percent. Ouch. The legal services industry includes all private law firms, and it employs about half of all lawyers. Meanwhile GDP grew by 2.2 percent, meaning that once again, the shriveling legal sector is being outdone by the rest of the economy.

Percent Change Real Value Added by Industry

(Source: GDP by Industry (xls), author’s calculations)

[Correction: Half of wage and salaried lawyers work in the legal services industry; most self-employed lawyers probably work there too.]

I’m providing moving averages to illustrate the break between the legal sector and GDP that began in 2005. That’s not to say things were hunky-dory before, just that those data still haven’t been revised yet. Go ahead, look at the old data and show me the situation was better before 1997. I dare you.

To editorialize, yes, the annual updates are horse-race reporting and recent years get revised a little bit each time, but I’m not enjoying reporting on the contracting legal sector nonetheless. I’m genuinely surprised that it’s still doing so badly, and I thought the Great Law Depression would’ve leveled out by now. Maybe future years and revisions will bear that out, but it’d take a sustained period of significant growth for the outlook to improve. Even a single year of 2.9 percent growth wouldn’t persuade me things are getting better, but even a piddly 0.4 percent would be nice to see.

To make things worse, when drilling into the real value added components, “compensation of employees” has been consistently contributing to the decline.

Contributions to Legal Services Real Value Added

(Source: GDP by Industry (xls), author’s calculations)

Only “taxes on production and imports (less subsidies)” has been growing consistently in the last three years.

The legal sector’s productivity measures are similarly unrelentingly bleak. Real value added per person engaged in production has fallen by about $20,000 since 1997 while the same measure has grown steadily throughout the economy and for the legal industry’s sibling in the “Professional, Scientific, and Technical Services” category, “Computer Systems Design and Related Services.”

Real Value Added Per Person Engaged in Production

(Source: Real Value Added by Industry, NIPA Table 6.8, author’s calculations)

If things keep going at this rate, the average legal services worker will be indistinguishable from the average worker overall. I guess it’s a good thing that the mean average worker isn’t anything like the median? It’s clear, though, that computer design is a much better candidate for “golden-ticket industry” than legal services.

Finally, we have the Bureau of Labor Statistics’ output per hour measure of labor productivity, which is a bit sharper than the real value added per person engaged in production estimated above.

Percent Change Output Per Hour

(Source: BLS Nonmanufacturing Multifactor Productivity Tables)

Here too, the long dashed moving average line (legal services) is comfortably below the thick line (nonfarm business), showing that the legal sector is not becoming more productive with the rest of the economy. More alarmingly, it’s lost about 8 percent of its productivity since 2007, and now the amount of private legal services the country is getting per hour worked is about what it was in 1988.

In conclusion, the data again depict a sputtering industry. For all the reporting on the declining supply of future law graduates, little is said about the long-term trends in the sector that’s most likely to drive demand for their services. Increasingly it appears to be dwindling while at the same time better opportunities for workers are forming in other sectors.

States’ Projected Lawyer Surpluses Deteriorate for 2022

…Is up on The American Lawyer.

I’m proud to say that unlike last year, there is no “Mississippi problem,” in which the net lawyer growth rate in any state exceeded its ten-year annual job growth rate, yielding a negative replacement rate, sky high surplus calculations, and a lot of time spent explaining math to the media.

Site Update: ‘Law School Tuition Data Going Back to 1996’…

…Can be found on the “LAW SCHOOL COST DATA (1996-)” page.

Formerly called ,”Tuition Increases at All ABA Law Schools (1999-),” or something like that, I’ve revised this site’s renowned tuition data page. Biggest changes include:

  • Tuition data for each law school going back to 1996 and up to 2013
  • Percentages of full-time students paying full tuition at each law school
  • Percentages of full-time students receiving the median grant or more at each law school (as stated in the Official Guide)
  • Tuition levels discounted by the median grant at private law schools that aren’t Brigham Young
  • A bunch of carefully sculpted dispersion charts and tables showing changes in law school tuition since 1985 or 1996 with the annual Stafford loan limit
  • And no tuition projections. I know they were popular. I know they gave me easy page views, but I don’t think any forward projection based on past data will be accurate anymore given that tuition increases are slowing down now. Also, the necessary methodology page was truly boring to write, and if anything, you folks deserve more “No Bubble, Just ROCK!!!” posts than me being bored on my own blog.

Don’t worry though, the URL is the same as before, so anyone linking to it will find the same information.

Tracking this kind of information on the back end is becoming harder as law schools (a) are socialized by public universities (meaning a change in status), (b) change their names (sometimes to sound more “hashtaggy”), and (c) contemplate splitting into multiple campuses. I’m sure consolidations are on the way as well. As it is, gathering their exact, full names was easily the most tedious aspect of this update. Easily.

Like, law schools, if you can hear me, please put your complete, full name on your main pages. Not in logos, and definitely not ending in “[law school name] Law” as though your school’s name is in fact the title of a law. To pick on one example, when I read “Wayne Law,” I thought about The Wonder Years taking place in a Michigan law school with Fred Savage, Jason Hervey, and Danica McKellar, the awesomest mathematician alive.

Which reminds me: Law schools, I’m into women as much as the next gynephile, but you do realize you put a lot of women on your main pages. There’s a certain … lack of originality to seeing attractive young women on the law school Web sites.

Wait, what am I complaining about? Strike that.

Okay, I should add—and this is very, very, very important—because the data page is so long (which is by design and I have no interest in changing) it doesn’t load well in Mozilla Firefox. If you scroll down far enough, at some point the screen turns black and the numbers are unreadable. It doesn’t crash the browser, but it doesn’t make the site easy to read. It does, however, work in Google Chrome. I don’t know if it works well on other browsers. Frankly, I don’t care at this point. Chrome is free; I prefer Firefox; whatever; we’re done here.

Follow

Get every new post delivered to your Inbox.

Join 166 other followers