Demos: Denominators Don’t Matter for Subsidies to Public Universities

Last week Demos published a paper that carefully apportions the causes of tuition cost hikes at public universities over the last decade (2001-2011). Authored by Robert Hitonsmith, it finds that 79 percent of the increases are due to cuts in state subsidies, about $3,000 on average at four-year public universities. Hiltonsmith is known for a paper ominously titled, “How Student Debt Reduces Lifetime Wealth,” which estimates the lost lifetime personal savings due to student loans.

Reconciling these two papers might cause confusion because it’s easy to misinterpret Hiltonsmith’s first paper as arguing against widespread college attendance. It plainly says otherwise: College pays off, but the costs should be socialized. I’m not fond of this line of reasoning as it showcases a large pecuniary loss for college education without explaining where the offsetting public benefits come from. It’s hard to see an adverse selection problem in higher education as with health care or national defense.

Something similar goes on in Demos’ more recent paper, “Pulling Up the Higher-Ed Ladder: Myth and Reality in the Crisis of College Affordability.” There’s no reason to dispute Hiltonsmith’s findings: State’s aren’t subsidizing higher education as much as they used to on a per student basis, hence the tuition cost increases.

However, a quick glance at Bureau of Economic Analysis data tells us that state government spending on higher education has risen overall:

S&L GCE and GI (Higher Ed., 2009 $)

(Table 3.15.16)

…And here’s a chart of state and local higher education expenditures as a share of state spending and receipts.

S&L Higher Ed. Expenditures Share of--

(Table 3.15.5 and Table 3.3)

In constant dollars, state and local governments spent 22 percent more on higher education in 2011 than they did in 2001, and states spend about the same percentage of their budgets on higher education, so why is tuition increasing?

Answer: Fractions have denominators. College attendance grew substantially in the 2000s.

Looking at Digest of Education Statistics data, in 2011 the number of public university students was 23.5 percent higher than in 2001 (Table 303.10). Meanwhile, the total U.S. population only grew 9.5 percent between those two years. (Speaking of fractions, that’s a blunt comparison, but it’ll do.)

This is the drawback of Demos’ per-student spending analysis (and of fractions generally): It misses the systemic shift in demand for college credentials and states’ responses to it. Demos sees no diminishing marginal return to sending more and more people to college, so everyone should be subsidized equally no matter the economic conditions. Therefore, any cuts are wrong irrespective of what goes on in the denominator aggregate. In reality, people treat public higher education like unemployment insurance, except there’s a big difference: At some point higher education becomes mostly about getting ahead of everyone else. At least with unemployment insurance, marginal recipients get to stay alive and are better off finding work when it’s available.

But Demos isn’t ready to reach that insight. Indeed, the paper’s opening sentence is, “In today’s competitive economy, nothing is more important than getting a college education.” On the contrary, today’s economy isn’t competitive. If it were, then employers would bid up workers’ wages. The kind of competition that goes on in today’s economy is zero-sum squabbling. Thus, rather than advocating for positive competition, Demos is promising everything to everyone, as though we can all get ahead of everyone else simultaneously.

I have a few more points worth making in passing. One, the average inflation-adjusted full tuition price at private four-year institutions rose 36 percent from 2001 to 2011 (Digest table 330.10). I am not studious enough to figure out what the net tuition is, but I’m skeptical that this increase hasn’t affected public universities in some way. If the big private research universities spend more money on superstar faculty, for example, I’d be surprised if their public counterparts did not try to keep up. This goes on in law schools all the time. Likewise, I would also not characterize this Demos article as falsifying the Bennett hypothesis just because state subsidies per student play a larger role for tuition price increases at public institutions. I don’t think anyone ever said that.

Two, there are other arguments in favor of public higher education I haven’t addressed. For example, running a large research university in a large metropolitan area can be a magnet for young people and supporting private sector innovation. The for-profit world isn’t all Thomas Edison stuff.

Finally, I’m a fan of the soft, lovey-dovey, bleeding-heart humanities. (They’re also super cheap to produce.) The point here is not that higher education is solely positional competition. It’s that when Demos decries rising public college prices when incomes are stagnant, it’s not seeing a causal relationship. Stagnant incomes are motivating people to go to college, which strains public higher education systems, and state and local governments don’t want to cover everyone. Much of this is undoubtedly due to ideological Scott-Walkerist anti-intellectual budget arsonism, but what’s important are the causes of stagnant incomes. Funding everyone’s college degrees will not create college jobs for everyone.

2015-05-03 Site Update

There are three pages or posts that I’ve updated recently.

(1)  Everyone’s favorite: Lawyers Per Capita by State, thanks to the ABA’s new data on state-level lawyer counts.

(2)  The “leaked” edition of the class of 2014’s employment report has been updated with the ABA’s newer data. I figured it wasn’t worthwhile to post on that twice. The original version is at the bottom but is struck out. (Sorry to e-mail subscribers for accidentally spamming your inbox with the separate updated post. I meant to delete it, not publish it.)

(3)  Finally, the Student Debt Data page is the beneficiary of a long overdue overhaul. It now leans more on the New York Fed’s research.

That’s all.

Michael Simkovic Has a Big Fan on Wikipedia

Wikipedia readers interested in higher education, student loans, and related topics in the United States might be interested to know why so many Wikipedia pages rely so heavily on law professor Michael Simkovic’s paper “Risk-Based Student Loans.” The same goes for those interested in the future of legal education, given Simkovic’s prominence in that field.

A few examples:

  • The page on the “National Defense Education Act” cites “Risk-Based Student Loans” as evidence that the act “followed a growing national sense that U.S. scientists were falling behind scientists in the Soviet Union, catalyzed, arguably, by early Soviet success in the Space Race, notably the launch of the first-ever satellite, Sputnik, the previous year.”
  • The first paragraph of “Bankruptcy Discharge” ends with the statement, “Discharge is also believed to play an important role in credit markets by encouraging lenders, who may be more sophisticated and have better information than debtors, to monitor debtors and limit risk-taking,” and then cites “Risk-Based Student Loans.”
  • The “Higher Education Act of 1965” ends with a citation to Simkovic’s work as well. “The HEA has been criticized for establishing statutory pricing of federal student loans based on political considerations rather than pricing based on risk.”
  • In “Human Capital,” “Risk-Based Student Loans” tells us, “According to signaling theory, education does not lead to increased human capital, but rather acts as a mechanism by which workers with superior innate abilities can signal those abilities to prospective employers and so gain above average wages.”
  • Student Loans in the United States” contains six references to “Risk-Based Student Loans.” Here’s one:

Both subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guaranty agencies. Nearly all students are eligible to receive federal loans (regardless of credit score or other financial issues). Federal student loans are not priced according to any individualized measure of risk, nor are loan limits determined based on risk. Rather, pricing and loan limits are politically determined by Congress. Undergraduates typically receive lower interest rates, but graduate students typically can borrow more. This lack of risk-based pricing has been criticized by scholars as contributing to inefficiency in higher education. [Emphasis added.]

A variation on the higher education bubble theory suggests that there is no general bubble in higher education—that is, on average, higher education really does boost income and employment by more than enough to make it a good investment—but that degrees in some specific fields may be overvalued because they do little to boost income or improve job prospects, while degrees in other fields may in fact be undervalued because students do not appreciate the extent to which these degrees could benefit their employment prospects and future income. Proponents of this theory have noted that schools charge equal prices for tuition regardless of what students study, the interest rate on federal student loans is not adjusted according to risk, and there is evidence that undergraduate students in their first 3 years of college are not very good at predicting future wages by major. [Underlined & italicized emphasis added.]

As of Sunday, April 19, 2015, I’ve found at least 13 pages on Wikipedia that cite “Risk-Based Student Loans.” I don’t intend to find them all.

I discovered the edits after one of them popped out to me. Readers will probably agree that many of the citations appear to be either (a) statements for which “Risk-Based Student Loans” at best serves as a tertiary source, or (b) interpolations into the articles that promote “Risk-Based Student Loans” more than inform the reader on the topic. After sleuthing one of these page’s history sections, and then using Wikipedia’s cruelly titled “WikiBlame” feature to establish who altered these pages, I traced them to two anonymous IP addresses: (May 5, 2012, through May 10, 2012, by my interpretation) and (May 15, 2012, through June 11, 2012). Both are located in Midtown Manhattan, and the links include lists of the altered pages. Most of the edits occurred by May 15.

The current pages have benefited from nearly three years of improvement (although it’s troubling that so many of the pages’ headers carry content alerts given the topics’ importance), but the initial edits evidenced surprising devotion to Simkovic’s work, especially since he wasn’t so prominent then. For instance “Student Loan” received as many as twenty-one citations to “Risk-Based Student Loans,” and twenty were added to Student Loans in the United States. Sometimes it appears as the very first authority listed.

Here’s “Student Loan” early on May 5, 2012:

Click to enlarge. It's unclear why the citation date is 2013.

Click to enlarge. It’s unclear why the citation date is 2013.

Click to enlarge.

Click to enlarge.

The intensity of the edits quickly caught the eyes of some Wikipedia editors. On the evening of May 5, 2012, editor ElKevbo contacted whom I’ll call “Simkovic’s Fan” to inform him (yes, he’s a dude) that using an unreviewed, “self-published source” ran afoul of Wikipedia policies. At the time, “Risk-Based Student Loans” had not been published in an academic journal. Simkovic’s Fan defended his namesake, claiming Simkovic was “an established bankruptcy and credit scholar” with numerous prominent publications to his name. ElKevbo asked to continue the discussion on the Talk page for “Student Loans in the United States,” and added, “I object to widespread use of an unpublished work that has not undergone any sort of peer review.”

There, the dialogue resumed with ElKevbo reiterating that if “Risk-Based Student Loans” stood for the propositions for which Simkovic’s Fan claimed, then more appropriate sources would be available. ElKevbo also condemned “the manner in which this unregistered editor is attempting to ram these edits through without consensus.” Editor Nstrauss also criticized Simkovic’s Fan for un-reverting the restored article to replace his numerous citations to “Risk-Based Student Loans.” (Nstrauss refers to Simkovic’s Fan as “the anon Virginia editor.” I believe that’s a reference to the location of Simkovic’s Fan’s Internet service provider, Verizon, which is in Virginia. The IP address was in New York City.)

Undaunted, Simkovic’s Fan continued inserting citations to “Risk-Based Student Loans” in various related articles. No other Wikipedia editors appear to have noticed the widespread changes.

I’ll be upfront, I suspect Simkovic’s Fan is in fact Michael Simkovic, given the location of the IP addresses and the fact that it’s highly implausible that anyone would have read “Risk-Based Student Loans” in mid-2012 and been so convinced by it as to regard it as a comprehensive, Wiki-worthy treatise on higher education, student loans, bankruptcy, etc. I also think only Simkovic would exaggerate his prominence as “an established bankruptcy and credit scholar.” I’m open to alternative candidates.

There are a few reasons I’m raising this discovery.

One, I have no desire to become an expert on Wikipedia policies, but “Risk-Based Student Loans” is probably inappropriate for nearly all the statements it purports to validate. Wikipedia prefers its articles to be based on secondary sources. Going by its title and abstract, “Risk-Based Student Loans” is not, for example, a secondary source on the National Defense Education Act or signaling theory. In these contexts, “Risk-Based Student Loans” is a tertiary source and it should be substituted for better ones. Moreover, as tertiary sources go, it may not be a neutral one.

Two, many of the remaining citations use passively voiced or weasely worded phrases that just advance Simkovic’s arguments in “Risk-Based Student Loans,” as in “Student Loans in the United States” or “Higher Education Bubble.” When properly rephrased these aren’t “scholars'” or “proponents'” consensus opinions; rather, they’re Simkovic’s, and his positions on these issues are probably too specialized to be relevant to the articles’ topics.

The only place “Risk-Based Student Loans” really ought to be cited is in articles on risk-based lending, and arguably Simkovic is not a sufficiently noteworthy scholar for his opinions to appear there—and certainly not as the first citation. Again, it may not pass Wikipedia’s neutrality requirements.

Three, Simkovic’s Fan has disserved Simkovic’s research efforts by concealing the sources “Risk-Based Student Loans” relies on to make its arguments. To the extent that those authors’ points are relevant to the altered articles’ topics, they are the ones who should be cited, not Simkovic. Simkovic’s Fan should not have treated “Risk-Based Student Loans” as a comprehensive secondary source on anything.

Four, it’s more believable than not that Simkovic himself is the one who in 2012 edited Wikipedia to promote his own expertise and scholarship. If so, he certainly overstepped Wikipedia’s conflict of interest policies on self-citation in a shamefully vain and unprofessional manner, particularly for the reasons stated in the previous point and given ElKevbo’s objection that “Risk-Based Student Loans” hadn’t even been published yet. If true, Simkovic should apologize, and Wikipedia’s editors should reevaluate all references to his article.

Five, I’m not knowledgeable about law schools’ or universities’ policies regarding their instructors’ activities on Wikipedia or similar venues, but even if Simkovic’s Fan happens to not be Simkovic, I really hope academics absorb the lesson established here of watching how their work is used in publicly available Web sites like Wikipedia. Hopefully Wikipedia will also do a better job of monitoring wanton edits to its articles and tighten its requirements on secondary and tertiary sources so other academics’ works aren’t misused this way again.

Finally, I acknowledge that this post might be construed as an “off-wiki attack” of Simkovic that Wikipedians may perceive as harmful to their community. I believe, however, that the harm is minimal given that the edits are nearly three years old and Simkovic’s Fan was not a registered user. I also will not edit any of Simkovic’s Fan’s citations myself.


Even though I’m not the topic of this article, I stipulate that I have never and do not intend to alter any Wikipedia pages to promote this blog, my articles on The American Lawyer, or anything else I have written or will write. I also take this time to thank those who have linked to my work in Wikipedia pages. It means a lot to me that my readers consider my work noteworthy enough for citation for the masses.

Moving On

Well folks, after nearly five years of blogging on legal education and the economy in general, I’ve decided to end this project and take a job (at greatly reduced pay) as the chief copywriter for J.D. Premium Loan LLC’s Web site. Thank you all loyal readers, and I hope you’ll invest in my new project.

America’s Doomed Democracy, or Vox’s Adventure in the ‘Prophetic Fallacy’

A few of my grad school buddies referred me to Vox‘s “American Democracy is Doomed,” by Matthew Yglesias. My erstwhile colleagues crowed in agreement with the author about how everyone is complacent, believing that IT can’t happen here, IT being a cataclysmic collapse of the U.S. government, possibly (hopefully?) including chaos, rioting, hyperinflation, etc. You know, the kind of stuff that only happens in other people’s countries.

As a one-time student of comparative politics (obviously) I’m ambivalent of discussions of IT. On the one hand, yes, IT can happen here, and IT is more likely to occur when Americans think they’re immune to IT for no better reason than “America the fuck-yeah.” On the other hand, Vox‘s argument isn’t nearly as persuasive as my colleagues wish.

To summarize: In times of political gridlock, presidential systems, characterized by their separation of powers between the executive and the legislature, are structurally weaker than parliamentary governments. The latter can rely on flexible legal mechanisms to form governments and do the people’s work, or if not, elect a new government that does. Vox says that the current gridlock in the U.S. government is due to polarization over ideology rather than patronage opportunities as it was a century ago. Ideological polarization is more destabilizing because it’s far less open to compromise. Consequently, it’s no accident that we live in a political era of “Constitutional hardball,” in which the parties (legalistically) break with existing political norms to move their agendas forward. Presidents expand their power via executive orders, Senators use the “nuclear option” to abolish filibuster rules, and state legislatures redraw their Congressional districts mid-decade.

Vox then predicts that a crisis will cause the U.S. system to fail in 20 to 30 years, its long stability only an accident of history. Our fate shall be that of Latin American banana republics—the states where presidential democracy goes to die. Everyone with sense uses parliamentary systems.

I admit I’m sympathetic to the structural argument against presidential democracy, but allow me to raise a few contrary points.

(1) We have really bad cases here.

There are structural reasons in favor of the United States’ future success. It’s in a temperate (for now) chunk of North America, a continent that lacks an east-west mountain range to break up weather patterns to blight us with rainy and dry seasons. Thus, its climate is as favorable to industrialization as to just producing commodities, which tends to devolve into corruption. It’s institutionally descended from competent British political structures, and its present government was founded by enlightenment junkies. The Constitution’s underrated Equal Footing Doctrine has helped create a federal republic that prevents one or two states from dominating all the others. Finally, its biggest domestic and constitutional disaster, the Civil War, might have been prevented if James Buchanan had more aggressively confronted secessionism as Andrew Jackson had two decades earlier. State governments, founded along the same model as the federal government, rarely suffer constitutional crisis that require federal intervention. There is little evidence that the unicameral Nebraska is a beacon of democracy compared to the other fifty states.

In short, as of 1800, I don’t think betting against the U.S. was such a great idea, even if you allow for some variation in its leaders.

By contrast, Latin America is hot or mountainous. Its countries’ institutions are descended from extractive Spanish colonial systems, which have contributed to their replacement with ineffective revolutionary Marxist, macroeconomic populistic ones. They’re cursed with natural resources, including cocaine. Importantly, they also have a “size problem” vis-à-vis the United States. The U.S. is one large “successful” case compared to Latin America’s many smaller failures. U.S. policies can influence Latin American states more than vice-versa, e.g. the cocaine. (Changes in U.S. drug policies would be quite beneficial to Latin America, irrespective of their governments.)

The best example of presidential failure Vox can offer is Honduras’ 2008 constitutional crisis, but that’s a chronically poor, hot country. Perhaps Egypt in 2012-13 would have been a better example.

In sum, it’s not so obvious that parliamentary systems would serve these presidential countries better.

(2) Parliamentary systems don’t always work well either.

Vox raises examples of imposed parliamentary governments and cites them as successes, including Japan’s. Japan does not have a model parliamentary system. Its bicameral parliamentary legislature can cause needless gridlock, and the substantive organization of the more powerful lower house’s districts ensure than rural voters have very disproportionate votes compared to urban ones. In fact, many of Japan’s elections have been held unconstitutional by its own supreme court. Go figure. It is for structural reasons that the Liberal Democratic Party has been in power for decades and has so easily returned to power when it has lost it. During the Cold War, Japan could never be allowed to fail, despite its structural weaknesses (“over-strengths”?). The same goes for West Germany.

Parliamentary systems, for their part, have their own structural problems. Elected governments can recklessly enact damaging legislation that can’t be undone, like Margaret Thatcher’s government, which privatized many of the U.K.’s public utilities and left that country much worse off. Once privatized, utilities can’t be so easily unprivatized.

Parliaments can collapse too. Weimar Germany was totally gridlocked without intervention by President Hindenburg. That might be construed as an argument against presidential power, but the gridlock occurred within the legislature first, not between the legislature and the executive, and the Weimar president wasn’t a powerful, separate political institution as it is in the U.S., though he could select chancellors.

Finally, Europe with all its parliaments has done a worse job fixing their economies after the Great Recession. The U.S. response, while awful, has still been better. I hardly doubt anyone wants Hungary’s rigged parliament for themselves.

(3) Gridlock is the symptom, not the cause.

The more accurate description of the issue Vox is respond to is that democracy’s biggest problem, irrespective of systems of government, is when the minority rejects the legitimacy of the majority’s rule. In other words, the system’s failure doesn’t lead to the collapse; rather, the collapse leads to the system’s failure. The question we’re concerned with, though, is how does that play out institutionally? In Japan, the system is so lopsided that minority parties have token political power. As long as the people are mostly satisfied, though, they grit and bear it. This is barely a success.

In the U.S., there was one attempt at minority secession. Now, it appears the minority wants to rule the majority against their will. They can’t, so they dig their heels in at every turn. Here I found Vox to be straining to take the both-parties-are-responsible-for-gridlock line while feinting at self-satisfied centrists who regularly do so. Did the Senate Democrats use the filibuster to oppose judicial nominees in the mid-2000s? Yes. Does Obama assertively use executive orders (immigration prioritization) and existing legislation (the Clean Air Act on carbon emissions) to enact his agenda? Yes. Is that equivalent to Republicans who more recently threatened to default on the national debt or shut down the government to repeal a health care law? Ha ha. No.

When the parties are reversed, things work differently. If Democrats controlled Congress and faced a Republican president, they wouldn’t obstruct the budget, prevent the president from appointing his officers, or threaten to default on government bonds just to defund popular legislation. They might be pushovers as an opposition party, but they’re much more willing to patriotically compromise. Vox‘s counterpoint that George W. Bush was a gregarious fella (a debatable point) hated by Democrats ignores the fact that when Democrats did control Congress during his administration (barely), they didn’t wage a scorched earth campaign to utterly undermine him.

If anything, the lesson for Democrats is that they need to articulate to the public that the Republicans’ “Constitutional hardball” is selfish anti-majoritarianism, not principled opposition.

(4) Beware the “prophetic fallacy.”

I think Vox uses its structural arguments to then advance vague, unfalsifiable predictions about the future, the “prophetic fallacy.” Yes, some day every government will fall, and among them the U.S. will be appreciated as the nation-state that gave humanity popular sovereignty and the first lunar landings. But that’s not the same thing as successfully arguing that the U.S. government will fail for structural reasons whereas a parliamentary one would not. Vox ignores too many variables like geography, climate, history, and external international factors to make that case.

To some extent, Vox‘s argument shoehorns political reality (the “symptoms” in the previous section) into its structural thesis without discussing the future of that political reality. For one, the Republican Party supposedly has serious demographic problems. Simultaneously, it’s not an accident that Democrats’ presidential candidates regularly win the popular vote and northern and coastal states. Aside from not confronting Republican obstructionism more publicly, their biggest mistake is their watered-down economic policies against abstract inequality and pro-trade for the corporate elite. (But hey, we all know there are clear ideological differences between the parties, right?) The biggest reasons they don’t control Congress are gerrymandering in the House and slow turnover in the Senate. I don’t think anyone seriously expects Republic control come 2017.

Vox then resorts to fear-mongering:

What if a disputed presidential election coincided with a Supreme Court vacancy? What if the simultaneous deaths of the president and vice president brought to power a House Speaker from the opposite party? What if neither party secured a majority of electoral votes and a presidential election wound up being decided by a vote of the lame duck House of Representatives? What if highly partisan state legislatures start using their constitutional authority to rig the presidential contest?

Okay, I can play this game too. What if demographics and odious Republic presidential nominees help Democrats take over Congress? What if Congress then amends the Reapportionment Act to require states with more than five representatives to draw multimember proportional representation districts? What if global warming shifts party alignments to the wet east versus the dry west?

Vox just assumes political gridlock will go on forever without discussing why, and then it sneaks this assumption into its incomplete structural doom scenario.

My principal point in today’s frolic is to say that people shouldn’t be swayed by the mediocre comparative politics (and international politics) or the rhetorical sleight-of-hand Vox uses to argue that the U.S. constitutional system is doomed to collapse for structural reasons. I’m in favor of structural reform in the U.S., particularly making Congress more representative of the country and the president more vulnerable to Congressional disapproval, whether by lighter impeachment/conviction standards or shorter terms of office. Regular readers might be surprised to hear this, but I’m optimistic about what the U.S. will look like 20 to 30 years from now.

What I don’t want to see in 20 to 30 years from now is Vox writers—Yglesias or otherwise—using evidence of salutary political changes that contribute to systemic reform to vindicate this article. Vox promises humiliating crisis; the future had better deliver. IT ala Honduras does not equal “reform” like the Progressive Era. That’s the “prophetic fallacy.”

Correction: 13 Schools Didn’t Report Graduate Debt to U.S. News

I wrote in my post on 2014 law graduate debt that Seton Hall did not report graduate debt data to U.S. News. Due to an accidental error in my data collection I omitted it, and I have now updated the original post on the topic. Excepting Belmont, it appears that 13 law schools did not submit graduate debt data to U.S. News, so that’s an improvement. I will not report any additional corrections, making changes only to the post itself.

71 Percent of Lawyers Work in the Legal Services Sector

71 percent of employed lawyers, that is. We’re not talking about people who are on the rolls but aren’t working.

I haven’t carefully read through all of Michael Simkovic’s and Frank McIntyre’s most recent analysis in law graduate earnings, but it looks like they’re still uninterested in exploring the possibility that law grads’ earnings are attributable to demand-side factors, like price or income elasticity of demand for lawyers’ services. Because they don’t show us that law students who complete all the required law school course work without graduating have the same earnings as law graduates, anything they say about a JD premium is premature. Such an analysis is crucial because one of their own citations, David Card’s 1999, “The Causal Effect of Education on Earnings,” indicates that law grads earn substantially more than the trend would suggest. This finding screams for testing, but Simkovic and McIntyre aren’t careful enough researchers to do that.

Thus, it follows that their comparisons between law grads and college grads in “Timing Law School” are equally inadmissible. Indeed, I may not bother commenting on “Timing” at length at all.

However, I did decide that a little procrastination is good for the human spirit (and entertaining to the reader), so I poked around “Timing” to see what errors I could find. I’ll showcase one.

On page 17 Simkovic and McIntyre write:

Based on initial outcomes for recent graduates and qualitative factors, Henderson and Zahorsky argue that the legal profession is experiencing a “structural shift” due to globalization and technological change.34 Others point to a decline in the size of “legal services” (law firms) relative to GDP.35 What this means for law school graduates is uncertain, since most legal services workers are not lawyers,36 and many law graduates work in fields other than legal services.37

Footnote 36 uses the Bureau of Labor Statistics’ Occupational Employment Statistics (OES) database to show that “out of more than 1.1 million legal services workers, only 375 thousand were lawyers. Other occupations include paralegals, secretaries, bookkeepers and computer support and business specialists.”

And footnote 37 says:

Around 60 percent of law graduates practice law. Simkovic and McIntyre, supra [“Economic Value of a Law Degree”] at 252. Of those working as lawyers, around 65 percent work in “legal services.” United States Department of Labor, Bureau of Labor Statistics, supra note 36. Some of the non-lawyers working in legal services have law degrees.

In other words, the authors bury in a footnote the fact that 65 percent of lawyers work in legal services, so they can claim that it’s unclear how economic swings affecting the legal services sector would in turn affect law grads because most workers there aren’t lawyers. Being mindful of the distinction between law grads and lawyers, it’s nevertheless pretty bizarre to believe that the one industry law school prepares people for most would have a trivial impact on their earnings. The only alternative interpretation is for Simkovic and McIntyre to show that the legal sector is laying off everyone but its lawyers—and admittedly (again, in a footnote) malemployed law grads.

The foregoing aside, their math is still incorrect. It’s true that 375,000 legal sector lawyers out of the 592,670 total in the OES equals 63 percent, but that’s not the full number of lawyers. Why? Because the OES omits self-employed workers, which feature prominently in the legal profession. This is an pitfall that I either first noticed or was pointed out to me when I started writing on law schools nearly five years ago, so it’s amusing to see Simkovic and McIntyre make it.

In 2012, the BLS’s Employment Projections program found 759,800 employed lawyers, of which 374,900 were legal sector wage-and-salary employees. According to the BLS’s estimate of the distribution of lawyers among industries (xls), 165,700 lawyers were self-employed workers. It’s just about impossible for these folks to not be working in the legal sector, and indeed, if one looks at the Bureau of Economic Analysis’ National Income and Product Accounts tables, one finds that self-employed workers are included in the category “Persons Engaged in Production by Industry” (Table 6.8D).

As a result, 540,600 lawyers out of 759,800 lawyers—71 percent—work in the legal services sector, not 63 percent. These scant 8 percentage points sure make it look more persuasive to me that what goes on in the legal sector influences law grads’ earnings. (Oh, and I add that another 17 percent of all lawyers work in government. Is that sector robustly hiring lawyers?)

I don’t expect those 8 percentage points to persuade Simkovic and McIntyre, though. They’ve gotten plenty of mileage asking the legal profession to accept on an untested, pure human capital hypothesis that law school pays off even if the legal sector implodes. They can at least include self-employed lawyers in their adverse footnotes.


Get every new post delivered to your Inbox.

Join 171 other followers