Friday, April 14, 2017

Another View of the Economics of a Law Degree

OTLSS has been fairly consistent in its fundamental message over the last four years: law school is too expensive overall for what you get, the job market is not favorable and continues to not be favorable to graduates, and what program you get into is a primary consideration assuming you still want to take the plunge.

An unpopular message, of course, if you are involved in legal education.  Especially if you do not have a long history and a large endowment that allows one to be picky about who it lets in.  But the scambloggers don't know anything, of course, so best to dismiss them as whiny losers - which was the extent of the response from the Cartel to scamblogger criticism.  Sure it was couched in fancy terms and attempts to legitimize the argument with dubious economic data, but that was the end result.

People with no dog in the fight, however, would seem to say otherwise, which much more straight-forward data:

 
Per this chart, we seem to know this already.  Law degrees are one of the (inexplicably) most expensive graduate degrees on the market.  MBAs and STEM degrees are significantly less by contrast.  Heck, even certain Arts programs require actual studio space, to say nothing of science, engineering, and medical facilities required to teach their respective subjects.  Law, by contrast?  Pfft, open up a mall storefront and some WestLaw accounts and you're good.  Books and fax machines are expensive, but not THAT expensive.

Well, what about that stellar success that awaits 98.6% of law graduates, or whatever the Cartel advertises as a good job rate nowadays? 

 
Hmm.  Well, eleven years out, Law Grads still have a one-to-one ratio as regards their income and debt burdens.  Doctors are down to 0.90, which is to be expected given their initial high-cost/high-pay scenario.  MBAs and STEM folks are down into the high 0.70s.  MAs sadly seem to increase, which points to why many folks ran into the arms of the Law School Cartel in the first place.  Hey, with no other points of comparison, Law looks better than a career in the Arts...!
 
Lastly, preftige matters, full stop, as can been seen from this last chart:
 
 
It would be hilarious if it wasn't so sobering.  Graduates from non-elite law schools (if you even want to call the top 100 "elite" in the first place) start with TWICE the debt burden, on average, that their preftigeous conterparts, yet still only have the above-referenced 1.0 income to debt ratio eleven years out.  While you see some confirmation of this phenomenon in other fields as well, only in the medical profession does in not seem to matter where you went to school(?), at least as far as economics are concerned.
 
Again, one has to ask: why is law school so expensive?  Why is the data so starkly different than the "positive" trends that are so noticeable in other professions?  How can it possibly cost twice as much to educate a lawyer as opposed to, say, a scientist?  Yes, the law can be complex to the uninitiated, but over time one's knowledge base and skills improve as in any field of study.  The same it true with, say, organic chemistry, for example - people manage to make significant educational strides in fields of that nature as well, but apparently at half the price.
 
In any event, the article closes with the following:  So, if you are seeking an affordable graduate degree that will boost your earning power, what should you do?
 
Yes, indeedily-doodily, that is the question.  It would appear that the data speaks for itself.  Don't go to low-tier law schools on vague and ephemeral notions of "defending liberty," "pursuing justice," or "loving the law," that's for sure.  Also, don't go to law school at all, unless your social capital allows you entre into top programs with a lock on a job prior to starting. 
 
Unless you enjoy having debt equal to your earnings for decades or more, of course.  Sadly, this appears to be the case even in the best of scenarios.



27 comments:

  1. If you look at the source of this, it is someone named Ernest. Ernest overstates lawyer incomes vastly and understates practicing doctors' income. His data is faulty. Notice also that the chart includes only practicing lawyers, only lawyers who work as employees in the private sector, and does not include the hundreds of thousands of solo practitioners with little or no income. It does not include the unemployed lawyers and annualizes the income of lawyers who are underemployed and not able to work full time as a result. The data is actually overly optimistic for lawyers.

    Question is how much worse it gets for lawyers after year 11. People who went to big law and then got a reasonable job afterwards are going start to fall off the charts due to longitudinal lawyer surplus. Their debt is going to go way up in relation to incomes.

    Doctors on the other hand have steadier incomes and will pay off their debt entirely.

    So if you went to year 20, many lawyers would have a higher debt to income ratio than 11 years out. Doctors will be making bank and have no debt 20 years out.

    The big unknown here is exactly how bad unemployment and underemployment and the debt to income ratio becomes for older lawyers.

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    1. I'm too lazy to read the article, so I will take your word for it. I also imagine the figures do not include law school graduates who have never worked as lawyers? (Either because they did not pass the bar or never could find a legal job?) You are right, it makes things look better for JD holders than they really are.

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    2. Well, figures on the income of lawyers should not include the income of people who have never worked as lawyers. On the other hand, those figures also should not be taken as representative of the incomes of law graduates. A common logical error—one that comes up repeatedly on the LSAT, incidentally—is the assumption that what is true of one group (here, lawyers) is true of another (law graduates), without establishing the point.

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    3. Exactly! The schools should be required to enter the unemployed graduates into their average salaries. Then again, it's not as if the pigs would comply anyway.

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    4. The data is from "earnest.com", so it is all self-reported and admittedly not something like a national data set. That said, for those who did report, this is what they found. While I agree that $140k average attorney salary is bogus for large data sets, it might be true for this set.

      What this might mean nationally is that the performance for a JD is "just as bad" as the MA degree concerning debt ratios and pay-back times, which is even worse news...the more data, the worse it looks.

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  2. Hahaha, oh wow. When I saw that article I immediately wondered "how long till I see those charts on OTLSS?"

    I immediately noticed the "lawyers making 140k" data point, which I now use as an easy way to detect articles that are completely full of shit.

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  3. "Top 100" and "Not top 100" is not the correct distinction to draw. How many times do I have to say this? There are four tiers:

    1) Harvard and Yale, maybe also Stanford.
    2) Four or five others.
    3) About eight more.
    4) All of the rest—upwards of 90% of the law schools.

    This distribution is based on outcomes. Only the top three tiers see 40% or more of their graduates get the sorts of jobs—Big Law or federal clerkships—that at least for a few years might realistically support payments on student loans.

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    1. This is probably a post I wish I had read 8 years ago before I enrolled. At least 100 law schools need to shut down just to stabilize the legal market. Do not ruin your life as most graduates are never going to practice law. There are literally no jobs being created and JD advantage is a myth.

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  4. In med schools, probably does not matter that much where one went to med school in terms of of paying off debt as long as one got an MD from a US med school. Would be more challenging to have the top outcomes for DOs and of course the placement rate for international med school grads in residencies is about 50%.

    There are about 18,000 US med school spots each year and they are as good a guarantee of paying off the cost of school as you can get.

    Let's say you go to a top 17 law school. That is say 8,000 people a year graduate from the T17 law schools. A 40% chance of paying off your debt is not that good a bet. And fewer lawyers than doctors can even make that bet.

    Shows you just how badly the American Bar Association has decimated the legal profession with a die hard doctrine of producing the maximum lawyer oversupply by every means, lawful and downright deceptive. The ABA has ruined the career path for most prospective lawyers by becoming a feeder of student loans for the benefit of the law schools and even allowing the NALP to create a wholly fraudulent category of "JD preferred or advantage" jobs where 99% of those jobs neither require a law degree or even find it useful, and most of these employers will be turned off by the law degree unless it is a high level job and the holder also has an MBA.

    With all its faults, the chart suggests that law school is a bad bet, the worse bet among career alternatives for college grads.

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  5. We still have no data on how much better a Harvard Law degree is than say NYU or Georgetown several years down the road. Sort of a big deal for good students who want law school for free.

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  6. Imagine a room with 5 people in it. 4 earn 20,000 a year. 1 earns 420,000 a year.

    The average salary of the room is $100,000.

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    1. I've given the example of nine people with an income of $0 and one with an income of $1M per year: the average is $100k, but who gives a shit?

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  7. https://www.washingtonian.com/2017/04/14/advocates-for-veterans-report-being-denied-student-loan-forgiveness-for-their-public-service/

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    1. Man, that Jason Delisle guy (formerly of the New America Foundation aka Sallie Mae) is a real liar.

      PSLF is "outrageously generous!!!," he screeches. Who died and made him Congress? It's a law, buddy...a law that was put in place to mitigate the effect to public / non-profit entities of the federal government having intentionally driven the cost of education sky-high by throwing 200 billion dollars a year in subsidies at a problem of price!

      I hope this cretin googles himself and finds this post.

      One doesn't have to know anything about economics or the laws relating to federal student loans to spot a garbage argument because it rests on a logical fallacy.

      If we don't forgive the debt, he supposes, the debt will be magically repaid!

      Right, just like removing bankruptcy protection magically put fiat dollars into the pockets of debtors, got the government "repaid" in full, and stopped defaults! Hmm, how is 'extend and pretend' working out for Greece? Or for the EU for that matter?

      I don't why this neo-lefty is fretting about the "cost" to the government / taxpayer (as if the 45 million Americans with student loan debt weren't taxpayers) anyhow.

      Yo, Jason, you should read Paul Krugman and just chill. The federal government can take all losses at no cost to anyone. You just print up the bucks! Oh wait...direct loans are funded with printed bucks...and the guarantees on FFELP loans that default are paid out with...printed bucks...all of which US sovereign debt is left to be paid by said dead-beat student loan borrowers. LOL, I guess we are all fucked!

      I want to occupy this dude's front lawn.

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    2. http://www.npr.org/sections/ed/2017/04/05/522575533/teachers-lawyers-and-others-worry-about-the-fate-of-student-debt-forgiveness

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  8. One way to make something appear prestigious is to charge a lot for it. It could be a pair of thin soled shoes or an old bottle of wine scraped off the ocean floor that tastes like shit. If only I knew is the inevitable future response...and you won't be able to go back in time to correct it.

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    1. That works best when the high price goes along with exclusivity. Law schools, however, charge monstrous fees while also offering their "service" to all and sundry. Cooley alone admits hundreds of people with LSAT scores below 140 (and in many cases probably far below).

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    2. For example: http://www.lansingstatejournal.com/story/news/local/2017/04/06/where-did-all-cooley-students-go/100066686/?fb_comment_id=1392389817475696_1392691857445492&comment_id=1392691857445492#f1b569134a7a87

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  9. Thanks to Nando and Campos, my law school debt is 0, because I didn't go, and my debt to income ratio is zero, and my income to debt ratio undefined.

    Just don't go. While you may initially have a few pangs of regret, these will go away in time, and instead you will find yourself saying "Thank God I didn't go, and Thank God for unanswered prayers."

    The cheapest law degree is one you don't buy.

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    1. Congratulations on avoiding the scam. Almost certainly you would have come to harm by going to law school. Only a masochist should feel pangs of regret over staying out of scam hell.

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  10. You can see how the American Bar Association has devalued law degrees in the huge numbers of contract attorney positions being advertised. These are not secure jobs and they often have no vacation and few or no employee benefits. Contract work is going to be a hard road in terms of paying off law school debt.

    One of the evidences of commoditizing law degrees is that most major law firms will require a law school transcript just to apply to an attorney job. That is a relatively new requirement.

    Someone who graduated from a top college with a 6% acceptance rate and graduated from one of the law schools way at top of the food chain (T3, T6, T8, etc.) you would think has demonstrated enough academic achievement to work at most of the 200 largest law firms, with the possible exception of a few elite law firms that require higher academic excellence.

    But it is not the case that your MIT undergrad and NYU law degree or double U of Chicago degrees, undergrad and law, is enough to get you an interview.

    I cannot not imagine a doctor applying for a job at a private medical group, outside the faculty of a major research hospital, and needing to prove his or her grades were good enough to get an interview.

    You have a further problem that grading curves change over time, so who is able to interpret a law school transcript from several years ago?

    The problem remains that even with two very elite degrees, college and law, a lawyer has nothing in terms of a credential that will even get them into a job interview for a job where the lawyer easily meets the substantive requirements for having the right work experience.

    The ABA has trashed the value of law degrees today, even from the very elite schools. That means the prospects of paying off law school debt or working for long enough at high enough salaries to make the decision to attend law school worthwhile, for those whose law school is paid for, are not good. Even from the best schools, law is a junk degree where one is walking a tightrope, about to fall off into unemployment and underemployment.

    There are so many lawyers to take up the slack, why treat your lawyers well? It takes about a second to replace your lawyers on the job market with a hundred hungry, underemployed lawyers with elite degrees.

    Law perfectly describes the vulnerable employee populations that are taken advantage of by employers.

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    1. It's interesting to learn that law firms have only recently begun to ask for transcripts from law school. I have been asked for my transcript, now several years old. I attended an élite law school and was among the top few students in the class, so I certainly am not ashamed of my transcript; but I am surprised to have to produce it.

      Indeed, some firms now ask for the LSAT score.

      Even with multiple degrees from élite institutions, with good grades to boot, I have struggled to find work. After several months of unemployment, I'm in a precarious job, trying to parlay it into something better. And if that's true for someone with fine credentials, it's true in spades for the typical graduate of Bumblefuck U with a JD from Bubba-Joe's Skule o' Law 'n' Hog Calling.

      I have long said that diplomas are little more than receipts for fees paid (frequently with borrowed funds). Forty years ago, a bachelor's degree meant something. Sixty years ago, even a high-school diploma did. Today, even a law degree could practically come out of a mother-fucking Cracker Jack box.

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    2. The problem is that there are much too many law students and much too many lawyers. It impacts handsome, young, talented lawyers like the LSAT tutor with a Columbia Law degree who was featured in a New York Times article a year ago or so. He had an elite summer job and did not get a third year offer when the bottom fell out of the job market in 2010. He told the Times that he had no idea when he enrolled at Columbia Law that this could happen. I don' know this guy, but he looks like he would be a very desirable guy for any major law firm to snap up. Because of the numbers problem, you have a lot of really good people who have job problems in law. This guy could likely go to an entry level position that paid less than the going rate, but he makes too much as an LSAT tutor to make that decision.

      It is too late for those of us who did not do the diligence at age 20 or even later for those who went to law school late in life and did not have the advantage of the internet.

      I gets worse as lawyers age, because there are fewer jobs the more experienced a lawyer gets.

      One of the disappointments of my life to have made a poor choice of careers with so many options available to me when I was young.

      I think the answer is to focus single mindedly on making a career and maybe even trying to develop one's own business or going to the successful business of another person. If you went to an elite law school and are in your mid-forties, there is still much hope. You will have more and better opportunities to come. Just take the right ones.

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    3. I think the requirement to send in law school grades to get an interview when one has many years of experience as a lawyer is a result of the severe lawyer oversupply. Same thing with the 6 year experience limits on 75% or 80% or more of the open legal jobs in some practice areas.

      I remember reading that in 1980, the Chief Justice of the Supreme Court predicted that with all these law students enrolled, lawyers would be swarming all over themselves for work and he did not know what would become of them. Exactly this prediction has happened. If Old Guy is in an insecure job hanging in there by a thread, as many, many lawyers are, notwithstanding excellent academics, this is totally and very predictably a result of severe lawyer oversupply. The ABA has simply allowed much too many tickets to be sold and inexplicably, the ABA is still in charge of accrediting lawyers. The fact that so many law graduates have been severely damaged for life does not matter to the U.S. government.

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  11. Chairman of Whittier College Board of Trustees announces closure of Whittier law school:

    https://www.law.whittier.edu/index/news/article/a-message-from-the-whittier-college-board-of-trustees

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  12. Idiot Bastard Whittier Students screech at Trustees:

    Video courtesy of Above the Law:
    https://www.youtube.com/watch?v=hMGoUXR3EUA

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  13. The internet has totally changed the job market for lawyers to the worst. There are now over 100 applicants per attorney job. The employers have caught on and limit a huge percentage of the hires to very recent graduates. So you go to law school and need to change jobs - wait in line with over 100 lawyers for each job. At that point, going to a top law school may get you into a pile of 50 or 60 applicants the employer may look at. You still have to beat out 60 people for the job. At this point, age is very important. The older you are the less likely to get the job.
    By going to a top law school, you are deferring the problem of a large number of applicants and very few acceptances to the time you first need to change jobs as a lawyer. At 35, coming from a top firm, maybe not impossible. At age 55 coming from that top firm, your employment options and earnings will be very limited. Once you hit 65, no one will hire you. Your degrees have no value.

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