Reconsidering the Conventional Wisdom on the Legal Job Market - Part III

This is the third of three posts on the current state of the legal job market.  In the first post, I discussed the preliminary results of a study I did of employment of recent graduates from my law school and explained why nine-month job data does not tell the whole story on employment.  In the second post, I explained why I am skeptical of the idea that the current state of the legal job market is the result of structural change.  In this post, I discuss Bureau of Labor Statistics projections about the future of the legal job market.

The Bureau of Labor Statistics Projections. 

Recent projections by the Bureau of Labor Statistics have received a lot of attention in discussions of the legal job market.  For example, Eric Posner recently wrote on Slate that “the Bureau of Labor Statistics estimated that 218,800 new legal jobs would be created between 2010 and 2020.”  There is a significant mismatch between this number and the projected number of law graduates over the same period, and it is understandable why many people have raised concerns about them when talking about the future of law schools.

I think we need to be careful, however, in reading too much into these projections.  I have two specific concerns about the numbers.  Before I get to them, I want to note that the BLS is a remarkably user-friendly government agency.  Fearing a huge, impenetrable bureaucracy, I asked a research assistant to try to find me someone to talk with about the projections.  She came back ten minutes later saying that I could just call and they would connect me to the right department.  When I did call, a human being picked up the phone, and connected me to Michael Wolf, the Branch Chief of the National Employment Matrix, who was happy to talk to me about the statistics.  It was incredibly nice to not have to find my way through an automated phone maze to find someone to talk to.

Mr. Wolf explained to me that the job statistics are based on two surveys.  The first is the Occupational Employment Statistics survey.  This survey goes to employers throughout the economy (including government employers).  The responses are typically filled out by Human Resources people at each employer.  The second is the Current Population Survey, which is designed to help catch people who are self-employed.  For our purposes, the Current Population Survey should capture solo practitioners.  The data from these surveys are combined to form the base year data on employment – that is, a picture of employment in the current year.  Projections of future employment are then based on macroeconomic factors, tailored to each specific industry.  Estimates of job openings factor in both expected new jobs and expected retirements.

The BLS job statistics therefore have two basic components – the base year data, which is based on surveys of current employment, and projections of future employment, which are based on applying certain projected macroeconomic assumptions onto the base year data.  I think there are reasons to be cautious in interpreting both sets of data.

We need to be cautious in interpreting the base year data because the people included in the category “Lawyer” are people who are identified by the HR people filling out the survey as lawyers.  I should emphasize that I am not criticizing the HR people who complete the survey – the survey is designed to be based on their responses, and the “Lawyer” category is not designed to be tied in any way to having a JD degree or admission to the bar.  Some jobs typically held by lawyers have their own, separate category.  Take a look at this table.  Scroll down to category 23-1010, Lawyers and Judicial Law Clerks.  Look over towards the right hand side, and you will see 218.8 – this is the 218,800 job openings projected for 2010-2020.  This category, as its name implies, combines both Lawyers and Judicial Law Clerks, each of which has their own category immediately below.  The number for category 23-1011, Lawyer, is right below, with 212,000 job openings projected for 2010-2020.  Look right below that to 23-1020, Judges, Magistrates, and Other Judicial Workers.  Many (though not all) of these people will have a J.D., but are not included in the Lawyer category.  Nor are people with J.D.s who are legislators, other elected officials, law professors, community organizers, lobbyists, people in policy positions, people in business positions, people working in non-lawyer positions for NGOs, bloggers at legal tabloids, FBI agents, or any of the other positions that people with J.D.s might fill but not be described as a “Lawyer” by the person filling out the survey.  I would imagine that most of the people who take “JD Preferred” or “Professional” jobs, as described in my first post, would not be categorized as lawyers in these surveys.  As I mentioned in my first post, some of these other jobs are good, some are not.  The crucial point here is the one I mentioned above – the “Lawyer” category is not synonymous with either having a J.D. or being a member of a bar.

I should emphasize that there is nothing whatsoever wrong with the BLS doing the survey this way.  We just need to be careful in how we interpret their data.  The one thing I would criticize the BLS for is this statement:  “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.”  According to Mr. Wolf, this statement is based on a comparison between the projected number of Lawyer jobs and the number of law school graduates taken from Department of Education statistics.  The overall conclusion may or may not be correct, but there is a mismatch between these two sets of data.  Not all people who graduate from law school go on to get a job that would fit in the Lawyer category.  (There was some discussion in the comment thread to my second post about whether the dramatic decine in law school enrollment has brought law school enrollment into line with what we might expect in the future job market.).

We need to be cautious in interpreting the predictions of job growth because they are just that – predictions.  If you have any experience working with long-term projections, you will know one thing with certainty – they are pretty much always going to be wrong in one direction or the other.  The assumed growth rate has a tremendous impact on the numbers, and actual reality is almost certain to differ from the assumed growth rate.  To illustrate how projections can differ, take a look back at the 2002 survey data.  In that year, the base year survey had 695,000 lawyer jobs.  Based on an assumed 17% growth rate, the report projected 813,000 lawyer jobs in 2012.  (Look at page 85 – under category 23-1011, you will see 813 under the 2012 column.).  The 2010 base year data had 728,200 lawyer jobs, with 801,800 projected for 2020.  (Look at row 23-1011 – the Judicial Clerk stand-alone category is new to 2010, but the 23-1011 Lawyer category is the same in both the 2002 and 2010 surveys.)  In other words, in 2002 the BLS projections had more lawyer jobs for 2012 (813,000) than there in fact were in 2010 (728,200) and are projected for 2020 (801,800).  The difference is largely in the assumed growth rate.  The significant point here is that projections will typically differ from reality, often in major ways.  Maybe lawyer jobs in 2020 will be significantly higher than the projected 801,800.  Maybe they will be significantly lower.  We won’t know for sure until we get there.  The projections are useful in some ways, but they do not tell us with certainty about what the future will hold.

Concluding Thoughts

I have made three major points in this series of posts.  First, I have argued that based on data on what graduates of the Widener-Harrisburg classes of 2010 and 2011 are doing now, many more recent law schools graduates are getting legal jobs than the nine-month job data would suggest.  Second, I have explained why I am skeptical that the current anemic state of the job market is the result of structural, as opposed to economic, factors.  Third, I have explained why we should be cautious in our interpretation of Bureau of Labor Statistics data on the legal job market.

I will close with two other points.  First, I think that an important concrete step that we could take to improve graduate employment rates is to move the timing of the bar exam from the summer after graduation to the summer after the second year of law school.  As I explained in my first post in this series, I think that bar timing is one part of the story of why nine-month data does not provide a full picture of graduate employment.  Moving up the bar exam would help even in a more robust economy where more students are getting jobs within nine months of graduation, because graduates who landed jobs could start working sooner.

Second, nothing in this post suggests that we should not be concerned about student debt.  At a few points in this series, I mentioned as an aside that I think it is wrong to focus on first year salaries when talking about law school affordability.  I do think that – many entry level legal jobs (clerkships, ADA positions) have relatively low salaries but typically provide graduates with experience that can lead to higher paying jobs later.  Entry level small firm jobs also often don’t pay a high salary to start, but the salary goes up over time.  I also think that statements about graduates’ ability to service their debt that do not take cost of living into account paint with too broad a brush.  A given salary goes a lot farther in, say, Harrisburg PA, than it does in New York City.  This said, we could always use better and more thorough salary data, especially data that captures salary changes as a lawyer progresses through her career.  I hope to include some data on salary in future iterations of my alumni study.  Further, legal academics should be concerned about cost and student debt issues.  Constant tuition increases of above the rate of inflation are inherently unsustainable.  Finally, cost issues have come up at various points in the comments to this series.  I plan to address cost issues in a future post.

[Update - Comments policy.  I welcome pushback on any point that I made in any of the three posts in this series.  I have a think skin, and I welcome hard questions.  That said, I will delete any comment that doesn't actually engage in the subject of the post.  If you think I am wrong on, say, the BLS data, explain why.  Find another place on the internet to post things like "All law professors are lying scumbags."]

Comments

[Ben Barros]

MacK, I disagree with your characterization of what law schools did. I unfortunately don't think it is a good idea for me to engage in that discussion due to the pending litigation. I would say, however, that if you understand FRCP 26, you will see why I have a good incentive to get my facts right.

Interesting question about the BLS data, which is actually the point of this particular thread. I'll have to think about it further. I think it reinforces my core point - we have to be careful before we make any broad pronouncements about BLS data. As you suggest, there may be counting issues.

[Theodore Seto]

Barros' analysis of the BLS projection is the best I've seen to date. Another way of asking the question is: How many lawyers will be hired over the next 10 years through HR departments? Answer: Not as many as law schools will graduate. Should this disturb us? Not necessarily.

[Ben Barros]

Embarrassed, I've been careful to state what I've assumed and what I haven't. I've also provided arguments for my positions. It would be great for you to actually engage in them, and to provide actual evidence or arguments about why you disagree with them.

The weakness of your comments is well illustrated by your point 5, which is on the actual subject of this particular post. You accuse me of making an assumption "That the BLS predictions will prove to be quite pessimistic." Here is what I actually said: "The significant point here is that projections will typically differ from reality, often in major ways. Maybe lawyer jobs in 2020 will be significantly higher than the projected 801,800. Maybe they will be significantly lower. We won’t know for sure until we get there. The projections are useful in some ways, but they do not tell us with certainty about what the future will hold." Can you tell the difference?

[MacK]

Trackpad issues -

I meant to say "you also need to be concerned about exhibiting confirmation bias or being perceived as trivialising the consequences of the employment situation you describe." I think some early posted called you on what looked like trivialisation.

[MacK]

Ben - I do actually have a daily working knowledge of Rule 26.

I do think that you need to ask yourself a question - if (a) you "disagree with [my] characterization of what law schools did" but (b) "don't think it is a good idea ... to engage in that discussion due to the pending litigation" why are you starting a thread where the issue is so central to the debate? What possible point can there be in going into an elephant house where you cannot discuss the room full of elephants, or the smell of the manure on the floor?

Frankly, if such an big issue is "off limits" and if you have the interests to protect that your invocation of Rule 26 implies, you should not have started this thread - I would not have let you if you were my client.

[Ben Barros]

MacK, I don't think that follows. I will say that the project that I reported on in my first post started before the lawsuit was filed. I am reporting on research on the current state of the legal job market. My post, my thread, I'll talk about what I want on it. You can talk about whatever you want; here, if it relates to the subject of the post; elsewhere if it doesn't.

[Stan]

For those that are unaware, this is the lawsuit that Ben is referring to:

http://www.abajournal.com/news/article/judge_allows_suit_claiming_widener_law_school_posted_misleading_job_stats_c/

[Embarrassed to be a law professor]

Ben,

I wasn't taking your last post at face value because your conclusion that "projections... do not tell us with certainty about what the future will hold" is so silly. Your series of post is clearly intended to suggest that law school won't be an absolutely horrible bet for a large number of prospective law students, especially at those schools (like yours) that send far less than 50% of their students to long-term, full-time JD-required jobs within 9 months of graduation. That view is only accurate if you run the table on the five issues I highlighted.

[Ben Barros]

Embarrassed, I want my posts to be taken at face value. I think you are reading into them things that are not there. And to call the statement about projections silly, is, well, silly. Long term projections are always wrong, one way or the other. You also point to nine month data when I explain why it is a mistake to do so in my first post.

[BoredJD]

You've made a very well-reasoned and supported case for your position. Truthfully it's much better than anything put out by the pro-law school crowd to date. But ultimately, there are still many important questions left unanswered, especially relating to debt, salaries, and the type of entry-level jobs. And there are several other uncertainties that weigh against going to law school. Maybe the entry-level job market for BAs will improve much faster than the JD job market? When faced with declining applicants, law schools may engage in abrupt and significant tuition hikes, like Hastings did last year. I'm sure Hastings 1Ls didn't plan on a 15% tuition increase, but it happened anyway.

This gets back to what MacK is saying about credibility. I don't question your credibility or your math. But law schools have demonstrated an astonishing degree of callousness and ambivalence over the past few years. As a result, whenever there is an uncertainty it is likely to be resolved against going to law school. And even if you show that the job market is not so bad, there's still the other side of the coin- the debt.

I'd like to hear your position on whether, even if what you say is true, you think the law schools should be doing anything at all to bring down costs for students.

[Ben Barros]

BoredJD, thanks. I'll say more about cost in the future. But I'll say this for now. I worry a lot about cost. I don't know what the "right" cost is, and I need to think about that issue more. I'm not even sure that that is precisely the right question. I do, however, have two strongly held views on cost. First, we need to be concerned about graduating student debt. Second, law schools, and other institutes of higher education more generally, need to stop increasing tuition at above the rate of inflation. (I know that real tuition can differ from sticker tuition, but sticker tuition still matters). Even if someone could prove with certainty that law school was _not_ too expensive right now, it would get too expensive at some point if the trend line does not change. This is true for higher education more generally. My kids are 11 and 9, and I shudder to think of what undergraduate tuition will cost in 10 years.

I'd also say that law schools are complex institutions, and it can be hard to cut costs quickly. (And yes, I know that it is easy to pick out some targets here and there). I think that the current crisis will likely lead to tuition increases in the short-term, as schools struggle to balance their budgets. But schools are shrinking and re-trenching, which will put them in a good position to lower costs in the future if that is a priority for them. I hope it will be.

I don't expect that to be a completely satisfactory answer, but it is what I have for now.

[MacK]

When I say there is a counting issue with the BLS data on the number of people employed in roles that require bar passage, e.g., lawyers, judges, etc. what I am alluding to is that depending on how the BLS adds the numbers up at various points there is a difference in the number employed - I am not saying their data is unreliable. Actually their count is pretty spot-on.

Also, an issue that a law professor missed in looking at BLS data is that occupation is measured by the last reported employment for an individual. If someone is unemployed, their last job is what is used to categorise them. Thus a JD who worked as a Barista, even if he/she passes the bar will not be counted as an unemployed lawyer - even if Starbucks fires him/her - but as an unemployed barista. Similarly, a JD who passes the bar will not be counted as a lawyer if they accept any other sort of job - burger flipping to real estate. Indeed, if I understand the classification, an never employed after graduation JD holder who passes the bar still does not count as an unemployed lawyer. You have to be employed as a lawyer first to be an unemployed lawyer.

This detail was missed not so long ago by another law professor trying to say that very few JDs were unemployed - that the bad job market was not real.

[MacK]

Ben:

There is another problem that one needs to be concerned about with law students. What is the income-delta associated with their JD and is it even positive in many cases. By that I mean does this person have a higher income with a JD than they would have enjoyed without it and three years of work seniority and experience (even before you take the opportunity cost of 3 years of law school into account.) Are they better off?

A second reasonable question is whether the United States (or even Pennsylvania) is better off with this person studying law. After all, law schools are enjoying a large public subsidy in the form of student loan guarantees and IBR. Would US GDP - or the net public welfare have been better off if the person at law school X had simply sought a job and stayed at it for 3 years more. I suspect that on some level this question is closely linked to the income-delta question.

You say that many of your students are bright and intelligent - where do you think they would have ended up if they had not gone to law school - would they have been better off?

[Ben Barros]

MacK, I see how that would be relevant information. I personally have no clue how to get at it - especially the second question. One thing I've been frustrated about is the lack of good information on the legal economy gathered by people who actually specialize in this kind of study. The After the JD project has potential, but I think the American Bar Foundation and others could do a lot more on this front.

[GreatNeckLawyer]

Professor Barros,
I applaud your efforts and more importantly willingness to enter the lion's den. I especially appreciate your acknowledgment of the tuition problem at both law schools and higher education in general.

I think the problem stems from the rent-seeking behavior of all higher education institutions, enabled by the Department of Educations under both political parties. Until recently, nobody mentioned cost containment. One would think that if the Department of Education is going to backstop education loans, then someone would stop for a second and say we don't want the taxpayers of this country to be burdened with overwhelming debts because 1) it hurts other overall economic activity ($1 trillion outstanding now- largest form of non housing debt) and 2) we don't want taxpayers on the hook. This might be a way to attack the cost issue, as you mentioned that you would subsequently address.

There finally seems to be some push-back in terms of vocal responses and application/enrollment declines at many higher institutions- law schools included. One can see this from the ratings downgrades by S&P, Moodys and Fitch.

[MacK]

Ben -

Over the years I have seen a lot of studies that:

A. Correlated education level (high school, college, maybe GPA - and IQ (there are correlations to LSAT) to income;

B. GDP to average educational attainment.

I think it is feasible.

[Steven]

I don't think what I've done is empty name calling. You don't get to be a law professor and argue in defense of law school without assuming some moral responsibility for the plight of your graduates. You chose to mount a defense of the status quo, so you should be prepared to defend the morality of that choice. According to your own data, many of them are suffering.

[Ben Barros]

Steven, from my first post: "I am also not arguing in defense of the status quo in legal education – as I’ve explained in prior posts (here, here, here, and here), I worry about many facets of legal education, not least the student debt problems caused by ever-increasing tuition." I care a lot about my current and former students. I've said so. See, e.g., my response to a thoughtful comment from one of Professor Tamanaha's former students in thread on the first post.

By basic problem with your comments is that you seem to have formed an opinion of what I am saying without actually reading the posts.

[Rob Rosen]

Ben - Thanks for your work. Did you get insight into how BLS deals with retirement issues? 218K doesn't sound like too much of a mismatch with law school graduation rates if we add to it 100K+ retirees over the decade. Independently of the BLS, it is worth noting that part of the structural adjustment in large law firms is an age one (juniors are being retired/fired) and the structural change that you document regarding title companies is their hiring junior attorneys to do work that seniors once did as a money-making sideline.

[Jeff Matthews]

Ben, re: your 10:04 pm post, I think the gist of your position is that, "It could be bad, but we just don't know." I wouldn't wage a $200,000 bet on a prospectus like that. "We don't know is pretty weak."