August 02, 2018
NALP data: When there are fewer law school graduates, there are fewer law school graduates with jobs (Michael Simkovic)
NALP entry level starting salaries and employment don't predict much of anything about what will happen three to four years from now when those currently contemplating going to law school will, if they choose to attend, graduate into a quite possibly very different economy. Nor is NALP data directionally very different from overall economic data like the employment population ratio which is released sooner.1 And while those graduating into a stronger economy do earn more (at least for the first few years), these cohort effects fade over time, those who graduate in a recession still benefit from their educations, and attempting to time law school is a money-losing proposition because of the opportunity costs of delay.
Nevertheless, every year NALP data on last year's graduating class is released with great fanfare, including a press release. In news that will surprise no one who has tracked the rise in the overall employment population ratio, it turns out that the class of 2017 had better employment outcomes than other classes since the recession. Or as NALP sexes it up for journalists, "Class of 2017 Notched Best Employment Outcomes Since Recession." (88.6% employed 9 months after graduation for the class for 2017, compared with 87.5% for the Class of 2016).
But, NALP unhelpfully informs us, there's a catch--the total number of law jobs for law graduates was lower even though the employment rate was higher.
This should not surprise anyone who is aware that the number of law school matriculants last peaked in 2010, and graduating class sizes have therefore been falling since 2013. From 1994 through 2015, the correlation between annual % change in graduating class size and annual % change in number of law graduates with jobs has been 0.78 (i.e., class size explains 61 percent of the variation in number of law jobs for recent graduates. (data here) The correlation is even higher since 1999 when reporting started covering a higher percent of the class--0.91 correlation, meaning that class size explains 82% of the variation in the number of law graduates with jobs.
There aren't fewer jobs available for lawyers. To the contrary, there are more lawyers working now than there were pre-recession according to both Bureau of Labor Statistics and Census Data (BLS OES, ACS, and CPS). There are fewer recent law graduates working as lawyers because there are fewer recent law graduates.
The employment market for educated workers is large and the number of law graduates is small relative to this market. Law schools are too small to move the market much on the supply side by admitting more or fewer students. Just as the typical investor could sell all of his or her shares of Apple without moving the market for shares of Apple (much less the S&P 500), the typical law school can admit as many or as few students as it wants without changing the overall percent of law graduates who will find jobs. (However, there’s some evidence that at the national level, the share of recent law graduates working as lawyers varies inversely with class size).
The usefulness of NALP data is questionable (at least for many of the uses to which it is often put), but NALP could help by limiting its reporting to employment rates and starting salaries. Discussing changes in the absolute number of law graduates with jobs is simply a confusing ways of telling people that fewer people entered law school 4 years ago than 5 or 6 years ago.
NALP should also contextualize its employment ratios by comparing them to the overall U.S. employment population ratio during the same time period (i.e, March of 2018), which was 60 percent overall, and and 79 percent for those age 25-54 according to BLS and the OECD, compared to 89 percent for recent law graduates, according to NALP.
1 (Similarities are greatest when one restricts it to those who are both young and well-educated using CPS data.
UPDATE: 8/3/2018 The correlations and r-squared were originally reported based on levels rather than % change from previous year. The numbers have been updated to reflect a model based on differencing (% change from prior year), which brings the explanatory power from 1999 forward down from 96 percent to 82 percent.
July 21, 2018
I recently pointed out some factual problems with claims by Northwestern lecturer Mark A. Cohen. Cohen, writing in Forbes, claimed that faculty terminations at Vermont Law School were proof that student debt was unsustainable, not only at Vermont, but at all law schools except for a handful of elite institutions.
Here’s the problem: When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low.
When Professor David Herzig pointed out some of the relevant literature to Mr. Cohen, Cohen responded with the following angry outburst on twitter:
“That "evidence" has been panned by every credible source I know. The methodology and premises upon which the conclusions were drawn are laughable and fly in the face of real studies. I was a bet-the-company trial lawyer for many years--the "study" you cite is 3rd rate fiction.”
Low student loan defaults for law graduates are consistent with the peer reviewed literature, such as The Economic Value of a Law Degree (final version here), Timing Law School (final version here), and related work by me and Frank McIntyre about the value of legal education. Law degrees generally provide benefits that are substantially greater than their costs, even toward the low end of the distribution, across race (final version here), sex and college major, both before and after the financial crisis, and including those who graduate during a recession. More than the top 75 percent of law graduates are getting good value relative to a terminal bachelor’s degree.
Strong student loan performance is also consistent with the After the JD study (compare waves I, II, and especially III), which showed rapid income growth for graduates of even low ranked ABA-approved law schools, and eventually, six-figure median full-time incomes.
Law students’ low default rates have featured in the business strategies of many student lenders, who are eager to refinance law student debt for interest rates substantially below those offered by the federal government.
Professor Herzig asked Mr. Cohen to be more specific about his sources and objections.
Mr. Cohen has yet to specify what he believes is wrong with the methodology in the studies—which were authored with a PhD labor economist, peer reviewed and carefully vetted, use high quality government data, use mainstream methods and assumptions that are well established in labor economics, and include sensitivity analyses and robustness checks. The results have been replicated by other researchers.
Mr. Cohen also has yet to specify which “real studies” he thinks use better data and more widely accepted methods, and why. He has yet to explain how his litigation experience qualifies him as a labor economist, statistician, and literary critic. Or why, as a seasoned litigator, he thinks so many of the lawsuits against law schools have been dismissed.
July 20, 2018
There are economies of size in legal education. Larger law schools can support a more highly specialized faculty, offer students a wider range of course offerings, amortize fixed costs over a larger number of students, and negotiate better terms with their vendors. As some law schools have shrunk to below efficient scale, mergers may offer an opportunity to quickly increase size and improve quality without increasing local capacity beyond sustainable levels. As Stephen Bainbridge has previously noted, many industries respond to declining markets with a wave of mergers. Law schools could follow suit.
Thus far, there have been mergers between (1) Mitchell and Hamline and (2) the two campuses of Rutgers (Camden and Newark).
Cornell has put together a Google map showing all of the ABA-approved law schools in the country.
The map is a bit out of date--U.C. Irvine is missing, and Mitchell and Hamline are still separate law schools. Nevertheless, the map is useful for thinking about which law schools could potentially pool their resources because:
1) They are geographically proximate
2) They serve a reasonably similar profile of students
3) They are organizationally similar (public vs. private; standalone vs part of a university; secular vs. religious)
The map only shows 1 (it would be nice to have color coding for other info), but those who are familiar with law schools can fill in the blank information. In areas like Boston, San Francisco, Chicago, and the Greater New York City area, which have a high density law schools in close proximity to one another, to my mind there are possibilities that suggest themselves.
July 19, 2018
The trouble at Vermont Law School isn't due to "unsustainable" debt levels for students--but it might be because of unsustainable tuition discounting and underinvestment in outreach (Michael Simkovic)
Vermont Law School recently stripped many of its tenured faculty of tenure. A recent article in Forbes by Mark Cohen, a lecturer at Northwestern, claims that Vermont's financial problems are a sign that tuition is too high and student debt is unsustainable.
The data doesn't support his contention. When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low. Vermont Law School's 3-year cohort default rates over the last 3 years available (classes of 2012-2014) are between 0.3 and 1.2 percent, while the national average cohort default default rate across educational institutions is close to 11.5 percent. Nor are Vermont graduates defaulting in large numbers on their Perkins loans. The 2016 default rate, the most recent available, was 3.5 percent for Vermont, versus an average across all educational institutions of around 11.5 percent. Perkins loans are not eligible for Income Based Repayment, so Vermont's relatively strong performance is likely not due too a disproportionately large share of its graduates enrolling in IBR. (Not all Vermont grads will practice law in Vermont, but lawyers in Vermont are actually paid reasonably well--around 120,000 on average according to the BLS).
Vermont Law School's problem is not that tuition is so high that student debt levels are unsustainable relative to students' post graduation income and other financial resources. Rather, Vermont's problem seems to be that there are too few students, and because of aggressive tuition discounting intended to attract them, the students who matriculate are paying too little to make the school financially healthy. Vermont Law School's 2016 529 shows that around 90 percent of incoming students received some scholarship, and half of students receive half tuition scholarships or better.
Vermont Law School could try to respond by offering even more scholarship, but its competitors have deeper pockets, and can outspend Vermont until it runs out of room to maneuver. Escalating a price war that Vermont will surely lose would be foolish. Degrading the quality of its education by relying on more lecturers and adjuncts risks causing a death spiral in which quality, enrollments, reputation, and revenue per student all continue to drop.
To be successful and sustainable in the long run, Vermont may need to find a way to attract students--not just from Vermont, but from across the region--other than offering a cut-rate price. Rather than compete on price, Vermont should find a better way to reach out to those students who are most likely to find Vermont's offerings appealing.
July 18, 2018
New York Times contributors get an unpleasant surprise when they try to write about higher education without bashing it (Michael Simkovic)
Ellen Shell, a journalism professor at Boston University, recently wrote an article for the New York Times arguing that while higher education confers vitally important advantages in the labor market, education alone is not enough to overcome the disadvantages of childhood poverty and to promote greater equality. The purpose of Shell’s article was apparently to advocate for more comprehensive efforts to overcome poverty, above and beyond greater investment in higher education.
In the hands of editors at the New York Times, the title of Professor Shell’s Op Ed became "College May Not Be Worth It Anymore."
Several readers who contacted me about this article assumed that Professor Shell was an elitist who believed that the poor did not deserve to be as well educated as her own children. Apparently so did the author of the study she cited. He says that to the extent that Professor Shell may have intended to downplay the benefits of education to poor children, she misunderstood his work.
I contacted Professor Shell to ask about the discrepancy between the contents of her article and its title, and whether New York Times editors had changed her title.
She wrote back that she was surprised by the title, that it did not match the contents of her article, that it must have come from the editor, and that it did not endear her to the administration at her university.
I knew to ask Professor Shell before jumping to conclusions because I have also been surprised to find that New York Times editors attached inapposite, critical titles to my work. And I have repeatedly heard similar complaints from other professors who have written Op Eds for the New York Times and from sources who have been misquoted by the New York Times and had their professional reputations damaged as a result.
Most readers of newspapers assume that the writer listed in the byline of a newspaper article or Op Ed is responsible not only for the text of an article, essay or Op Ed, but also for the lead or title that appears at the top.
At the New York Times, that is not the case.
Editors choose the titles of Op Eds or articles. Because many readers only read the lead or title, and not the full article, this gives senior management at media companies an enormous amount of power. This power comes without public scrutiny, since usually only the name of the “author” (and not the editor) appears in the byline of the article.
July 13, 2018
Colleges and universities typically pay educated professionals a fraction of what similar individuals earn in the private sector (typically around 60 to 80 cents on the dollar) in return for greater job security and academic freedom. In recent years, some law schools have effectively reneged on this bargain, slashing compensation, de-prioritizing research support and/or accepting outside funding that compromises academic freedom, and terminating even some tenured faculty members.
Recent reports suggest that Vermont Law School has taken this to the extreme.
According to the ABA Journal, Vermont Law School recently stripped tenure from 14 of its 19 tenured professors. This was done without a formal declaration of financial exigency, and according to faculty members and the AAUP, apparently without the consent of faculty members typically required for such decisions.
Professors were reportedly offered severance equal to 6 months salary and health benefits, but only if they agreed to sign a non-disclosure agreement and full release of all legal claims. This package is no more generous than severance pay routinely offered to long-serving (but untenured) employees of for-profit corporations.
June 11, 2018
Have education advocates sold out students' and educators' privacy for money from technology firms? (Michael Simkovic)
The Department of Education's failures to safeguard student data against leaks have led to repeated Congressional hearings over the last few years. (see here, here, and here). Even some of the best state education agencies have also suffered data breaches.
Privacy advocates, student and parent groups, and educators are therefore understandably concerned about sharing even more detailed and personal student information with government agencies that cannot adequately safeguard the information they already have.
A network of think tanks, advocacy groups, and media organizations with links to technology firms have been pushing for extremely intrusive and detailed collection of information about individual students. Disclosures would no longer be limited to aggregated, anonymized data, but rather would include information about individual students. Extant disclosures have already undermined student privacy far more than was anticipated. Student contact lists are commercially available for purchase on the basis of ethnicity, affluence, religion, lifestyle, awkwardness, and even a perceived or predicted need for family planning services. Disclosure of disciplinary records -- which occurs in spite of legal assurances that such data will remain confidential -- can put students at a disadvantage in the job market for a lifetime. (See also here).1
As one expert on technology explained:
"The bill proposes a new system to collect student-level data . . . . And that's where we all should feel a little queasy. Despite the obvious benefits of having access to data . . . the inherent security and privacy concerns of such a system are significant.
The definition of "data in scope" might change over time. And once the data is collected, there it sits, ready to be leaked, breached or worse. Without getting too deep into Big Brother conspiracy theory, there are so many ways for the system to go wrong."
Tech-backed groups want even more data collection mandated by the federal government. Many of these groups are funded by the Gates Foundation and related groups with links to technology firms.
Technology firms have a tendency to have faith in data-driven solutions to problems. But technology firms would also benefit financially from more onerous reporting obligations because technology firms provide compliance and reporting services to education institutions. Rising technology and compliance costs are among important reasons that higher education has become more expensive.
The American Council on Education (ACE) has stopped defending student privacy against these demands after ACE received grants from the Gates Foundation (including one to promote online education) and after ACE was viciously attacked2 by Gates-funded journalists3 for opposing Gates-backed policies.
The American Association of State Colleges and Universities also received a substantial grant from the Gates Foundation around the time it ceased defending student privacy (see also here). So did the Association of Public and Land-Grant Universities (see also here, here, here, here, here) and the American Association of Community Colleges (here, here, here, here, here). (While there may be innocent explanations, the optics are not great).
One of the few remaining defenders of student privacy is the National Association of Independent Colleges and Universities, which represents private non-for-profit universities. However, even NAICU appears increasingly likely to compromise and give the Gates-backed group much of what it wants.
Technology firms might obtain access to extremely sensitive data through a revolving door between the Gates Foundation, the Department of Education, and Edu-Tech firms. Such data could be advantageous when technology firms negotiate the price of technology servicing contracts or compete with education institutions through online offerings.
One wonders if higher education "lobby groups", rather than educating policymakers about the needs of students and universities, have found it more advantageous to lobby higher education institutions on behalf of technology firms.
June 08, 2018
Apprenticeships and online education are not viable alternatives to ABA-approved law schools (Michael Simkovic)
Over the last several decades, both the cost and the quality of ABA approved law schools have increased. Faculty student ratios have fallen. Completion rates have increased, even as diverse groups with historically lower completion rates have become a larger share of the student body. Earnings premiums have increased, and racial disparities have narrowed.
Nevertheless, some critics of law school, concerned by the high cost, have suggested going back to the "good old days" of legal apprenticeships, or using technology to bring down costs. The data does not support apprenticeships or less highly regulated (and less expensive) online or correspondence versions of law school as viable alternatives to ABA-approved law schools.
Several major legal markets (including New York and California) permit prospective lawyers to sit for the bar exam after 4 years of apprenticeship under a licensed lawyer (or 4 years combined law school and apprenticeship). Very few people still try this approach. But for those who do, the bar passage rates are abysmal.
June 07, 2018
June 05, 2018
Should law schools pressure their students to go into low paid, thankless public service jobs? (Michael Simkovic)
A recent report by a Harvard law school alumnus, Pete Davis, points out that law schools like Harvard serve the interests of wealthy elites by training primarily future corporate lawyers. (See also here). This is consistent with the available evidence on graduates’ employment, notwithstanding widely publicized—and dubious—claims of law schools being liberal or left-leaning.
Whether or not this is a problem, and whether schools like Harvard should try to do a better job of training future business lawyers or try to steer their students away from business law, is a matter for debate. Davis appears to believe that business lawyers are incapable of serving important collective interests of society—or at least do not do as good of a job as public sector lawyers. According to Davis, law schools therefore have an obligation to discourage students from pursuing careers in business law.
My view is that the path toward resuscitating the public sector will entail convincing the American people to collectively share the burdens of civilization by voting for higher taxes and higher pay for public servants. Until public servants are paid fairly, no one but the very wealthy should feel any obligation to work in the public sector or encourage their students to do so.
I would argue that business lawyers facilitate incredibly important functions in the service of society. Business lawyers help businesses raise the capital they need so that they can serve the basic needs of hundreds of millions or even billions of people. Lawyers also help firms mitigate risks, comply with government regulations and organize tens or even hundreds of thousands employees and suppliers to work together toward a common goal. That is remarkable, and the economic progress that has resulted clearly is in the public interest.