Lawyering Jobs

November 21st, 2017 / By

I’ve written before about the Bureau of Labor Statistics’ Employment Projections program. Every other year, the statisticians associated with that program count the number of existing “lawyer” jobs as part of their work. This count is especially useful because it includes both salaried and self employed workers. The biennial counts thus include solo practitioners, law firm partners, and practicing lawyers who earn a salary from any source.

The counts offer an excellent opportunity to track the growth of lawyering jobs. Here are the number of “lawyer” jobs reported in selected years since 1978, when the program began:

  • 1978:   380,000
  • 1988:   582,000
  • 1998:   681,000
  • 2008:  759,200
  • 2010:  728,200
  • 2012:  759,800
  • 2014:  778,700

As I’ve written before, those figures show that the number of jobs for lawyers is still growing–but the pace of growth has slowed considerably. Between 2012 and 2014, the number of lawyering jobs increased by just 9,450 positions per year.

The Bureau of Labor Statistics recently released the figures for 2016, and the news is sobering. In 2016, the Bureau counted just 792,500 “lawyer” jobs in the economy. That’s an increase of only 13,800 positions since 2014–or just 6,900 positions per year. That’s better than the anemic growth between 2008 and 2014 (which included periods of job loss), but worse than growth in most other two-year periods.

These figures, unfortunately, coincide with ones released by the ABA for recent graduates. Since 2013, the number of “lawyer” jobs for new JDs has fallen each year, from 26,653 for the Class of 2013 to 22,930 for the Class of 2016. (Figures for the Class of 2017 won’t be available until next spring.) Graduating classes have been smaller, so the percentage of employed graduates has improved somewhat–but the number of jobs found by those graduates has declined.

To me, the BLS projections underscore the wisdom of creating programs that allow college graduates to perform some aspects of law practice. There is plenty of demand for legal services–just not at the price demanded by fully licensed JDs. Rather than continue producing JDs at rates the job market can’t absorb, schools would be wise to consider alternative programs.

These figures also counsel caution about recent upticks in LSAT takers. More students may be considering law school, but schools need to remain wary about the employment market. If we admit more students, will employment rates fall again?

* Note: The BLS statistics for “lawyer” jobs report only positions listed under that category. Some BLS tables also report small numbers of judges and law clerks, but I have eliminated those categories for simplicity.

 

 

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Jobs and Salaries for New Lawyers

April 30th, 2017 / By

What does the job market look like for new lawyers? The ABA will soon release statistics about the Class of 2016, and NALP will add additional information by the end of the summer. But the Bureau of Labor Statistics (BLS) gives us an advance peak.

Each year, BLS reports job numbers and salaries for a wide range of occupations. This series of reports includes only salaried positions; for the legal profession, the series omits both solo practitioners and equity partners in law firms. Still, since most new graduates seek salaried positions, these numbers offer a useful measure of the profession’s ability to absorb and pay new members.

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Job Growth

March 26th, 2016 / By

How many lawyering jobs does our economy support? Is that number still growing? Data from the Bureau of Labor Statistics (BLS) shed light on these questions. Every other year, BLS counts the number of existing “lawyer” jobs as part of its Employment Projections program. This count is particularly useful because, unlike some other BLS reports, it includes both salaried and self employed workers. These biennial counts thus include solo practitioners, law firm partners, and practicing lawyers who earn a salary from any source.

By examining these counts, which are available online since 1978, we can chart growth trends for lawyering jobs. (For a full description of the jobs included in these figures, see the note at the end of this post.)

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Compared to What?

April 7th, 2015 / By

Some legal educators have a New Yorker’s view of the world. Like the parochial Manhattanite in Saul Steinberg’s famous illustration, these educators don’t see much beyond their own fiefdom. They see law graduates out there in the world, practicing their profession or working in related fields. And there are doctors, who (regrettably) make more money than lawyers do. But really, what else is there? What do people do if they don’t go to law school?

Michael Simkovic takes this position in a recent post, declaring (in bold) that: “The question everyone who decides not to go to law school . . . must answer is–what else out there is better?” In a footnote, Simkovic concedes that “[a]nother graduate degree might be better than law school for a particular individual,” but he clearly doesn’t think much of the idea.

People, of course, work in hundreds of occupations other than law. Some of them even enjoy their work. Simkovic’s concern lies primarily with the financial return on college and graduate degrees. Even here, though, the contemporary options are much broader than many legal educators realize.

Time Was: The 1990s

Financially, the late twentieth century was a good time to be a lawyer. When the Bureau of Labor Statistics (BLS) published its first Occupational Employment Statistics (OES) in 1997, the four occupations with the highest salaries were medicine, dentistry, podiatry, and law. Those four occupations topped the salary list (in that order) whether sorted by mean or median salary. [Note that OES collects data only on salaries; it does not include self-employed individuals like solo practitioners or partners–whether in law or medicine. For more on that point, see the end of this post.]

Law was a pretty good deal in those days. The graduate program was just three years, rather than four. There were no college prerequisites and no post-graduate internships. Knowledge of math was optional, and exposure to bodily fluids minimal. Imagine earning a median salary of $109,987 (in 2014 dollars) without having to examine feet! Although a willingness to spend four years of graduate school studying feet, along with a lifetime of treating them, would have netted you a 28% increase in median salary.

But let’s not dally any longer in the twentieth century.

Time Is: 2014

BLS just released its latest survey of occupational wages, and the results show how much the economy has changed. Law practice has slipped to twenty-second place in a listing of occupations by mean salary, and twenty-sixth place when ranked by median. One subset of lawyers, judges and magistrates, holds twenty-fifth place on the list of median salaries, but practicing lawyers have slipped a notch lower.

About half the slippage in law’s salary prominence stems from the splintering of medical occupations, both in the real world and as measured by BLS. We no longer visit “doctors,” we see pediatricians, general practitioners, internists, obstetricians, anesthesiologists, surgeons, and psychiatrists–often in that order. These medical specialists, along with the dentists and podiatrists, all enjoy a higher median salary than lawyers.

There are two other health-related professions, meanwhile, that have moved ahead of lawyers in wages: nurse anesthetists and pharmacists. Both of these fields require substantial graduate education: at least two years for nurse anesthetists and two to four years for pharmacists. But the training pays off with a median salary of $153,780 for nurse anesthetists and $120,950 for pharmacists.

Today’s college graduates, furthermore, don’t have to deal with teeth, airways, or medications to earn more than lawyers do. The latest BLS survey includes nine other occupations that top lawyers’ median salary: financial managers, airline pilots, natural sciences managers, air traffic controllers, marketing managers, computer and information systems managers, petroleum engineers, architectural and engineering managers, and chief executives.

How much do salaried lawyers earn in their more humble berth on the OES list? They collected a median salary of $114,970 in 2014. That’s good, but it’s only 4.5% higher (in inflation-controlled dollars) than the median salary in 1997. Pharmacists enjoyed a whopping 28% increase in median real wages to reach $120,950 in 2014. And the average nurse anesthetist earned a full third more than the average lawyer that year.

If you’re a college student willing to set your financial sights just a bit lower than the median salary in law practice, there are lots of other options. Here are some of the occupations with a 2014 median salary falling between $100,000 and $114,970: sales manager, physicist, computer hardware engineer, computer and information research scientist, compensation and benefits manager, purchasing manager, astronomer, aerospace engineer, political scientist, mathematician, software developer for systems software, human resources manager, training and development manager, public relations and fundraising manager, optometrist, nuclear engineer, and prosthodontist (those are the folks who will soon be fitting baby boomers for their false teeth).

Law graduates could apply their education to some of these jobs; with a few more years of graduate education, a savvy lawyer could offer the aging boomers a package deal on a will and a new pair of choppers. But the most common themes in these salary-leading occupations do not revolve around law. Instead, the themes are math, science, and management–none of which we teach very well in law school.

Twenty-first Century Humility

Lawyers will not disappear. Even Richard Susskind, who asked about “The End of Lawyers?” in a provocative book title, doesn’t think lawyers are done for. We still need lawyers to fill both traditional roles and new ones. Lawyers, however, will not have the same economic and social dominance that they enjoyed in the late twentieth century.

Some lawyers will still make a lot of money. As the American Lawyer proclaimed last year, the “super rich” are getting richer. But the prospects for other lawyers are less certain, and the appeal of competing fields has increased.

If law schools want to understand their decline in talented applicants, they need to look more closely at the competition. What do today’s high school students and middle schoolers think about law? Those students will choose their majors soon after arriving at college. Once they choose engineering, computer science, business, or health-related courses, a legal career will seem even less appealing. If we want potential students to find law attractive, we need to know more about their alternatives and preferences.

We also need to be realistic about how many students ultimately will–or should–pursue a law degree. As citizens of a healthy economy, we need doctors, nurse anesthetists, pharmacists, managers, and software developers. We even need the odd astronomer or two. Law is just one of the many occupations that make a society thrive. The twenty-first century is a time of interdependence that should bring a sense of humility.

Notes

Here are some key points about the method behind the OES survey. For more information, see this FAQ page, which includes the information I summarize here:

1. OES obtains wage data directly from establishments. This method eliminates bias that may occur when individuals report their own wages. The survey, however, includes only wage data for salaried employees. Solo practitioners (in any field) are excluded, as are individuals who draw their income entirely from partnerships or other forms of profit sharing.

2. “Wages” include production bonuses and tips, but not end-of-year bonuses, profit-sharing, or benefits.

3. Although BLS publishes OES data every year, the data are gathered on a rolling basis. Income for “1997” or “2014” reflects data gathered over three years, including the reference year. BLS adjusts wage figures for the two older years, using the Employment Cost Index, so the reported wages appear in then “current” dollars. The three-year collection period, however, can mask sudden shifts in employment trends.

4. BLS cautions against using OES data to compare changes in employment data over time, unless the user offers necessary context. In particular, it is important for readers to understand that short-term comparisons are difficult (because of the point in the previous paragraph) and that occupational categories change frequently. For those reasons, I have limited my cross-time comparisons and have noted the splintering of occupational categories. The limited comparison offered here, however, seems helpful in understanding the relationship of law practice to other high-paying occupations.

5. For the data used in this post, follow this link and download the spreadsheets. The HTML versions are prettier, but they do not include all of the data.

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What Use Is the BLS?

March 28th, 2015 / By

What is the Bureau of Labor Statistics (BLS), and what can it do for you? The BLS is an independent statistical agency that measures “labor market activity, working conditions, and price changes in the economy.” You’ve sampled BLS wares if you’ve relied upon the Consumer Price Index, unemmployment rates, or average wages.

One program within BLS tries to project employment growth for hundreds of different occupations. The Bureau issues these forecasts every two years, with each projection spanning a decade. The most recent projections, released in December 2013, attempt to forecast occupational growth between 2012 and 2022.

Why does BLS spend your tax dollars trying to do this? Most parents can’t predict what their teenagers will do next week. How does the BLS think it can predict the behavior of an entire economy, including growth rates in so many different occupations?

The truth is that it can’t, at least not with the level of accuracy that some users would like. There are just too many variables, not to mention acts of god and war. The latest evaluation of BLS’s occupational projections found that, when BLS projected occupational growth rates between 1996 and 2006, it failed to foresee the following:

* Immigration would be higher than the Census Bureau predicted
* Women’s labor force participation would decline
* Terrorists would hijack 4 jets, level the WTC, and damage the Pentagon
* The United States would go to war with both Afganistan and Iraq
* A housing bubble would double home prices over the decade
* Internet-based services would cut the number of travel agents by a third

It was a tumultuous decade, but so are most decades. Given the twists and turns of human history, which affect the type of work that humans do, why does BLS even bother with occupational projections?

Better Than the Alternatives

Like democracy, BLS’s projections seem to be better than the alternatives. In particular, these forecasts are better than ones that rely solely on historical trends. In 2010, the Bureau tested its model against four different “naive models” that drew solely on historical data. A common naive model (and one that the Bureau tested) predicts each occupation’s growth rate based on that occupation’s rate of growth during the previous 10 years. Another variation, also tested by the Bureau, uses the most recent five years to project future growth.

On three out of four measures, the Bureau’s predictions outperformed all of the naive models. Predicting the future is difficult, especially when that future includes human actions. The Bureau’s experience, however, suggests that past performance is not the best guide to occupational growth; adding other ingredients to the forecast improves information.

Who Needs It?

Even if BLS predictions are better than naive models, who needs these predictions? Why engage in such an imprecise exercise? BLS began projecting occupational growth after World War II in order to help returning veterans identify promising career paths. The program persisted as a way to serve “individuals seeking career guidance,” as well as “policymakers, community planners, and educational authorities who need information for long-term policy planning purposes.”

If BLS wants students to use its occupational projections for “career guidance,” then why does it warn against using the projections to predict labor shortages or surpluses? Don’t students examine these projections precisely to determine which occupations are growing and which ones are declining? How is occupational “growth” different from a labor “shortage” in that occupation?

The two concepts are related, yet different. Remember that BLS projects (however imperfectly) the number of people who will actually fill an occupation a decade later. The Bureau doesn’t estimate how many people will want to work in that field or how many will prepare to do so; that’s not its task. The Bureau also assumes that the labor market will “clear.” In other words, if demand falls for workers in a particular field, those workers will go elsewhere. They won’t simply hang around the edges of the occupation, constituting a surplus labor supply.

This doesn’t mean, however, that the number of workers preparing to enter an occupation is irrelevant to predicting job and salary prospects for that occupation. If the pipeline of aspiring workers is easy to quantify, and if the occupation itself is tightly defined, then comparing the worker supply to job projections can yield useful information. If labor supply greatly exceeds likely job openings, then one of three things are likely to happen: (1) some of the workers will take other jobs; (2) wages in the occupation will decline; or (3) both.

What About Law?

The worker pipeline is relatively easy to specify in law. Almost no one becomes a lawyer without obtaining a JD, and there is evidence (p. 72) that most law graduates want to practice law at least for a while. The occupation itself is also well defined. Law graduates can apply their education to a range of law-related jobs, but there is widespread consensus on which jobs are “lawyering” jobs that require bar admission. These are the same jobs that graduates, on the whole, prefer.

Under those conditions, it is useful to compare the number of law school graduates to projected job openings for lawyers. That is what I did several years ago. At that time, the number of students progressing through the law school pipeline greatly exceeded the number of lawyering positions that BLS projected. A substantial number of those graduates, I predicted, would have to find work outside of law practice. Wages for entry-level lawyers might also fall.

That is, in fact, what happened. My recent study of new lawyers admitted to the Ohio bar confirms that, four and a half years after graduation, one quarter of licensed lawyers were working in jobs that did not require a law degree. After accounting for graduates who didn’t take or pass the bar exam, it appears that a full third of recent law school graduates are not practicing as lawyers.

The good news is that my study suggests there may be more job openings for lawyers than BLS projected. Not enough to satisfy all of the graduates who want those jobs, but more than BLS estimated.

Meanwhile, there is also evidence that wages have declined for entry-level lawyers. The median starting salary reported to NALP for the Class of 2008 was $72,000; five years later, the median reported salary for the Class of 2013 was $62,467. The comparison looks even worse after adjusting for inflation: If the median wage had remained at the 2008 level, it would have reached almost $78,000 by 2013. The real median wage for new lawyers fell by 19.8% over those five years.

Will law graduates who were unable to find a lawyering job find satisfaction in other jobs? They might; probably some will and some won’t. Will they prosper financially from their law degree, regardless of occupation? They might, if historical patterns hold. To the extent their wage losses represent effects of the recession, will they make up those differences later in their careers? Again, they might if historical patterns hold. But for students investing more than $100,000 in a legal education, it’s worth considering as much information as possible. That includes BLS projections for their desired occupation.

These projections are also useful–when combined with other available information–for legal educators to consider. The career prospects of our graduates should inform the educational programs we design, as well as the information we offer potential applicants. BLS projections represent only a small piece of this puzzle, but they offer one perspective on how the labor market for lawyers is performing.

What About Those New Projections?

The BLS recently changed the way in which it measures occupational “separations.” That’s an estimate of the number of people who will leave a particular occupation. This measure, in turn, affects the projection of job openings; when a worker leaves an occupation, that departure often creates a job opening. Under this new method, BLS will project more lawyering jobs than it did in the past. That sounds like good news for aspiring lawyers, and it is–in part. The change also reveals some unsettling trends in our profession, which I’ll explore in a future post.

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How Many Lawyers?

March 20th, 2015 / By

A few years ago, I used employment projections from the Bureau of Labor Statistics to project the number of job openings for licensed lawyers during the current decade. At the time, BLS was the best available source for that type of projection; it remains a useful resource today. The BLS makes these predictions precisely to help workers, employers, and policymakers understand the likely demand for workers in particular occupations.

Why should law schools care about these predictions? As Michael Simkovic and Frank McIntyre show in two recent papers, a JD historically has conferred financial advantage (compared to entering the workforce with just a BA) even if graduates did not work as practicing lawyers. If law graduates reap financial returns from their degrees, regardless of the jobs they take, does it matter how many jobs they find as practicing lawyers?

Some scholars (including me) wonder whether financial returns to a law degree will remain as high as they have been. But let’s leave that debate aside for now. Let’s consider, instead, why law schools should care about the number of grads who will find jobs as licensed lawyers–and what that number might be.

Who Cares?

Law graduates, students, and prospective students seem to care. Several sources indicates that, although some graduates enjoy work that does not require bar admission, graduates overall prefer to practice law. Every year, for example, NALP publishes a table showing how many graduates are employed but still seeking work. These tables consistently show that grads in jobs that require bar admission are far less likely than other grads to be seeking new jobs. In 2010, for example, just 15.1% of the graduates in “bar required” work were seeking other employment, while 48.1% of those in “JD preferred” jobs and 49.0% of grads in “other professional positions” were doing so. [Sorry, source not available online]

Similar preferences emerge later in the career. The After the JD longitudinal study found that law grads working in non-lawyering jobs were less satisfied than those in lawyering positions. The distinction held both seven and twelve years after law school graduation. [No online link for that one either, I’m afraid, but check p. 70 of the AJD II and AJD III reports.]

If graduates care, I suspect that students and prospective students care as well. And if only out of self interest, law schools should care too. We can tell students that a law degree offers many options, and that historically those options have paid off financially compared to a BA alone, but the current crop of students isn’t buying that pitch. If they want to practice law, they’re still coming to law school. But if they’re looking for intellectual stimulation, a degree with diverse options, or other benefits, they seem to be going elsewhere.

This is partly why I think law schools should examine the way we package the education we offer. We’re good at teaching close reading, careful writing, and critical thinking–and we could teach those skills to undergraduates. Talented undergrads want those skills, and employers will pay a premium for them. At the same time, we’re good (and could be better) at teaching advanced legal doctrine and other intellectual skills essential for law practice. We can keep providing that education to a more focused group of JD students who primarily will become lawyers.

So How Many Lawyers?

This brings me back to the question I started with: If prospective law students care about whether they will get jobs as licensed attorneys, and if law schools should care about that question (if only to attract students), about how many law graduates are able to get jobs that require bar admission?

My recent study of law graduates in the State of Ohio gave me some numbers to work with. I tracked job outcomes for all 1,214 new lawyers who passed the Ohio bar exam in 2010. In December 2014, about 75% of them held jobs that required a law license. Most of the rest were employed, but in other types of work.

My population included only licensed lawyers, not law graduates who didn’t take or pass a bar exam. One thing we know about the latter group is that they can’t be practicing law. So, after performing some calculations to account for that group, I estimated that about two-thirds of 2010 graduates were practicing law four and a half years after graduation.

Will the same percentage hold for graduates from other years and in other states? I don’t know; we often have to deal with limited data and isolated points of reference in making real-world plans. I explain in the paper why I think Ohio offers a useful perspective, and why I think the annual number of new bar-required jobs will remain stable in coming years. I’ll write more about both of those issues here soon.

The Good News

The good news for both law schools and prospective students is that my estimate is higher than the BLS’s historic projections. I estimate that, four and a half years after graduation, about 29,250 members of the Class of 2010 are practicing law. Some of the jobs are dubious solo practices; some undoubtedly are part-time, temporary, and/or low paid. Some of them are jobs that a graduate secured only after failing and re-taking the bar exam. Prospective students need to take those factors into account, not simply consider whether they’ll be able to find a job practicing law.

When all is said and done, though, graduates are finding more “lawyering” jobs than BLS once predicted–although not as many as BLS predicts through a proposed revision to its forecasting method. I’ll comment on the latter in another post.

The other piece of good news is that, if my calculations are correct, and if law school attrition rates remain constant, then about 84.5% of the current 1L class will find lawyering jobs within a few years after graduation. That level of job placement may be sufficiently attractive to maintain enrollment at current rates.

The Bad News

I couched that last sentence carefully: “to maintain enrollment at current rates.” Better placement in lawyering jobs will reassure prospective law students, but I doubt it will draw them back to law school in droves. Law schools, meanwhile, will need to worry about bar passage rates as they enroll students with lower credentials. Declining bar passage rates will discourage potential applicants both directly and indirectly, as they depress the percentage of graduates working in jobs that require bar passage.

Schools will also vary in the percentage of graduates they place in jobs requiring bar admission. Some will place more than 85% in those positions; others will place much less. If I’m right that potential students care about getting jobs that require a law license, enrollment declines will continue at the latter schools.

Summing Up

In making predictions, both here and in my paper, I offer some very specific numbers. I do that to offer a point of reference for debate; I can’t say exactly how many members of the Class of 2017 will find lawyering jobs, or how many students will apply to law school in 2018. I do think, though, that JD students care about their odds of securing a job that requires a law license and that law schools need to account for that preference. To do that, it helps to know as much as we can about operation of the legal market.

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Why Can’t We Support More Lawyers?

January 15th, 2014 / By

I wrote recently about the discouraging labor market projections published by the Bureau of Labor Statistics. BLS has–once again–lowered its estimate of the number of new lawyers that the U.S. economy will absorb over the next decade.

Why is BLS so bearish about job prospects for lawyers? The agency devotes an issue of its flagship publication, the Monthly Labor Review to the methodology and trends that underlie its workplace projections. Here are some of the forces that are restraining job growth for lawyers.

The Great Recession

The BLS economists open by noting that the “length and nature of the recession have left lasting scars on the economy.” Recovery has taken longer than even pessimists predicted: Although the Great Recession ended more than four years ago, growth in GDP remains slow.

Unfortunately, BLS predicts that “growth will continue to be slower than was originally hoped.” Robust growth often follows a downturn, but the last recession contributed to a “new normal” in which GDP will grow only about 2.6% per year. That’s better than growth rates during the last few years, which have witnessed growth of only 2.1% annually, but it falls well below earlier growth rates. Between 1992 and 2002, GDP grew 3.4% annually. BLS does not expect that type of growth to return any time during the next decade.

The effects of the Great Recession, in other words, have become structural rather than simply cyclical. This was not an ordinary downturn with a robust rebound. The impacts are lasting. They will dissipate some day, for law as well as other occupations, but that “some day” is still more than a decade in the future.

Decreased Labor Force Participation

The shock of the Great Recession distracted many of us from an economic malaise that has been building quietly over the last twelve years: a declining percentage of our adult population is participating in the workforce. To determine labor force participation, BLS calculates the number of adults (age 16 or older) who are employed or looking for work. That number, divided by the total number of non-institutionalized civilians, yields the labor force participation rate.

In 1947, when BLS started tracking this economic indicator, 58.3% of the adult population was in the workforce. That percentage rose and fell modestly over the next two decades. After 1970, as both women and baby boomers entered the workforce, the participation rate rose steadily–reaching a high of 67.1% that persisted from 1997-2001.

Since 2001, however, labor force participation has been falling noticeably. By 2012, the percentage had dropped to 63.7%, a participation rate that was last recorded in 1979. BLS projects that the rate will continue to fall over the next decade, reaching 61.6% by 2022.

A decline in labor force participation might seem like good news for job seekers: fewer participants means less competition for existing jobs. The negative effects of decreased labor force participation, however, far outweigh any benefits. Declining workforce participation has at least three negative effects:

1. Fewer workers means less productivity. GDP will grow slowly over the next decade partly because of our decreased labor force participation.

2. Declining workforce participation also means fewer people with income to spend on goods and services. Households with a single worker have less disposable income than households with two or more workers.

3. The declining labor force participation rate, finally, means that each worker will support more non-workers. Workers won’t be purchasing goods and services just for themselves; they’ll also be paying both taxes and private money to support the elderly, children, and others who cannot work. In 2012, our economic dependency ratio was 102: For every 100 people in the workforce, there were 102 people supported by the workers. That ratio will climb over the next decade, reaching 106.5 by 2022.

This ratio, notably, is far from the highest one that our population has supported. In 1975, when women still faced employment roadblocks and most baby boomers were still in school, our economic dependency ratio was 126. That ratio, however, steadily decreased during the late twentieth century, falling as low as 91.7 in 1992. Decreasing dependency fostered growth during the late twentieth century; now the trend has reversed.

The Bottom Line

BLS predicts that the long-term effects of the Great Recession, combined with our changing demographics, will impose significant restraints on the economy. Consumers will have less money to spend on goods and services, especially on those that are discretionary.

Lawyers and legal educators tend to think of legal services as essential rather than discretionary, but consumers clearly think otherwise. That is particularly true for middle-class individuals, a group that many law schools and recent graduates hope to attract as new clients.

Historically, middle-income consumers have been reluctant to pay going rates for legal services. Technology and more efficient practice management may now allow us to deliver services at lower rates to these consumers; that’s a noble goal that we should pursue as aggressively as possible. This prospective client base, however, is a moving target. With slow economic growth and more dependents to support, these individuals will have even less money to spend on legal services than they did in earlier decades. We will have to make legal services very efficient and very economical to attract considerable business.

We also have to be realistic about the fact that consumers choose among goods and services. Even the largest corporate clients have budgets; they prefer to spend their profits on executive compensation, developing new products, and opening new markets than on legal bills. For small businesses and individuals, budgets are even tighter. People will almost always buy food, shelter, and health care before they purchase legal services. Many of them may also prefer iPhones, internet connections, and football tickets above legal advice. The BLS projections incorporate, not what people would buy in an ideal world, but the mix of goods and services they are likely to purchase under projected economic conditions.

The constraints sketched here don’t touch on the special factors that are reducing demand for legal services. Those include technology, increasing competition in a profession that once benefited from substantial economic protection, and new management practices. Those structural changes are affecting our industry in particular ways. Meanwhile, we face the same structural changes (lasting impact of the Great Recession and changing demographics) that affect the economy as a whole. This is an era of slower growth and increased dependency–both significant dampers on the economy.

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How Many Lawyers?

January 7th, 2014 / By

How many lawyers will our economy support during the next decade? As legal educators, we are often bullish about our industry. We know our graduates’ talents, and we see vast unmet needs for legal services. We also know that legal rules are more complex than ever. From those perspectives, it seems logical that demand for lawyers will increase sharply–especially as the effects of the Great Recession fade.

But our perceptions can mislead us. Most of us lack economic training; we also know little about the macroeconomic data that inform labor market forecasts. As academics, we don’t even know much about the economics of law practice. Our very position in the industry, finally, tempts us to take a rosy view of the job market.

The best source of labor market predictions, in our industry and others, remains the Bureau of Labor Statistics (BLS). Every two years, the Bureau prepares a ten-year forecast of job openings in more than 800 occupations. The Bureau uses extensive data and complex macroeconomic models to prepare those predictions. Its economists analyze the economy as a whole, accounting for demographic shifts, technological change, complex interactions among industries, and consumer purchasing power. The final projections are much more reliable than anything that armchair experts might offer.

The Bureau recently released its projections for occupational job openings over the next decade. How will the legal profession fare? The news remains depressing.

Declining Projections

In 2008, at the height of our profession’s prosperity, the BLS projected that 240,400 job openings for “lawyers” would occur in the ten years between 2008 and 2018. That estimate encompassed all jobs practicing law, including work done by solo practitioners. It also counted both jobs generated by expansion and those required for replacement. The projection did not include jobs for judges and judicial law clerks, small categories that the BLS counts separately. I return to those categories below.

Note that even this 2008 projection fell far short of the number of students graduating from U.S. law schools at the time. ABA-accredited law schools conferred 43,588 JD’s in 2008. Even if just 80% of those graduates (34,870) sought jobs as lawyers, that number far exceeded the 24,040 new lawyer jobs per year that the BLS projected at that time.

The forecasts, however, got worse. In 2010, in the wake of the recession and rapid shifts in the legal profession, the Bureau adjusted its projection downward. It estimated that in the ten years between 2010 and 2020, the economy would support only 212,000 new lawyers. That number represented an 11.8% drop in the number of openings for new lawyers.

“Well, of course,” you might think, “the economy was in a serious recession. Of course the number of job openings would decline.” Remember, though, that this projection covered an entire decade. The Bureau assumed that, even if the economy returned to full strength by 2020 (an assumption built into its models), the number of job openings for lawyers would be substantially lower over the decade than previously predicted.

Now the news has gotten even worse. In its latest projections, the Bureau has again lowered the predicted number of openings for lawyers. It now estimates that the economy will support only 196,500 new lawyers between 2012 and 2022. That’s another loss of 7.3%. Put another way: Four years ago, BLS expected the economy to support about 24,040 new lawyers per year. Now it expects only about 19,650 new lawyers per year to find jobs. That’s a loss of 18.3%.

The Bureau expects the absolute number of lawyer jobs to increase between 2012 and 2022, but the increases will be considerably smaller than previously predicted. The available openings, furthermore, won’t come close to accommodating the number of law school graduates–even if those numbers decline as anticipated.

Graduates and Openings

I previously calculated that about 36,260 students will obtain JDs from ABA-accredited law schools in 2016. Those are the students who just finished their first semester of law school and are on track to graduate. Once again, let’s assume that only 80% of them will seek jobs as lawyers–a generous allowance for JD Advantage jobs. Even if one-fifth of our graduates take jobs outside the “lawyer” category, we will still graduate 29,008 eager new lawyers in 2016.

The BLS, however, predicts that the economy will support only about 19,650 new lawyers per year. If that prediction proves correct, then lawyer jobs will exist for only two-thirds (67.7%) of the graduates seeking them–or only 54.2% of the full graduating class. Those ratios are slightly worse than the ratios for the Class of 2008, when the job market was much stronger. Even with reduced class sizes, we are losing the placement race. Graduating classes will have to shrink substantially more to approach the number of lawyering jobs that the economy is predicted to support.

Other Job Categories

As mentioned above, the BLS counts some “lawyering” jobs in categories of their own. Judges, Magistrate Judges, and Magistrates, for example, constitute a separate category from lawyers. So do judicial law clerks. Neither of these categories, however, offers much comfort for law graduates: BLS has dramatically reduced projected openings in these categories. In 2010, the Bureau estimated that the economy would support 9,600 new judges/magistrates and 6,800 judicial law clerks between 2010 and 2020. The more recent predictions have cut those numbers to just 5,200 new judges/magistrates and 2,500 new judicial law clerks over the next decade. The latter reduction is particularly notable; it may represent cuts in government budgets as well as an increase in permanent law clerks.

Adding these small categories to the estimates offered above doesn’t alter the picture much. If we include job openings for judges, magistrates, and judicial law clerks, then the BLS predicts about 20,420 new openings per year for lawyers. That number will accommodate only 56.3% of the students projected to graduate from ABA-accredited schools in 2016. (To be clear, I think it’s appropriate to include judges, magistrates, and law clerks in these projections. I omitted them in my initial calculations because the numbers are small and the BLS has redrawn these small categories over the years. For clarity, it’s easier to focus first on the primary “lawyer” category.)

According to the BLS, only three categories of law-related professionals enjoy better prospects today than they did two years ago: paralegals, title examiners, and other legal support workers. The Bureau raised projected openings in each of those fields in its latest estimates, producing a combined total of 119,600 expected openings during the next decade.

Why Won’t the Economy Support More Lawyers?

The reasons for this decline are complex. They include lasting effects of the recession, technology, new efficiencies in the provision of legal services, and changing demographics. The last factor is particularly intriguing; it is one that we in the legal academy often overlook. My next post will explore these economic change-agents in more depth.

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Unemployed Lawyers

February 20th, 2013 / By

The Bureau of Labor Statistics (BLS) reports that only 1.4% of lawyers were unemployed in 2012. That’s an impressive figure, especially when compared to an overall unemployment rate of 7.8%. Some law schools point to our profession’s low unemployment rate as a positive reason to embrace law school. Is that a valid way to use the BLS statistic?

No, the statistic is quite misleading when recited without further context. Here is the information schools need to know–and should convey–if they want to use this statistic. First, the statistic includes only people who held a lawyering job before becoming unemployed. That’s why the BLS titles this data series a measure of “experienced unemployed persons.” The statistic does not include people who have passed the bar and are eager to work as lawyers, but who have not yet held a lawyering job. They may be unemployed, but they’re not unemployed lawyers.

Second, the statistic does not include anyone who worked for a single hour during the survey week. The occupational unemployment rates derive from the Current Population Survey (CPS), which surveys 60,000 households each month. The CPS uses a very liberal definition of “employed.” Anyone who receives pay or profit from at least an hour of work during the week is “employed.” A lawyer who was paid for a single hour of document review during the survey week may be strapped for cash and woefully under-employed, but that person is still an “employed lawyer.”

Third, the statistic does not include lawyers who have been unable to find satisfactory legal work and have taken jobs in other fields. An hour of paid work in any job counts as employment for the CPS. A laid-off law firm associate who takes a retail sales job to pay the bills is an “employed retail salesperson” not an “unemployed lawyer.” Ditto for the laid-off lawyers who have taken jobs as high school teachers, realtors, paralegals, or other workers. Even if these employees want to be lawyers, have the training to be lawyers, and would eagerly leave their jobs for a lawyering position, they don’t count as “unemployed lawyers.”

This point is particularly important because job seekers can work down, but not up, the training scale. A worker with just a high school diploma can’t practice law, but a lawyer can do many of the jobs that the high school graduate performs. Similarly, the lawyer can take many of the positions open to other college grads. This is an important part of the reason why people with advanced degrees have low unemployment rates; they usually can return to occupations that were open to them before obtaining the degree. The advanced degree may have little relevance to their employment, but they are not unemployed.

Finally, the BLS count of “unemployed lawyers” includes only individuals who have actively looked for work during the preceding four weeks. Checking newspaper ads or attending training classes doesn’t count as an active job search. This caveat is important because of the number of unemployed lawyers who become discouraged and leave the workforce entirely.

Women are a barometer of this phenomenon; if paid work is difficult to find, they may choose to care for children or other family members instead of pursuing their profession. Unfortunately for the diversity of our profession, BLS statistics show just this trend among female lawyers. In 2000, women constituted 29.8% of all employed lawyers. By 2003, despite more women graduating from law school (and disproportionately male senior lawyers departing the workforce), only 27.6% of employed lawyers were women. The 2001-03 recession pushed more female lawyers than male ones out of the workplace.

Similarly, both the percentage and absolute number of women lawyers has declined recently. After hitting an all-time high of 34.4% of the profession in 2008, the percentage of female lawyers declined to 31.1% in 2012. More than 100,000 women graduated from law school during the last five years, but there are 19,000 fewer women lawyers today than there were in 2008. I don’t know if those women have moved into other fields or out of the workforce, but they don’t show up as unemployed lawyers in the BLS statistic.

In sum, it is technically true that the unemployment rate for lawyers, according to the BLS, is just 1.4%. But that statistic is likely to give prospective law students and others a distorted view of the legal job market. The bare statistic suggests that 98.6% of people who want to practice law, and who have law licenses, are employed as lawyers. That’s clearly not the case. In fact, the same BLS data series suggests that the number of practicing lawyers declined between 2011 and 2012: There were about 1,085,000 respondents working as lawyers in 2011, but just 1,061,000 in 2012.

There are responsible ways to discuss both positive and negative aspects of the legal job market with prospective students. A responsible approach, however, gives context to statistics; it also includes both positive and negative figures that appear in the same data series.

Note: The BLS does not publish the occupational unemployment statistics on its website; that’s one indicator that the Bureau sees limited utility in these figures. But for those who want to see the data for the last ten years, I have PDF copies of the tables.

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