Monday, November 18, 2013

Prediction: Full-Time Jobs will Exceed New Law Graduates for Graduating Class of 2016


The Tide Turns Again?
New Jobs Exceed the Number of Law Graduates in 2016?

At the conference of the Midwest Association of Prelaw Advisors held at the end of October 2013, Professor Jerry Organ predicted that jobs would exceed the number of law school graduates in 2016 (as I recall).

He suggested that the market would turn because applicants to law school would continue to decline while the trend in new law jobs would hold at least steady.

So, here is my attempt at supporting this prediction.  I am using data provided by LSAC at the MAPLA conference, which I have discussed in earlier postings.  I am also relying on data provided by NALP.

I make the following assumptions:
  • Enrollment of first-year law students will decline by 8.0% from the previous year through the 2015 entering class.
  • Each entering class experiences an attrition rate of 12 percent. So, only 88 percent of each first-year class graduates three years later.
  • New full-time jobs in three categories -- bar required, JD advantage, and other professional jobs -- will hold steady at the 2012 level of 31,776 jobs.
  • All categories of full-time jobs will hold steady at the 2012 level of 33,759 jobs.
If all these assumptions hold up, full-time jobs (in three categories) will exceed the number of graduates from law school in 2017. If I include all full-time jobs in the count, then those jobs will exceed law school graduates in 2016. 

Here's my math: 

Decline in first-year law students from the prior year, according to the LSAC data. Pointed brackets (<>) indicate my predictions.

2009-10     52,500          3.5%     (number graduating in 2012:  46,364) (all time high)
2010-11     48,700        -7.2%     (projected number graduating in 2013: <42,856>)
2011-12     44,500        -8.7%     (projected number graduating in 2014: <39,160>)
2012-13   <40,940>   <-8.0%>   (projected number graduating in 2015: <36,027>)
2013-14   <37,665>   <-8.0%>   (projected number graduating in 2016: <33,145>)
2014-15   <34,652>   <-8.0%>   (projected number graduating in 2017: <30,494>)
2015-16   <31,879>   <-8.0%>   (projected number graduating in 2018: <28,054>)

[As noted in an update below, NALP and ABA report data differently.  According to the ABA reports, the all-time-high enrollment of 52,500 occurred in the Fall of 2010 (not 2009).  Accordingly, my data is off by one year because I use the NALP data.]

Employment for 2012 graduates, according to the NALP data:
  • 46,364 total.  (The data shows that about 12 percent of law students who start law school in 2009 did not graduate in 2012.)  
  • 44,339 reported their employment status to NALP.
  • Of those reporting their employment status, they fell within the following categories:
    • Bar passage required, full-time:   26,876
    • JD Advantage, full-time:                4,730
    • Other professional, full-time:          1,770
    • Non-professional , full-time:             330
    • Unknown, full-time:                            53
    • Total full-time employment:          33,759
  • 2012 graduates with jobs in the first three categories total 31,776.  
Nov. 19, 2013 Update:  The Faculty Lounge blog suggests that the down turn in law school applications (and hence first-year enrollees) could be higher than expected. So, my estimated 8.0% decline in first-year enrollees could be conservative.

Nov. 20, 2013 Update:  Brian Tamanaha, in his book Failing Law Schools,  cites data from the Bureau of Labor Statistics indicating that "from 2000 to 2010 the economy created 123,000 new lawyer jobs; departures from the legal profession over ten years added another 151,400 openings.  Combining the two, there were about 275,000 job openings for lawyers . . . ."  I assume his use of the terms "lawyer jobs" or "job openings for lawyers" ties to the NALP category of "bar passage required, full-time" jobs.

He also says: "The Bureau of Labor Statistics projects about 25,000 openings for lawyers each year through 2018 (new positions and replacements for departures) . . . ."   Thus, if the discussion is confined to full-time jobs requiring bar passage, the decline in applicants to law school would need to be sharper and more sustained to ensure that every graduate got a job in that category.

Nov. 22, 2013 Update:  I received this email today from Professor Deborah J Merritt, John Deaver Drinko/Baker & Hostetler Chair in Law, Moritz College of Law:
Paula, I saw your interesting post on when the number of law graduates will equal the number of jobs that were available in 2012. Unfortunately, I think you confused the degree totals for 2012 and 2013 -- it's an easy mistake to make because of the odd way in which the ABA reports data. I've made a post on my blog in which I re-run the calculations and also make some different assumptions about jobs. I thought you might like to see the results:

http://www.lawschoolcafe.org/thread/when-will-graduates-jobs/
Just to make it clear, I relied on a report prepared by LSAC for the MAPLA conference.  It does not make the source of the data clear, but does drop a footnote suggesting that the applicant data came from the ABA. I know the two entities share data, but I've not done the research to know how or what.  Thanks, Professor Merritt for your further analysis.  She predicts that law jobs requiring bar passage will not exceed the number of law graduates until 2021.

Nov. 23, 2013 Updates:  One of the scambloggers has picked up this posting and offered commentary, most of which is an ad hominem attack against me and my law school (or its graduates).  As I have said elsewhere, and as the headlines clearly indicate, this was not my prediction, but an effort to support the prediction of Prof. Organ. In addition, I have continued to update this posting with links to the analysis of other people and have posted all three of the comments received so far.

As far as his barrista comment, yes, barristas would be included in the total count of full-time jobs needed to see a market turn in 2016.   They would fall in the non-professional, full-time category, which in 2012, included 330 of the 33,759 graduates reporting employment.  As far as I know, none of our ASL graduates became full-time barristas after graduation.  And, even if they did, they soon found better employment. Please see the comments to this posting about the limitations of the 9-month cut off for employment data.

Nov. 27, 2013 Update:  Wall Street Journal blogger, Jacob Gershman, picked up the story and concludes:
"So is it a good time to consider law school? The jury is still deliberating."

Dec. 6, 2013 Update:  For more on this topic see here (JD Advantage jobs), here (JD Advantage jobs), and here (the unemployed and grads working part-time) and the embedded links to the National Jurist article on the job equilibrium.

Dec. 7, 2013 Update:  An ABA Journal blogger has picked up the story and mentioned The Red Velvet Lawyer here.

Dec. 9, 2013 Update:  Job data reported for legal industry here.

Dec. 10, 2013 Update:  TaxProfBlog picks up the story and says I've predicted a 2017 equilibrium date. I'm not sure where he got that.  I'm still saying 2015 or 2016 depending on how you define "employment."

Dec. 27, 2013 Update:  One blogger, Matt Leichter, of the Law School Tuition Bubble blog, has continued to work with the numbers and published a story in the AmLaw Daily here.

Jan. 9, 2014 Update:  The National Jurist has analyzed the data and made a prediction here.

March 2, 2014 Update:  Finally, Prof. Organ, who started this conversation, has weighed in with his well-supported prediction here.

March 12, 2014:  Professor predicts "almost guaranteed legal employment for all law school graduates" over the next two decades.

March 21, 2014 Update:  Another professor offer insights.

9 comments:

  1. I wonder, what are the possible changes for this forecast not to take its course? Anyhow, although this is good news for 2016 Law graduates I'd rather have high quality lawyers than vast job opportunities. If ever this prediction would come true, I hope law firms would still be strict in hiring lawyers, especially personal injury lawyers mesa az.

    ReplyDelete
    Replies
    1. Take a look at the updates I've included here, and my posting in January that describes the analysis of The National Jurist.

      Delete
  2. What about students graduating over the next 3 years? How does that affect your results?

    ReplyDelete
    Replies
    1. We continue to massage the available data. Take a look at my posting in January 2014 that updates the story. Looks like grads in 2016 will have a much better job market.

      Delete
  3. Thanks for putting this together. It looks like you are using 9 month job data for your number of jobs. Is that right? If so, I think that your projections are actually too negative. 9 month job data understates the total number of jobs, as I explain here:

    http://www.thefacultylounge.org/2013/04/reconsidering-the-conventional-wisdom-on-the-legal-job-market-part-i.html

    I also expect the job market to improve, rather than hold steady. Based on anecdotal evidence from my own market (Harrisburg PA), this year's job market appears to be stronger than it has been in the past few years. My study showed that our classes of 2010 and 2011 had solid job results, although it took some people longer than normal to get jobs because of the poor job market. As smaller classes graduate into an improving job market, I expect that there will not be enough graduating lawyers to meet entry-level demand.

    Re: one of your updates, I explain why it is a mistake to rely on BLS data in this context here:

    http://www.thefacultylounge.org/2013/05/reconsidering-the-conventional-wisdom-on-the-legal-job-market-part-iii.html

    ReplyDelete
    Replies
    1. I saw your study on the limitations of the 9-month data, I think grads of lower ranked schools do have a longer time to their first full-time job, especially if the law school is located in a rural area like ours. They need the time to get back home and work the local market.

      Delete
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  5. Thanks, Gregory, for your comment. This posting continues to bring new information to folks who follow this blog. It is an evolving story.

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