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Home Publications Blogs Beat the Press The NYT Disagrees with Economists: Claims There are Too Many Lawyers

The NYT Disagrees with Economists: Claims There are Too Many Lawyers

Sunday, 09 January 2011 08:07

Most of the thousands of economists gathered this weekend at the annual convention of the American Economics Association in Denver would probably agree with MIT economist David Autor, that the big problem facing the U.S. labor market is that our workforce is not being adequately educated. Autor claims that most of the new jobs that are being created are at the top and the bottom of the skills level. His recipe is to have more people go to college and earn advance degrees.

By contrast, the NYT devoted a lengthy article to tell readers about the dismal job market facing young lawyers. It reports that many recent graduates of law schools that are below the top tier can only find very low paying legal jobs, if they find any within the professional at all.

It is worth noting that if Autor is right, then the NYT has seriously misrepresented the state of the legal market. Alternatively, the economy could simply be suffering from a situation in which there are too few jobs in total. This would mean that the fundamental problem is not the skills of the workforce but rather the skills of the people designing economic policy.

Comments (14)Add Comment
What's the Point?
written by Ron Alley, January 09, 2011 7:48

Autor's piece and the lawyer piece both miss the point. Just how many highly educated lawyers, physicists, chemists, art historians, sociologists and classical pianists do we need anyhow? Just how many economists and MBAs can make a meaningful contribution to our economy anyhow? Is the goal to create a wave of highly-educated émigrés who can administer China's economy?

To little bacon, and too much hogwash. The Chinese will gladly tell you they are doing just fine administering their own economy.

Close, but not quite
written by LSTB, January 09, 2011 8:59
Ron Alley is on the right track: the economy needs only so many attorneys.

True, much of the unemployment young attorneys face is due to the Lesser Depression. However, the ratio of attorneys per capita has steadily increased from 1:695 in 1950 to 1:264 in 2000, and at current rates by 2050 it will reach 1:100 (http://www.cwsl.edu/content/journals/Dolin.pdf). Unfortunately the NYT article only obliquely cited this structural problem the legal profession faces at the very end.

Worse, the issue isn't just the increasing number of lawyers per capita but the increasing number of juris doctors per capita. The gap between legal sector-employed (or even gainfully employed) JD-holders and total JD-holders in the economy is a catastrophe for the legal education system, the profession, the judiciary, and the taxpayers.

However, acclaim to Dean Baker for not slurring lawyers with doctors as high income earners profiting from protectionism.
written by skeptonomist, January 09, 2011 9:04
Do you need a college degree to be an assembly-line worker or to sew clothing or make shoes? These are the jobs that have been lost as corporations have turned to cheaper foreign labor. The people doing these things 50 years ago had the prospect of joining the "middle class".
As for law
yers, someone who gets paid for doing economics or writing about it should investigate the relationship between jobs and compensation for lawyers and the overall performance of the economy. Do lawsuits increase in boom times and decrease in recessions?
written by liberal, January 09, 2011 9:27
LSTB wrote,
However, acclaim to Dean Baker for not slurring lawyers with doctors as high income earners profiting from protectionism.

A group can still benefit from protectionism even if many members of the group aren't doing so well.
EIR: Monopoly powers of doctors, high-end lawyers, hedge-funders
written by Rachel, January 09, 2011 9:47
EIR, for Elephants In the Room. American doctors, because of scope-of-practice laws, restricted training, the power of connections, and many other market failures, make excess profits. So do lawyers from Harvard and a few other institutions. The financial specialists also earn far more than they contribute, or would earn in a more competitive and transparent market.

The even bigger elephant, that careful economicsts should not overlook: restricted access to education. If we had more medical schools, even night schools, we would not be in the shameful situation of having to import doctors and nurses. But of course that would interfer with those excessive salaries.

And why do we have so many lawyers? It's obvious: because in this one field there are so many schools, including night law schools and online law schools, for people who are struggling to improve themselves, but have few other options. Unless they want to flip houses, or even more unproductive activities.

There should also be the option of more on-the-job training. Unfortunately, we have created an education system very heavily oriented to the "needs" of high-earners' children. It is not very well suited to creating a productive society.
written by Stuart Levine, January 09, 2011 10:16
LSTB is right, but there's even an more significant problem that tends to go unrecognized. It is that technology has brought significant efficiencies to the "production of legal product." In other words, not only has the ratio of lawyers to the general population risen, but the ability of those lawyers to produce contracts, wills, memoranda, etc., has risen considerably. As a result, "legal product" has glutted the market.
Attorney Surplus Due to Over-Simplified and Insufficient Regulations
written by izzatzo, January 09, 2011 10:35
Any economist knows the surplus of attorneys is a result of insufficient government regulations, as well as regulations already on the books that are too simple.

The scarcity of regulations causes a Superstar Attorney Effect, which draws in large numbers of naive amateur attorneys oblivious to the winner-take-all White Shoe Market for what few regulations there are. Most attorneys end up doing repetitive administrative chores for a few big hitters with connections.

Regulation Scarcity also undermines the thriving Revolving Door of Rent-Seeking Regulation, a moral hazard effect evident in attorneys who circulate between government and private sector creating regulations, then charging huge fees to navigate them.

David Autor is correct. If only there were more regulations that are more invasive and complex from the supply side, more jobs would open up for attorneys and others at the high end of skill levels, while justifying the highest possible tuition for law schools.

The attorney surplus has absolutely nothing to with insufficient aggregate demand, because if there was more demand, regulations would be even more scarce than they are now and result in even more unemployed attorneys.
Missing the point
written by John, January 09, 2011 2:18
The point of this piece was that schools represent themselves in a deceptive manner.
written by Bloix, January 09, 2011 4:22
The NYT article had an excellent discussion - buried, unfortunately - about the perverse effect of the guaranteed student loan program, which allows the schools to raise tuition and induces them to publish deceptive information about salaries and employment prospects.

And I don't see why Autor and the Times can't be right. The sad truth is that the many of the graduates of third and fourth tier schools are not and never will be competent lawyers. Most grads of these schools have never been able to find work as lawyers, and have historically wound up in insurance claims or police work or other quasi-law-related jobs, or they've had to leave the legal world altogether. The problem for them is that tuition has climbed so high, due to the guaranteed student loan program, that they will never be able to earn enough to pay back the loans, which cannot be discharged in bankruptcy - therefore, they fear that they will be impoverished for life if they can't get a high-paying legal job. This prospect creates a strong disincentive to take a low-paying job in, say insurance, and keeps the grads hunting for high-paid legal work which will forever be beyond their reach.
Concerning Protectionism Abuse
written by JHM, January 10, 2011 3:36
Concerning Protectionism Abuse

Dear Dr. Bones,

Let us respectfully approach His Nibs by way of two peanut-gallery peanuts:

(1) "LSTB" likes how H. N. does "not slur... lawyers with doctors as high income earners profiting from protectionism."

(Do you guess that guy is a brain scientist at H*rv*d Med, or only a near-prole G.P. out by the Styx?)

(2) Then comes "Liberal" who points out, with a neoliberality bordering on Chicagonomics, that "A group can still benefit from protectionism even if many members of the group aren't doing so well."

What sort of groupist (grouper?) that one is does not stand out so clearly; let us provisionally take her to be a mammonologist like H. N. for simplicity. Certain updaters of the late Dr. Marx -- Herr von Hobson, Mlle. de Luxembourg -- thoroughly agreed with Ms. Poster, assuming her ‘group’ can be cashed in for their _Klasse_ at a tolerable exchange rate. The Protestant Ethic Crew were, thought these annotators and glossators, in some such plight: toward the end of their fated Ascendancy, capitalists would be doing ever worse and worse _en masse_ (as Himself had foreseen), but, as He had either not noticed or not adequately emphasized, they could ward off their ultimately inevitable expropriation for a while with (1) consolidation, which would produce a few temporary Bigwinners, and (2) protectionism carried to the point of ‘Imperialism’ (a word everybooby used back in the bad old days, but which had special meaning for Pscientific Psocialists.)

That rosy scenario has not, perhaps, altogether come to pass, but I mention it for its philosophical-critical, rather than historical, value. Unless one abandons oneself to mythological thinking altogether, one shall have problems about how to take the formula "a group can still benefit." Or make that simply, "Class/group C benefits, AS A GROUP/CLASS, from exploitation X," since chronology and potentiality are not at issue. One totters, as it were, on the brink of supposing that beetles and bacteria feel proud and happy every time some faith-crazed Darwinite like the late Mr. Gould of H*rv*rd pronounces them the TRUE winners of the evolutionary caucus race, pooh-poohing the claims of certain noisy ex-monkeys.

It would be fun, but maybe not much more, to interpret the dark saying of "Liberal" to mean that the staff and bigmanagement of the American Bar Association keep getting richer and richer, while Belisarius Esq. and a million clones whine for obols in the parkin’ lots of snow-shrouded malls. More entertaining sytill would be for Massa Tom Donohue [ http://j.mp/cwQAd5 ] to be officially fêted as The Crœsus to End All Crœsi on the afternoon of the day, 6 October 2019, whose pre-noon hours saw our holy Homeland™'s very last outsourcable entities shipped off to Ormuzd and Cathay.

  • But I betcha she does not mean that at all, and would assent to the orthodox view that the A.B.A. _apparat_ only ‘represents’ -- another hard word -- the shyster community, and does not by any means *constitute* it. [**]


    I see I am still nowhere near His Nibs, but we can pick on him any time.

    Happy days (through affordable health care).

  • His freelordship of the CCUSA being of Hibernian provenance, this apocalyptic vision is utterly impossible. (I do kinda wonder how much he rakes in, though.)

    [**] ‘Community’ is what you might call a very unhard word, Dr. Bones. Soft as Shinola is ‘community’ when used to mean just any group or _Klasse_ that comes down the pike.

    How about the Muses and you and I sign up with the bowling-alone community one of these days?

  • ...
    written by liberal, January 10, 2011 7:31
    JHM wrote,
    Then comes "Liberal" who points out, with a neoliberality bordering on Chicagonomics, that "A group can still benefit from protectionism even if many members of the group aren't doing so well."

    That's a assinine slur. The fact is that not all rent collectors are well-off.
    Off shoring of Lawyers
    written by sherparick, January 10, 2011 12:03
    A great deal of back-office legal work, unlike some of the protectionism that exists for medical field, can be and is being off-shored, particularly to English common law heritage countries. Also, as the article points out setting up a new law school to channel new graduates into legal profession is easy. And apparently, both asymmetric information and irrational biases create a certain stickiness in supply over demand, as the article discusses. Finally, the combination of Government guarantee and the exemption of student loans from the bankruptcy laws make them a rather risk free for lenders to make endless loans and law schools to jack up their tuition fees.
    written by Jay, January 10, 2011 7:11
    There are a lot of lawyers. But this article is equivalent to someone arguing too many people are playing the Powerball. The odds of most lawyers working at big law firms are small. The problem is most people go to school to become employees rather than self-employed. Also, the are a large number of professional students mired in enough debt that could finance a house. As a result, most cannot reasonably afford or stomach the risk of entrepreneurship. The claim has always been there are too many lawyers. Nothing new. Same old.
    written by AK, January 11, 2011 3:02
    There are intertemporal and information problems here in this market -- it's not as simple as you paint it. Students incur very large education expenses based on expectations of certain wages (in part a function of insufficient lawyer supply). When they graduate during a recession they face a smaller wage and entry into lower ranked law firms on average. Since information on the quality of lawyers causes the labor market to bias heavily in favor of lawyers from firms with stronger reputations, these unexpected lower starting positions cause present value reduction to lifetime wages. The drop now is large enough that many students would not have entered law school to begin with had they known the state of the labor market now and its implications on their lifetime earnings. So we have a market failure. Aside from the monumental tasks of fixing the fundamental market failure or getting law schools to reduce their fees, fewer students having entered law school would be an easier path to equilibrium. So there is some accuracy of the statement that "there are too many lawyers graduating".

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    Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.