Ever since the Great Recession sucked the air out of the legal industry, an extremely vocal group of writers -- myself included -- has been trying to warn pretty much any 20-something with an Internet connection to think twice about going to law school. The job market for recent grads has been murder. And there's an abiding sense that the business model that sustained many big corporate firms, the ones that offer those plum $160,000-a-year jobs of lore, is in danger of becoming obsolete, if it hasn't already.
So it was with both great skepticism and a bit of personal trepidation that I cracked open "The Economic Value of a Law Degree," a new draft paper by Seton Hall Law Professor Michael Simkovic and Rutgers economist Frank McIntyre. The two researchers argue that over the course of a career, your average J.D.-holder will make almost $1 million more than a similar worker with just a bachelor's degree (or about $700,000 after taxes). Even law grads on the low end of the salary scale seem to fare better than their merely college-educated peers. Crucially, the paper finds no evidence that the earnings premium has declined since the economy crashed.
"[O]ur results suggest that attending law school is generally a better financial decision than terminating one's education with a bachelor's degree," they write. Or to put it more bluntly, the law school haters are wrong.
So, are we? Is paying $60,000 a year to learn torts, tax, and civil procedure really a great deal after all? I don't think there's neat yes or no answer to that question. But I do think law school critics need to take Simkovic and McIntyre's conclusions seriously.
But before we get into precisely why, let's talk a bit about what went into this study. Using Census data dating back to 1996, the paper compares the earnings of law school graduates -- mind you, not just practicing lawyers, but anyone with a J.D. -- at all stages of their careers to the earnings of bachelor's degree holders, while accounting for factors like academic performance, race, socio-economic background, their chance of unemployment, and gender. The comparison comes out looking like this.
So on average, J.D.'s have traditionally earned about $53,000 more per year than similar college-educated workers. This should shock nobody. Using some standard accounting techniques, Simkovic and McIntyre estimate that pay bump is worth about $990,000 over a lifetime, far more than the cost of tuition at any law school.
But the post-recession critique against law schools has never been about the fate of the average J.D. Rather, the concern is about the least successful grads, the ones who find themselves jobless after commencement, or toiling at legal temp work. But Simkovic and McIntyre don't just find that law grads fare better on average. Rather, they fare better all over the salary spectrum. The paper calculates that a worker at the 25th percentile of law grads makes about $17,000 more per year than a worker at the 25th percentile of earners with just a bachelor's. The median law J.D. makes $32,000-a-year more than the median B.A.
That, in turn, would make a law degree a very good investment. Assuming tuition costs $60,000 a year (the average is closer to $30,000), you can think of a J.D. as a bond that pays off about 8 percent to 10 percent for the median earner. Stocks, by comparison, pay off about 6.8 percent a year, traditionally. (Important note: If a male lawyer at the 25th percentile of earnings pays average tuition, the paper says they're still beating stocks).
Of course, everyone knows lawyers had a great run until the financial crash. What about today's young esquires? While legal salaries have tumbled and unemployment has risen, the paper argues, based on data from the class of 2008, that lawyers seem to have essentially maintained their advantage over their less educated peers. In fact, as the economy soured, their earnings premium seemed to rise.
The economy has been terrible for everyone. But it may have been better if you had a law degree to keep you afloat.
As we all learned thanks to a certain Excel error, it's a bit foolish to put too much stock in a single academic paper, especially one that hasn't yet been subjected to a thorough vetting. That said, having scoured through it -- and having asked the Hamilton Project's Adam Looney, who has done similar work on college graduates, for a second opinion -- Simkovic and McIntyre's paper seems to be both based on a reasonable set of economic assumptions and a very by-the-book interpretation of their numbers.*