Is law school really worth it? (Part II)

Good evening y’all!

Yesterday I finally finished editing this entry on the monetary costs-vs-benefits of law school, which pulled together some easily-accessible data based on my own work history, ADA salaries in North Carolina, my tuition and fee payments for both N.C. State and NCCU Law, and so on.

Recognizing that it only took me about 2 hours for the data gathering / spreadsheet making / graphic creating / writing / editing, I didn’t tout it as a comprehensive panacea of analysis — even going so far as pointing out “[d]ata-driven analyses like this are, in a word, pointless. There are simply too many variables involved to produce anything useful[.]”

But that didn’t stop the comments on the post from being uniformly negative

All the commenters raised points worth considering though, so rather than limit discussion to the comments section of that particular thread I figured I’d do a copy/paste in a separate entry with my responses.

For clarity, I’m using the same snippet-by-snippet response style I ran with in deconstructing the Pope Center’s hit piece on me way back in March. If you haven’t already done so, I’d encourage you to read yesterday’s entry and the comments yourself just so there are no concerns about me misrepresenting what was said

Here we go…

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Aaron Massey: Since we’re both American, this might be completely anti-cultural, but I think you’re calculations are still significantly off because you’re not accounting for retirement savings plans. The head start on retirement that both the HS diploma and the BA/BS degree would have can make a big difference once you start factoring it in. A higher income is nice, but so is compound annual interest/stock appreciation.

I didn’t include any mention of retirement savings in my post, because it’s simply not relevant to the discussion

If you take a look at the “caveats” section of the entry, my only requirement is that any money earned during college or law school can’t go to defraying education expenses — done solely to artificially magnify the cost of that education for the purpose of the analysis.

The vast majority of college students work, which is why the common categorization of years in school as a true “opportunity cost” barely holds water (and retains even less). If a freshman wants to set up a 401(k) and put money into it from his side job, he wouldn’t run afoul of my analysis. Similarly, there’s nothing stopping a law student from taking a chunk of their financial aid refund or earnings from a summer associateship and socking that into a retirement plan as well.

Now in both cases they’d be better off financially by paying down their student loans, since their long-run net return on investments will likely be less than the 8% loan interest rate I’m using. But if they did that I couldn’t artificially inflate the student loan interest for the analysis

If we assume students can and do work (but simply don’t defray education costs), a corollary question may be “Will they be putting away as much as someone working full-time?” And the answer to that is “It depends.”

Unlike the full-time employee, typically students get to have their living expenses (rent, electricity, etc) rolled into their financial aid package; it’s why economic analyses typically show traditional college-aged students having the highest discretionary income of any age group. Under those circumstances, a student could easily put away a comparable amount for retirement if they had the inclination to do so.1

Since planning for retirement isn’t precluded by my analysis and could easily be done by all three hypothetical students, I think for this particular analysis we’d lose more from the confusion inherent in tackling too many issues than we’d gain from discussing 401(k)s and related savings plans

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Aaron Massey: Also, I also think you’re generic approach to the four year college degree is a little difficult to justify. Some degrees (like computer engineering) have starting salaries that average about $60,000. Others are almost half that.

Could some folks start out making more money? Of course. But similar to bringing in the discussion of retirement savings, expanding the analysis to include a litany of possible starting salaries for the BS/BA track adds a lot of noise without much signal.

For example, if we’re going to differentiate degrees like computer engineering to account for the higher salaries, it’d only be fair analytically to also differentiate the law track to rely on that expertise — an attorney doing IP-related litigation before the US Patent & Trademarks Office will be making far more than the ADA salaries I included

The generic approach also has the benefit of its reasonableness being reviewable against aggregate data compiled by the government. For example, the U.S. Census Bureau produced this compilation titled “The Big Payoff” analyzing data on average salaries and synthetic work-life earnings by education level, gender, race, and so on.2

Based on the government’s compilation, I’ve overestimated lifetime earnings of the diploma-only worker by ~$150K, underestimated the BS/BA earnings by only ~$53K, but underestimated professional degree earnings by ~$1,698K (aka $1.7M). The rhetoric about them being “difficult to justify” notwithstanding, my numbers are generally in line with the government’s except for the legal salary (that I’ve gratuitously underestimated).

So while a more-nuanced approach might provide a minimal amount of added clarity (at the expense of a lot more reading), I’ve already tilted the numbers so far in favor of the non-law school route that doing so isn’t particularly meaningful.

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Aaron Massey: Still, the most important problem with this sort of raw calculation is that your disclaimers in the preliminaries are far more important than the rest of the post. “Worth it” is a question of happiness, which is often not at all about money. Sometimes, life happens and no amount of money will help.

I wholeheartedly agree, 110%. It’s why I linked to Jack Whittington’s entry on that very topic, and why the “I’d have more fun doing law” argument was central to my email to BL1Y.

But since Jack already covered the “Happiness is important” route, and BL1Y covered the “You’re not going to be happy” route, that left me with only the financials

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Aaron Massey: Realistically, the best advice anyone considering law school can receive about whether it is “worth it” is this: “Don’t just think that you’re going to be better off financially; run some numbers using some potential scenarios, including one in which you abandon law altogether. Also, don’t just think that more money will actually make you happier; be honest about what your life goals really are.”

I agree with everything here except the first word — strike “Realistically” and replace it with “Ideally”

Realistically, almost no one’s going to do that level of analysis… which is why I did it for them

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BL1Y: A lot of the trouble with students going in to law school is that they look at data like this and see law school as an investment. It’s not.

If you sit on the couch eating potato chips every day, your JD doesn’t bring in any money. If you go back to your old job, your JD typically won’t get you a raise (especially if compared against 3 lost years of seniority). A JD is merely a credential on your resume that may, or may not, make certain new job paths available to you.

What many law students don’t realize going in is how much work is then required. The JD doesn’t bring you any extra income, you do. You have to work for it.

I’m not entirely sure there’s a point here.

The same complaints you’re levying against a JD are also true of a BS/BA, but I don’t think that means we make the leap to saying folks should avoid giving up 4 years and various sums of $$$ to get a college degree.

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BL1Y: And, for many people, the stress, boredom, long hours, and shitty atmosphere are not worth the increase in salary.

And, what makes law school a particularly shitty “investment” is that until you start working after graduation, you really have no idea whether you’ll like it or not.

This is a perfectly fair criticism, though I think you overstate the ability to figure out if someone would like law or not before going to law school.

There’s nothing preventing an aspiring law student from performing a little due diligence by trying to get a job in the legal arena and/or talking extensively with current practitioners. Is it going to be a perfectly accurate representation of actually living the life of a BigLaw associate? Not at all. But it should provide at least enough of an idea that it would remove “Am I going to be content / not hate my life?” as a concern before going in.

And once they’re in, if for some reason they haven’t done their research beforehand, at the very least they should learn whether or not they hate it through summer associateships or clinic work or something similar — hopefully in time to bail out before tacking on another 2 years of student loan debt.

If they haven’t done any due diligence at all before or in law school, or they have but pride stops them from getting out even though it’s not for them, they can’t then turn around and claim unfair surprise when they enter the job market and hate what they do for a living. As Professor Ks said last year, “Laziness is not a defense.”

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BL1Y: The huge rates in depression, drug abuse, and suicide indicate a very high risk of being stuck in a job you hate. In fact, it’s probably easier to get a job in Big Law than to get an enjoyable one.

I concede I’ve got rose-colored glasses on this one, having already “enjoyed” the life of a homeless college dropout myself. I’d happily trade a sh*tty work environment that at least keeps bills paid over having to sleep in a shelter next to Bob the Crackhead and wondering if my personal effects will be pilfered by Methamphetamine Jane by the time I wake up

But, more broadly, concerns over work environment are applicable to the BS/BA folks and the diploma-only people too. That’s the nature of just about any marketplace.

My suspicion is that the higher incidents of the various pathologies you noted are more the result of higher reporting, since lawyers play higher up the socioeconomic ladder — it’s easier to be an addict when you’ve got the money to spare, and to hire a therapist to talk about your depression when you actually get health insurance benefits and vacation time that you can take without wondering how your rent’s going to get paid.

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Va.: I was really looking forward to this post, but I’ve got to say I’m a little disappointed with the methodology.

It was a quick post by a current student cobbled together on ACC football Saturday — cut me some slack

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Va.: I also think that your analysis doesn’t really capture the “worst case” scenario that I’m seeing play out among people I know. Your expectations of being able to obtain a job after law school are certainly reasonable (or at least they should be), and you seem to have no illusions (unlike many law students) about how easily $160k jobs are to come by. However, despite applying for any and every job they see (including ADA positions), many people I know aren’t employed. I know people who graduated in 2008 who are still doing temp attorney contract work. Some can’t even get that. A lot of people aren’t doing what they set out to do or have had to make geographic compromises that take them away from friends and family. Although I certainly hope you find a job before graduation or soon thereafter, being unemployed for 6 months to a year or more can start you off in a financial hole that can be pretty difficult to get yourself back out of. The uncertainty is stressful and “settling” for jobs you don’t want lowers your quality of life.

Unemployment is a legit point, and one I thought about when I was writing the entry.

But I opted to exclude it as the “worst case” scenario because the overwhelming majority of people still find jobs. Even acknowledging the games law schools play with their employment data, few schools have 6-month employment rates below 80%. It didn’t make sense (to me at least) to tailor the analysis toward the other 20%, particularly when the economy will likely be turned around by the time 2013 gets here.3

If we want to factor in unemployment, though, it can be done fairly easily from an economics perspective by weighting the results. Essentially we’d take the projected work-life earnings and multiply by the percent probability of being employed, e.g. the $2.7M x 80% if we assume permanent 20% unemployment for the person’s entire work-life.

Doing comparable calculations for the other two columns makes law school less attractive from a marginal cost-benefit standpoint, but still a financially better option than just high school or just college even factoring in law school costs.

I’m less sympathetic on the “they’re not doing what they want yet” argument, but that’s also out of my own personal bias than any rational reason. My first job after dropping out of N.C. State was loading UPS trucks from 3am-8am Monday-Friday; it didn’t pay much and definitely wasn’t what I wanted to do, but it kept a (non-crackhead-containing) roof over my head and helped shore up my financial foundation while I looked for better work. The same principle applies to the law grads — I know it’s not much consolation to the people stuck in that situation, but where you start isn’t where you end up

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Va.: And a good chunk of law schools are private and have much higher tuition than you do.

Very true… but a point that doesn’t necessarily change my conclusion

On the one hand, I concede that plopping in cost data for other law schools affects the lucrativeness when using my salary numbers.

On the other hand, students have a choice in what law school they attend as far as cost is concerned. Using me as an example, NCCU Law was my first choice because UNCCH Law charged twice as much despite similar bar passage rates and employment prospects in North Carolina (which is where I’d prefer to stay professionally).

And on the third hand, in many cases the more expensive schools also have better employment rates and salaries — a point you yourself made to me back in January

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Va.: Anyway, I think your conclusion should probably be a bit more cautious in tone. If you don’t get the job you want, or any job at all (god forbid…), then the evaluation would certainly change.

This is probably true. But would any of y’all still read this blog if I wasn’t flippant most of the time?

Besides, if I don’t end up where I want maybe BL1Y will let me join him, Namby Pamby and Nando in the Cynics Club

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So that’s my rebuttal y’all

Have any comments / criticisms / witticisms / thoughts of your own? Please post them below

1. And inclination is really the crux of that particular issue: even a non-trivial chunk of full-time employees don’t save for retirement thanks to the “consume first, save later” philosophy instilled in people’s minds by our cradle-to-grave welfare state [↩]
2. I concede up front that the Census Bureau’s document is now 8 years old, but if you’re inclined to spend the time over at the Bureau of Labor Statistics website you’ll find that the values haven’t changed much in inflation-adjusted dollars, even with the recent recession. [↩]
3. Granted that might be excessive optimism on my part, but the idea of us being in or near a recession for 5 straight years is practically unheard of in the history of the American economy. [↩]

Tags: About TDot, Damned Lies and Statistics, Money Money Money, NC State, NCCU Law, Tuition & Fees