Paul L. Caron

Thursday, June 20, 2013

NALP: Employment Rate of Law Grads Falls for Fifth Consecutive Year

NALP, Law School Class of 2012 Finds More Jobs, Starting Salaries Rise— But Large Class Size Hurts Overall Employment Rate:

The overall employment rate for new law school graduates fell to 84.7%. Even though the overall number of jobs obtained by this class was higher than the number of jobs obtained by the previous class, the Class of 2012 was also bigger. When coupled with fewer law-school funded positions, this resulted in the overall employment rate for the Class of 2012 falling almost a full percentage point from the 85.6% measured for the prior year. The overall rate has now fallen for five years in a row since 2008. With the Class of 2012 there are a number of markers that signify continuing weaknesses in the entry-level legal job market, but nonetheless some signs of improvement are also evident. The employment profile for this class also reflects a “new normal” in which large firm hiring has recovered some but remains far below pre-recession highs. ...

Despite signs of modest improvement, as evidenced by more law firm jobs as described below, there are still signs of structural weakness in the entry-level job market. For instance, of those graduates for whom employment status was known, only 64.4% obtained a job for which bar passage is required. This figure has fallen over 10 percentage points just since 2008 -- when it was 74.7% -- and is the lowest percentage NALP has ever measured. An additional 13.3% obtained jobs for which a JD provides an advantage in obtaining the job, or may even be required, but for which bar passage is not required (these are often described as law-related jobs). This compares with 12.5% for the Class of 2011 and is the highest since NALP began comparable tracking in 2001. The percentage of graduates employed in other capacities was 6.7%. The unemployment rate was also up for this class, measured at 12.8%, up 0.7% percentage points from the 12.1% measured for the Class of 2011. ...

Chart 1

Of the 64.4% of graduates for whom employment status was known who obtained a job for which bar passage was required, just over 6% of these jobs were reported as part-time, and therefore the percentage employed in a full-time job requiring bar passage is only 60.7%. Because some of these jobs will last less than one year, the percentage employed full time in jobs requiring bar passage that will last at least a year is only 58.3%. Nonetheless, both these figures are improvements over the 2011 figures, which were 60% and 56.7%, respectively.

Salary information was reported for almost 65% of the jobs reported as full-time and lasting at least a year. The national median salary for the Class of 2012 based on these reported salaries was $61,245, compared with $60,000 for the Class of 2011, and is the first year-over-year increase in the overall median since 2008, when the median increased to $72,000. The national mean for the Class of 2012 was $80,798, compared with $78,653 for the Class of 2011. The increase can be attributed largely to the bounce back in law firm jobs, particularly at large firms. Nonetheless the overall salary median and the median for law firm jobs specifically remain below those of 2008-2010. ...

[J]obs in the largest firms, those with more than 500 lawyers, have rebounded substantially from their low point in 2011, and accounted for 19.1% of jobs taken in law firms, compared with only 16.2% in 2011. The number of jobs taken in these firms -- over 3,600 -- is up by 27% over 2011 levels, representing a recovery almost to 2010 levels but to nowhere near the 2009 figure of more than 5,100 jobs. ...

The national median salary at law firms based on reported salaries was $90,000, compared with $85,000 the prior year. With salary medians by firm size remaining essentially unchanged, the modest increase in the overall median is largely attributable to the increase in the number of large firm jobs, with salaries of $160,000 now accounting for over 29% of reported law firm salaries. At the same time, although salaries of $160,000 still prevail at the largest firms, their share has dropped since 2010. And though still a tiny minority—less than 4%—salaries of $50,000-99,000 for bar passage required jobs at large firms are more common than just two years ago, as more graduates are taking staff attorney or similar positions at lower salaries. (See Table 1 below.)

Table 1

James Leipold (Executive Director, NALP), Job Market Begins to Recover with Class of 2012, But Employment Rates, Salaries, Remain Far Off of Pre-Recession Highs:

As expected,with the Class of 2012we see some employment markers continuing to slide while others are showing signs of recovery. The overall employment rate is down again, but despite this, it is important to understand that the jobs picture is actually improving, if only slightly. This class found more jobs, and more jobs in private practice, than the previous class, but because the national graduating class was so much bigger, the overall employment rate continued to fall.Median starting salaries for this class have also rebounded slightly, reflecting the availability of more jobs with the largest law firms — those that pay the highest salaries — than existed for the previous class. On the other hand, the percentage of graduates who found full-time, long-term employment in jobs requiring bar passage remained below60%.

I continue to believe that the Class of 2011 represented the absolute bottom of the curve on the jobs front, and the results for the Class of 2012 bear that out, showing as they do, a number of improving markers, but at present, the employment picture remains decidedly mixed. ...

I am often asked if there are signs that the entry-level job market is recovering. Based on the results for the Class of 2012, for the first time in more than five years I am able to say yes. Looking ahead, I would expect to see the employment picture for the Class of 2013 continue to improve, although that is another very large graduating class, and its size will take a toll on the overall employment rate. As class sizes comedown over time and the legal employment market stabilizes somewhat, I would expect to continue to see modest improvements in the job market in the near and medium term future. Absent another significant national or international economic setback, I would expect to see aspects of the employment profile for the next several classes continue to inch up, though there is nothing to indicate a rapid recovery or a likely return to pre-recession employment levels any time in the near future.

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Cas claims that response bias will increase employment and salary rates for NALP graduates.

But what's the source for this claim? How does he or she know?

How do we know the unemployed aren't more likely to respond to the survey because they have more time on their hands? Perhaps they are angry about poor job placement, and this motivates them to report unemployment and / or low salaries? Perhaps law graduates underreport by ignoring bonus compensation.

As usual, law school critics simply make things up without providing citations to serious (i.e., academic, peer reviewed, or government) sources.

Posted by: Anon | Jun 23, 2013 7:14:39 AM

"Unemployment rate for the undergrad Class of 2012: 6.3%. Source: BLS"

This is incorrect. Where are you getting those numbers from? Link or cite a specific table. Here's what the BLS data actually shows:

71% of those age 20 to 24 are employed; 81 percent age 25 to 30.

Versus 85 percent of law school graduates who are employed according to NALP.

Here's another BLS data source showing much higher "unemployment rates" for recent college grads (around 14 percent)

And NALP is only reporting a 10.7 percent unemployment rate (not working / seeking) for 2012 law graduates. There's a difference between "unemployed" and not working, since some people are voluntarily opting out of the labor force.

Posted by: Anon | Jun 23, 2013 7:11:41 AM

It looks like "disclosed salary" data has never even reached 50% of JD grads -

These are of course the infamous bi-modal salary distribution charts (which look like they were only made public starting in 2006).

Look at the "based on" numbers below each chart.

Given the distinct possibility of self-selection bias when less of 50% of grads are reporting salary, perhaps we really need *tri-modal* charts...

Posted by: cas127 | Jun 20, 2013 10:03:52 PM

I haven't yet located the reports I recall detailing the "low-survey responder" stats but I did find this -

It is the *detailed* results from the 2012 survey (covering 2011 grads).

Look on page 1, under the column "# with salary"

It looks to me like just 19,000 of 44,000 grads reported *any* salary data.

Any guesses as to whether or not the *25,000* (50%+) non-disclosers had salaries above or below the reported figures?

It may be that "survey response" has increased dramatically over the last few years (the 2011 survey appears to indicate a high general response rate - in contrast to my recollection of previous years) but the "salary disclosure" rate is still so low - and, more importantly, so self-selected, that it calls into question the overall validity of the reported median salaries.

Posted by: cas127 | Jun 20, 2013 9:50:43 PM

I may be mistaken, but it looks like the NALP is playing the same sh*tty game the schools have played for decades - calculatedly ignoring the non-response and incomplete-response rate to surveys in order to bias the publicized placement and salary results upward.

*By ignoring the large percentage of survey non-responders and non-salary-disclosers, the NALP ignores (to its advantage) the extremely large role that self-selection bias plays in its non-sampled, unscientific surveys*.

(In fact, NALP isn't really even executing a "survey" so much as a woefully/calculatedly incomplete census).

In brief, grads with *jobs* are much more likely to respond at all and grads with higher salaries are much more likely to *disclose*.

Pissed off, unemployed grads are much more likely to ignore the NALP survey and low-earners much less likely to disclose their salaries.

These hidden biases distort the reported figures upward tremendously - and the NALP looks like it wants to encourage this wide-spread misunderstanding.

Just like the schools did for decades - before the ABA awoke from its deathly slumber two years ago.

(Why else would the NALP prominently display the total number of JD grads next to a pie chart with percentage results, while wholly omitting survey response and salary disclosure rates?).

I smell a long rotting rat - previous reports buried in the bowels of the NALP website indicate that the response rate may be as low as 50% to 60% of all grads.

I'm going to see if these reports are still available.

In the meanwhile, look at these NALP qualifiers -

"For instance, **of those graduates for whom employment status was known**, only 64.4% obtained a job for which bar passage is required"

"Salary information was reported **for almost 65% of the jobs reported as full-time and lasting at least a year**"

So the salary data is reporting *a fraction of a fraction" - which is not the general impression given.

Posted by: cas127 | Jun 20, 2013 9:01:03 PM

Unemployment rate for law schools' Class of 2012: 15.3% Source: NALP (100 - 84.7)
Unemployment rate for the undergrad Class of 2012: 6.3%. Source: BLS.

Average student debt for law school grads: $125,000 (plus undergrad debt)
Average student debt for undergrads: $27,000

And we have what, a four or five year backlog of other un/underemployed law school graduates? Where's the good news?

Posted by: Unemployed_Northeastern | Jun 20, 2013 4:33:44 PM

NALP's headline is the picture is mixed but overall improving; Taxprof's headline focuses on the negative.

Why is that?

Posted by: Anon | Jun 20, 2013 2:06:20 PM