Law School Class of 2010 Starting Pay Fell 20% as Jobs Erode Forum

[robotclubmember]

ITT people who don't have degrees in economics argue about what is a recession.

plus a biology major who thinks that having a piece of paper equates to having knowledge on a topic. in economics the degree is neither necessary nor sufficient to knowledge. how do we know you have the requisite knowledge to critique the economic aspect of this debate? for all you know the points being brought up are very sound (and there have been at least a couple econ majors in this thread that have posted that i know of, though they haven't done a good job representing their major). please feel free to share your thoughts on this, if you actually have any?

[robotclubmember]

Please, get a clue. I'm going to make a wild guess that you DIDN'T study economics in undergrad.


As to the meat of this- this is a jobless recovery because this is a recession caused by overleveraging in the financial sector, which allowed companies to play fast and loose in general. Now companies are using their cash and profits to build reserves, while the financial sector deleverages, meaning that job growth won't catch up until the financial services stop deleveraging and begin lending in earnest.

Basically, we're fundamentally ok now, but no one is taking a risk by expanding until Europe settles down, greece gets bailed out, financial sector gets straightened out, and consumer appetite picks up. There- reality. Stop making crap up about a government conspiracy.

I responded to the first half of your past, but I wanted te touch on this too. Before Lehman collapsed at the height of the last bubble, Wall Street firms were carrying risky financial derivatives on their books with a value of a $183 trillion (13 times the size of the U.S. economy). Have we learned our lesson? Well, now we're at $248 trillion. No kidding. You think we're deleveraging? LOL. Drink the Kool-aid, because I'll tell you now that's not why the recovery is jobless, the money is just being used in investment vehicles instead of job creation. There's this Reagan mythology that thinks that people with big money create all the jobs. As it turns out, certain areas like investments or real estate can generate significant income and very few jobs. There has been literally zero legislation passed to enact any regulation that would correct the problems in the financial market that led to the last recession.

People like yourself say companies have tons of "cash on the balance sheet" (you state "Now companies are using their cash and profits to build reserves") but that's only financial companies sitting on TARP money, and those companies tend not to do much in terms of job growth. The real companies right now (U.S. nonfinancial corporations) overall are deeply in debt, ($7.3 trillion). That’s a record level of debt. They don't have reserves. The money just isn't there for companies to expand hiring and they've shown they don't want to.

I like how you throw around quick phrases like "blah blah and then the companies played fast and loose in general." Your the econ major, not me, so you should know better than to substitute genuine reasoning and facts for cute little phrases. Please tell me what this very scientific analysis ("playing fast and loose") means. It looks like a substanceless phrase you just regurgitated, I just can't tell.

How do you think we are fundamentally okay? The fed is out of ammo at this point. They can't lower the rates anymore. They can't just dilute the economy with tons of new money because they already did. The gov't is out of ammo too. There's no way more stimulus money is going to be approved, and we're now looking at reducing federal spending. Hell, despite all of the government spending, which is designed to create jobs, the government itself is now freezing hiring or laying workers off, and unemployment ticks higher and higher. If we had any monetary tools left, I might agree we're okay. Or if we had any fiscal tools like stimulus spending. But we don't. So we're going to be facing this the hard way now: unemployment, inflation, and reduced government spending all at the same time. You do the math and tell me how we're "fundamentally" okay. Does math still apply in economics? It's been a while since I graduated, please let me know.

[areyouinsane]

Take a look at this must-see video:

http://www.youtube.com/watch?v=2I0QN-FYkpw

Peter took so much heat and abuse from Reaganite assclown Art Laffer and the rest of the CNBC mouth breathers, and he still takes heat today for his view that we're cooked as a country and have begun a perpetual slide backwards.

The way I see it, anyone who failed to predict the 2008 crash/housing bubble etc has no business prediciting anything else going forward. I'm sticking with the man who saw all this coming and stuck by his guns under intense media ridicule: Peter "Nostradamus" Schiff.

[dkt4]

this thread would have been a lot more useful - albeit much less entertaining - without the mindless argument over economics.

regardless of how you feel about the economic prospects of the country, the employment numbers for law school grads are pretty bleak for almost everybody. folks should know that before going in.

[SchopenhauerFTW]

ITT people who don't have degrees in economics argue about what is a recession.

Elitist much?

[robotclubmember]

ITT people who don't have degrees in economics argue about what is a recession.

Elitist much?

his/her degree is biology lol. and tbh the couple of econ majors that appeared in this thread (bill cosby and cmckid) were a disappointment

[SchopenhauerFTW]

ITT people who don't have degrees in economics argue about what is a recession.

Elitist much?

his/her degree is biology lol. and tbh the couple of econ majors that appeared in this thread (bill cosby and cmckid) were a disappointment

Ha I see. Got it. Anyway... how 'bout those jerbs?

[rayiner]

ITT people who don't have degrees in economics argue about what is a recession.

Elitist much?

his/her degree is biology lol. and tbh the couple of econ majors that appeared in this thread (bill cosby and cmckid) were a disappointment

Majoring in economics is like majoring in psychology. It doesn't give you predictive powers, just ways of describing things in hindsight.

[prezidentv8]

how 'bout those jerbs?

--ImageRemoved--

[prezidentv8]

ITT people who don't have degrees in economics argue about what is a recession.

Elitist much?

his/her degree is biology lol. and tbh the couple of econ majors that appeared in this thread (bill cosby and cmckid) were a disappointment

Majoring in economics is like majoring in psychologyalmost every other major out there. It doesn't give you predictive powers, just ways of describing things in hindsight.

[stratocophic]

how 'bout those jerbs?

--ImageRemoved--

Yep. Partners terk er jeeeeerbs and deposited them directly into their bank accounts in the form of several hundred G's.

[Tim0thy222]

Someone please help me understand this.

Looking at the article, it looks like 68% of graduates got jobs that require bar passage, with a median salary of $104k. Based on what I've read other places, I'm guessing that the $104k figure is the average of graduates who get $160k biglaw and graduates who get $50k jobs, but I'm not sure about that.

68% chance of getting a JD required job doesn't sound so bad to me, but everyone on TLS makes it sound like job prospects are much worse than this. Am I missing or misunderstanding something?

[prezidentv8]

68% of graduates got jobs that require bar passage

<thinks attrition/people who failed out is not accounted for>

[rayiner]

Someone please help me understand this.

Looking at the article, it looks like 68% of graduates got jobs that require bar passage, with a median salary of $104k. Based on what I've read other places, I'm guessing that the $104k figure is the average of graduates who get $160k biglaw and graduates who get $50k jobs, but I'm not sure about that.

68% chance of getting a JD required job doesn't sound so bad to me, but everyone on TLS makes it sound like job prospects are much worse than this. Am I missing or misunderstanding something?

The median salary for those starting at firms was $104k. It's not really the median because its the median of those actually reporting salaries, which on this survey has historically been 50%. 68% of jobs require bar passage, but remember doc review and working for a solo for $10/hour also require bar passage. And the article doesn't say what % of the 68% who got a JD-required job went to a firm.

So basically the $104k median is for the 50% of of graduates reporting salaries out of the 40% (or whatever) of graduates getting firm jobs out of the 68% of graduates getting a JD-required job.

Also, this 2010 data. 2011 will be worse.

[law2013]

Someone please help me understand this.

Looking at the article, it looks like 68% of graduates got jobs that require bar passage, with a median salary of $104k. Based on what I've read other places, I'm guessing that the $104k figure is the average of graduates who get $160k biglaw and graduates who get $50k jobs, but I'm not sure about that.

68% chance of getting a JD required job doesn't sound so bad to me, but everyone on TLS makes it sound like job prospects are much worse than this. Am I missing or misunderstanding something?

Note that the median is only for the reported salaries in private practice. Only about 51% of the graduates got jobs in private practice. So in best case scenario there are about 10000 jobs that pay 104 or above. Based on 2009 numbers, it is likely that the number is below 7000. So out of 44000 graduates less 70000 can expect six-figure salary.

[Tim0thy222]

Someone please help me understand this.

Looking at the article, it looks like 68% of graduates got jobs that require bar passage, with a median salary of $104k. Based on what I've read other places, I'm guessing that the $104k figure is the average of graduates who get $160k biglaw and graduates who get $50k jobs, but I'm not sure about that.

68% chance of getting a JD required job doesn't sound so bad to me, but everyone on TLS makes it sound like job prospects are much worse than this. Am I missing or misunderstanding something?

The median salary for those starting at firms was $104k. It's not really the median because its the median of those actually reporting salaries, which on this survey has historically been 50%. 68% of jobs require bar passage, but remember doc review and working for a solo for $10/hour also require bar passage. And the article doesn't say what % of the 68% who got a JD-required job went to a firm.

So basically the $104k median is for the 50% of of graduates reporting salaries out of the 40% (or whatever) of graduates getting firm jobs out of the 68% of graduates getting a JD-required job.

Also, this 2010 data. 2011 will be worse.

2011 will be worse. Anyone have any thoughts on 2012, 13, 14? 2014 is the one relevant to me, as a 0L soon to be 1L. A lot of people seem to think it will get better. Is anyone buying that?

[SchopenhauerFTW]

2011 will be worse. Anyone have any thoughts on 2012, 13, 14? 2014 is the one relevant to me, as a 0L soon to be 1L. A lot of people seem to think it will get better. Is anyone buying that?

I'm not. Maybe things will improve in every other sector. The golden age for lawyers is over. Things are changing.

[robotclubmember]

2011 will be worse. Anyone have any thoughts on 2012, 13, 14? 2014 is the one relevant to me, as a 0L soon to be 1L. A lot of people seem to think it will get better. Is anyone buying that?

I'm not. Maybe things will improve in every other sector. The golden age for lawyers is over. Things are changing.

read and enjoy:

http://www.abajournal.com/magazine/arti ... igm_shift/

the changes in the legal field are not JUST because of the economy. the golden age for lawyers is coming to an end, just as the golden age of auto workers came to an end. this happens for many professions in which the human capital is grossly over-compensated and then management discovers that their work can be done cheaper by robots/software, scabs/temps, or offshored. all of these things are happening in the legal field.

that said, if you've been following the economic situation, it is obvious we are still in a recession and will remain in one for o couple years to come. if there is any "recovery," it sure isn't helping the legal market. the median starting salary of this profession plummeted TWENTY PERCENT IN ONE YEAR. clearly that is partly because of the economy, but largely because of structural changes in the legal market. but the fact that the structural changes look like they are here to stay, with temp agencies reporting an expected cumulative increase of 25% in temp hiring over the next two years, and the fact that absolutely none of the economic difficulties of 2008 have been solved, i'd say that in 2012, 2013, and 2014, your schools' OCI will in fact be a LOLCI.

[robotclubmember]

Please, get a clue. I'm going to make a wild guess that you DIDN'T study economics in undergrad.


As to the meat of this- this is a jobless recovery because this is a recession caused by overleveraging in the financial sector, which allowed companies to play fast and loose in general. Now companies are using their cash and profits to build reserves, while the financial sector deleverages, meaning that job growth won't catch up until the financial services stop deleveraging and begin lending in earnest.

Basically, we're fundamentally ok now, but no one is taking a risk by expanding until Europe settles down, greece gets bailed out, financial sector gets straightened out, and consumer appetite picks up. There- reality. Stop making crap up about a government conspiracy.

I just wanted to bump this to remind people that the economy is still fucked and so is the legal market: http://www.nytimes.com/2011/07/30/busin ... arter.html

Pretty far from fundamentally okay! The GDP has expanded at an annual rate of less than 1% this year and less than 2% less year, and what little growth there has been has been outpaced by inflation which has exceeded GDP growth. Uh, check and mate? Sry bro, this ain't a recovery.

If you've already seen this thread and are among the TLSer's that share the knee-jerk reaction of dismissing all negative news/affront to models and bottle delusions as scamblogging, then you have made your point known already and I have heard it. This bump is for the new people that join this forum everyday to whom this is shit they never even dreamed of. 20% decline in 2010 from 2009, after 2009 was already a bad year, and don't expect things to get better in the foreseeable future. Basically, do not attend law school.

[rayiner]

Pretty far from fundamentally okay! The GDP has expanded at an annual rate of less than 1% this year and less than 2% less year, and what little growth there has been has been outpaced by inflation which has exceeded GDP growth.

Stop being bad at life. The reported GDP growth rate is real GDP (ie: net of inflation).

[robotclubmember]

Pretty far from fundamentally okay! The GDP has expanded at an annual rate of less than 1% this year and less than 2% less year, and what little growth there has been has been outpaced by inflation which has exceeded GDP growth.

Stop being bad amazing at life. The reported GDP growth rate is real GDP (ie: net of CORE (i.e., grossly understated and inapplicable to 95% of Americans) inflation).

FTFY.

You and I both know that real inflation (not the fake "core" inflation) has gutted what little growth is left in your so-called GDP. When inflation is measured honestly, you'll see the economy is actually still receding.

[scammedhard]

Stop being bad at life. The reported GDP growth rate is real GDP (ie: net of inflation).

True; but you are missing the Robot's main point: the general economy is in a sorry state, and the legal sector is an even sorrier state.
Revisions to GDP data for the last quarters were published this morning. Total, real GDP has not even recovered from the pre-recession peak; and considering that the population has continued to grow, we are much worse off in a GDP/per capita basis. Here is the data, judge for yourself:

http://www.calculatedriskblog.com/2011/ ... -peak.html

[robotclubmember]

Thanks scammed, that's a great graph, but my original point actually still stands. GDP less inflation is probably close to zero or even negative. GDP is only measured net of core inflation, which neglects food, gasoline and energy prices as well as many other commodities which are essential to consumer spending but deemed too "volatile" to be included in the measurement. I said what I believe and what the real facts show: that the economy is not in a recovery yet. Growth is at 0.85% per annum for 2011, net of core inflation. Honest inflation figures that account for non-core products suggest growth is much lower or even negative. Saying the economy is in a recovery is a disingenuous statement only supported by defining economic terms such that they exclude significant factors of reality, like the cost of putting food on your table or driving to work or keeping your refrigerator on. Just because the government doesn't want to include that in its measurements doesn't mean that those realities have gone away.

[scammedhard]

Robot:
I get you point and fully agree with it. But just to be accurate, CPI (aka inflation for most purposes) is not used to calculate "real" GDP; instead, another "inflation" measurement called "GDP deflator" is used, and I am sure it can be just as easily manipulated by statisticians as the CPI, "core" CPI, etc.

http://en.wikipedia.org/wiki/GDP_deflator

[kapital98]

Pretty far from fundamentally okay! The GDP has expanded at an annual rate of less than 1% this year and less than 2% less year, and what little growth there has been has been outpaced by inflation which has exceeded GDP growth.

Stop being bad at life. The reported GDP growth rate is real GDP (ie: net of inflation).

Rayiner, you have been one of the voices of reason on this ridiculous thread.

Robotclubmember has no understanding of economic theory. His chain of causality for macroeconomics, in particular business cycle theory, is obtuse. His (non-existent) understanding of monetary theory is troubling. Further, his understanding of labor market theory, and marginalism in general, is particularly troubling when discussing the legal field.

To Address Specifics

The recession occurred because of increasing fragility in the financial sector. An expansionary phase occurred during the mid 2000's due to increasing leveraging due to new financial instruments (ex: those used in real estate.) This led to higher growth but at the cost of economic stability. The federal reserve did not pop the bubble because it was afraid of decreasing economic growth when the threat of financial instability was unknown. If the collapse in the real estate market had been contained (as neoclassical theory suggests) their would have been no problem. This would have been the equivalent to creative destruction. However, when the real estate sector fell (a tiny portion of the economy) this threatened the ENTIRE financial sector (essentially the entire economy.) (http://www.amazon.com/s/ref=nb_sb_ss_i_ ... le+economy)

The growth that occurred during the "bubble" was in every way REAL. The only part that was imaginary was in the real estate sector. The problem here, and which robotclubmember clearly doesn't understand, is that a decrease in aggregate demand would decrease real wealth. The collapse of the financial sector would lead to decreased investment across the board due to uncertainty (animal spirits.) This would cause a negative multiplier effect due to the nature of double ledger accounting. During a normal recession the Federal Reserve could increase the money supply indirectly by changing the discount rate and buying Treasury bonds.

Unfortunately, a liquidity crisis occurred. This means that the IS-LM model no longer holds because preference for liquidity is extremely high. In this situation the only way to continue to have growth, and keep the REAL growth that occurred during the bubble, is to increase government purchases. In this sense you can have your cake and eat it too. The basic theory has been around since 1936 (http://www.amazon.com/General-Theory-Em ... 726&sr=1-1.)

This is a jobless recovery because of the lingering liquidity crisis and changing structural elements in the economy. Historically, it takes many years after a major financial shock for investment to return to normal (http://www.amazon.com/This-Time-Differe ... 590&sr=8-1) On the other hand an interesting shift has occurred over the last two decades as our economy has shifted from manufacturing to service. It generally takes longer for employment to recover after a recession than before. This is not due to cyclical factors (i.e. the recession itself.) Rather, it is due to structural changes in the economy.

For the record:

1) The gov't does not determine when a recession/depression (there is no difference in economic analysis) occurs. The National Bureau of Economic Research determines "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." (http://www.nber.org/cycles.html.) The NBER is a non-partisan organization that has published well renowned books from both conservative and liberal economists.

2) I read Moody's economic analysis department Dismal Scientist on a regular basis. Over the last 3 years they have consistently stated the exact same thing I have just said. They consistently urged for more stimulus throughout the recession -- in particular government purchases over tax cuts (ex: https://www.economy.com/home/login/ds_p ... 1107291339) The analysis of Moody's is DIRECTLY in opposition to your statements.

3) The government made money off of TARP. The original TARP plan was barely used. After the Obama administration took over Geithner drastically changed Paulson's original plan that was passed by Congress. Even then, it was an insurance policy made by the government to prevent systemic collapse of the financial sector. It was NOT stimulus. All the money (plus a profit) came back to the government.

Kapital98
B.A. Economics, Political Science
President of Economics Society
Member of Federal Reserve Challenge
20 page term paper on TARP for Legislative Process
1.5 hour presentation on the causes of the Great Depression (extremely similar to current recession.)
All the books mentioned above were reviewed by me on Amazon.

Robotclubmember, reading news articles, that don't discuss economic theory, will get you no closer to understanding the underlying phenomena. Please understand this before you go off spouting your supreme understanding of economics.