Useful Data: JD Starting Salaries Over Time

January 17th, 2013 / By Deborah J. Merritt

The National Association for Law Placement (NALP) has just published two graphs illustrating the progression of starting salaries for JD graduates over the last twenty-six years.

First some background information for readers who have not used NALP data: NALP gathers employment and salary information from all ABA-accredited law schools. Schools report the jobs and salaries that their graduates hold nine months after graduation. Salaries reported by 2011 graduates, therefore, were their salaries in February 2012. NALP publishes salary data only for graduates employed full-time in jobs that will last for at least one year; salary figures do not include unemployed graduates, part-time workers, or temporary job-holders.

NALP and the law schools rely primarily upon self-reported salary information from graduates. Schools, however, may supplement reported salaries with ones that are publicly available. In general, the publicly available salaries are from large law firms and federal government positions. Those salaries (especially the ones from large firms) represent the high end of entry-level law salaries. For that reason, NALP cautions that its reported salaries skew high.

Those caveats, however, are less important when comparing salaries over time. Although the median reported salary may be higher than the true median each year, that distortion probably doesn’t change much over time. That’s one reason that NALP’s graphs of salary trends are so interesting.

As the second graph on this page shows, median reported salaries have fluctuated over the last twenty-five years when recorded in constant dollars (i.e., after controlling for inflation). The dotted line, which represents the median for all salaries, peaked in 2002 and–after a slight dip–again in 2009. But the current median is virtually the same as the median back in 1985.

Analyzing median salary by sector is also instructive. The solid black line, at the top of the graph, represents private practice jobs. That median rose sharply between 1996 and 2001, receded somewhat between 2001 and 2004, and rose again to its all-time peak in 2009. The latter rise was so steep that the median reported salary for graduates in private practice almost doubled–in constant dollars–between 1996 and 2009. That heady rise undoubtedly fueled the assumption that law was a golden career with high salaries.

Even during that period, of course, the median masked a great deal of variation. 2009 was the peak year for entry-level salaries, with graduates at firms of 251+ lawyers reporting a median salary of $160,000. But only 6,624 graduates (15.1% of the class) obtained those jobs. A similar number of graduates (6,749) joined firms of 2-10 lawyers. Less than 40% of those graduates reported their salaries, and the ones who did generated a median of just $50,000. (These facts all appear in the chart linked earlier in this paragraph.)

Returning to the graphs showing median salary over time, median reported salaries in private practice have dropped sharply since 2009. The median in private practice, when measured in real dollars, has fallen closer to 1985 levels than to its 2009 peak.

Meanwhile, the same graph shows that median reported salaries for public interest, clerkship, and government jobs have been flat since 1985 in real dollars. The trend line for business jobs is more uneven, but median salaries there have also returned to close to 1985 levels (after controlling for inflation).

Stagnant entry-level salaries might not be surprising in a stable industry. New workers contribute a set value, which doesn’t shift much over time. The pattern is more surprising in an industry like law, which has experienced significant increases in productivity due to technology. Why aren’t new lawyers today, armed with laptops and smart phones, worth more than they were twenty-five years ago?

One answer is that either supervisors or clients are taking that value for themselves. Another is that the new lawyers actually aren’t more valuable: technology and outsourcing have eliminated some of the jobs that new lawyers used to do while they learned more sophisticated skills on the job. If that’s true, and I think there is evidence to support that, then new lawyers are worth less to employers today than they were twenty-five years ago. Those lawyers need to be trained, which costs money, are there aren’t enough profitable tasks for them to do until they are trained.

Whatever the reasons for these salary trends, the marketplace is telling us that today’s law graduates are worth no more than graduates were twenty-five years ago. That’s a sobering message for law schools. We are charging students much more today than we did in 1985. The resulting gap between educational investment and workplace return is driving much of the recent disenchantment with law schools.

he NALP graphs, furthermore, suggest that the gap does not stem solely from the recent recession. For some areas of law practice, salaries for new lawyers have been flat over the full twenty-six years. For most others, salaries have varied modestly and returned to 1985 levels. Only at the largest firms, which provide a declining percentage of jobs, did salaries rise sharply–and, even there, salaries are dropping back toward 1985 levels. Can we figure out how to address this gap between students’ investment and return?

I have posted a permanent link to the NALP graphs on our Useful Data page.