What Use Is the BLS?

March 28th, 2015 / By Deborah J. Merritt

What is the Bureau of Labor Statistics (BLS), and what can it do for you? The BLS is an independent statistical agency that measures “labor market activity, working conditions, and price changes in the economy.” You’ve sampled BLS wares if you’ve relied upon the Consumer Price Index, unemmployment rates, or average wages.

One program within BLS tries to project employment growth for hundreds of different occupations. The Bureau issues these forecasts every two years, with each projection spanning a decade. The most recent projections, released in December 2013, attempt to forecast occupational growth between 2012 and 2022.

Why does BLS spend your tax dollars trying to do this? Most parents can’t predict what their teenagers will do next week. How does the BLS think it can predict the behavior of an entire economy, including growth rates in so many different occupations?

The truth is that it can’t, at least not with the level of accuracy that some users would like. There are just too many variables, not to mention acts of god and war. The latest evaluation of BLS’s occupational projections found that, when BLS projected occupational growth rates between 1996 and 2006, it failed to foresee the following:

* Immigration would be higher than the Census Bureau predicted
* Women’s labor force participation would decline
* Terrorists would hijack 4 jets, level the WTC, and damage the Pentagon
* The United States would go to war with both Afganistan and Iraq
* A housing bubble would double home prices over the decade
* Internet-based services would cut the number of travel agents by a third

It was a tumultuous decade, but so are most decades. Given the twists and turns of human history, which affect the type of work that humans do, why does BLS even bother with occupational projections?

Better Than the Alternatives

Like democracy, BLS’s projections seem to be better than the alternatives. In particular, these forecasts are better than ones that rely solely on historical trends. In 2010, the Bureau tested its model against four different “naive models” that drew solely on historical data. A common naive model (and one that the Bureau tested) predicts each occupation’s growth rate based on that occupation’s rate of growth during the previous 10 years. Another variation, also tested by the Bureau, uses the most recent five years to project future growth.

On three out of four measures, the Bureau’s predictions outperformed all of the naive models. Predicting the future is difficult, especially when that future includes human actions. The Bureau’s experience, however, suggests that past performance is not the best guide to occupational growth; adding other ingredients to the forecast improves information.

Who Needs It?

Even if BLS predictions are better than naive models, who needs these predictions? Why engage in such an imprecise exercise? BLS began projecting occupational growth after World War II in order to help returning veterans identify promising career paths. The program persisted as a way to serve “individuals seeking career guidance,” as well as “policymakers, community planners, and educational authorities who need information for long-term policy planning purposes.”

If BLS wants students to use its occupational projections for “career guidance,” then why does it warn against using the projections to predict labor shortages or surpluses? Don’t students examine these projections precisely to determine which occupations are growing and which ones are declining? How is occupational “growth” different from a labor “shortage” in that occupation?

The two concepts are related, yet different. Remember that BLS projects (however imperfectly) the number of people who will actually fill an occupation a decade later. The Bureau doesn’t estimate how many people will want to work in that field or how many will prepare to do so; that’s not its task. The Bureau also assumes that the labor market will “clear.” In other words, if demand falls for workers in a particular field, those workers will go elsewhere. They won’t simply hang around the edges of the occupation, constituting a surplus labor supply.

This doesn’t mean, however, that the number of workers preparing to enter an occupation is irrelevant to predicting job and salary prospects for that occupation. If the pipeline of aspiring workers is easy to quantify, and if the occupation itself is tightly defined, then comparing the worker supply to job projections can yield useful information. If labor supply greatly exceeds likely job openings, then one of three things are likely to happen: (1) some of the workers will take other jobs; (2) wages in the occupation will decline; or (3) both.

What About Law?

The worker pipeline is relatively easy to specify in law. Almost no one becomes a lawyer without obtaining a JD, and there is evidence (p. 72) that most law graduates want to practice law at least for a while. The occupation itself is also well defined. Law graduates can apply their education to a range of law-related jobs, but there is widespread consensus on which jobs are “lawyering” jobs that require bar admission. These are the same jobs that graduates, on the whole, prefer.

Under those conditions, it is useful to compare the number of law school graduates to projected job openings for lawyers. That is what I did several years ago. At that time, the number of students progressing through the law school pipeline greatly exceeded the number of lawyering positions that BLS projected. A substantial number of those graduates, I predicted, would have to find work outside of law practice. Wages for entry-level lawyers might also fall.

That is, in fact, what happened. My recent study of new lawyers admitted to the Ohio bar confirms that, four and a half years after graduation, one quarter of licensed lawyers were working in jobs that did not require a law degree. After accounting for graduates who didn’t take or pass the bar exam, it appears that a full third of recent law school graduates are not practicing as lawyers.

The good news is that my study suggests there may be more job openings for lawyers than BLS projected. Not enough to satisfy all of the graduates who want those jobs, but more than BLS estimated.

Meanwhile, there is also evidence that wages have declined for entry-level lawyers. The median starting salary reported to NALP for the Class of 2008 was $72,000; five years later, the median reported salary for the Class of 2013 was $62,467. The comparison looks even worse after adjusting for inflation: If the median wage had remained at the 2008 level, it would have reached almost $78,000 by 2013. The real median wage for new lawyers fell by 19.8% over those five years.

Will law graduates who were unable to find a lawyering job find satisfaction in other jobs? They might; probably some will and some won’t. Will they prosper financially from their law degree, regardless of occupation? They might, if historical patterns hold. To the extent their wage losses represent effects of the recession, will they make up those differences later in their careers? Again, they might if historical patterns hold. But for students investing more than $100,000 in a legal education, it’s worth considering as much information as possible. That includes BLS projections for their desired occupation.

These projections are also useful–when combined with other available information–for legal educators to consider. The career prospects of our graduates should inform the educational programs we design, as well as the information we offer potential applicants. BLS projections represent only a small piece of this puzzle, but they offer one perspective on how the labor market for lawyers is performing.

What About Those New Projections?

The BLS recently changed the way in which it measures occupational “separations.” That’s an estimate of the number of people who will leave a particular occupation. This measure, in turn, affects the projection of job openings; when a worker leaves an occupation, that departure often creates a job opening. Under this new method, BLS will project more lawyering jobs than it did in the past. That sounds like good news for aspiring lawyers, and it is–in part. The change also reveals some unsettling trends in our profession, which I’ll explore in a future post.