The  U.S. Supreme Court  (AP Photo/Jacquelyn Martin)

Law school applications have been dropping for years now and are facing their lowest enrollment numbers in years, prompting some to cut their budgets and change their programs to attract more students, as my Post colleague Simkovic is an associate professor of law at Seton Hall University School of Law and a Visiting Research Scholar at Fordham University. McIntyre is an assistant professor of finance and economics at Rutgers Business School. (They thank Access Group and LSAC for supporting their recent research on a paper titled Timing Law School.)

By Michael Simkovic and Frank McIntyre

Applications to law school have plummeted almost 40 percent since 2010 and enrollments have dropped by almost 30 percent. Law school applications have historically cycled up and down (enrollments have always been less volatile than applications), but the most recent drop in applications is unusually large and difficult to explain. Peer-reviewed research using high quality data from the U.S. Census and established methods of analysis in labor economics finds that a law degree typically boosts earnings by around $30,000 to $60,000 per year compared to a bachelor’s degree.

This is more than enough to pay for law school, and even law graduates with below average outcomes will typically see a large financial benefit over the course of a career. While the recent recession has seen declines in earnings for law graduates—especially young graduates with limited work experience—earnings of bachelor’s degree holders have seen similar declines, and law graduates have maintained a large relative advantage.

So what could explain the sharp drop in law school applications?

One possibility is that prospective law students believe that poor outcomes for recent law graduates  predict long term declines in the value of a law degree for those now contemplating law school. They may be waiting for the economy to improve before attending law school, hoping that this will enable them to graduate into more favorable conditions. Several studies have reported that initial outcomes at graduation can have a longer-term impact on subsequent earnings of college and high school graduates.

So does a strategy of trying to “time” law school make sense?

The answer is no.

Middle and high ability law students who are lucky enough to graduate into a booming economy see a large boost to their earnings for approximately the first four years after graduation, but the effect quickly fades. There is a roughly 10 percent swing up or down in the present value of lifetime earnings for graduating into a boom or recession

Moreover, the state of the economy three or four years into the future—when those now applying or matriculating to law school will graduate—is not predictable based on information that is currently available.  Popular methods of prediction—current unemployment, starting salaries of recent law graduates,  lawyer job openings projections from the bureau of labor statistics, changes in law school enrollment, or indicators of recession like an inverted yield curve—generally explain a given law graduates’ historical earnings advantage no better than random chance. (There is limited evidence that very poor outcomes for current graduates might weakly predict better outcomes four years in the future, and also limited evidence that very large graduating class sizes are weakly associated with higher earnings premiums).

Delaying law school will not improve the likelihood of graduating into a booming economy. But it will shorten the number of years of higher post-law school earnings, and increase the number of years of lower earnings with just a bachelor’s degree. A year or two in the labor force working in a field like law, finance, insurance, real estate, or government may be helpful to figure out whether law school seems like a good fit. But each year of delay will cost on average around $31,000. The optimal strategy to get the most out of law school financially is to go to law school as soon as possible after deciding that you eventually want to go to law school.

Some critics of legal education maintain that automation, outsourcing, and other structural changes will erode the opportunities available to law graduates and thereby decrease the value of their degrees. The most recent version of these claims dates from around 2011.

With five years of data since then, we can see that so far the critics have been wrong.   Law graduates have maintained their relative advantage. If automation, outsourcing, and structural change are affecting law graduates negatively, the impact of these forces on those with less education has been just as great.

Similar warnings about the effects on the legal profession of new technology or of new entrants accompanied the introduction of the typewriter, word-processing, the fax machine, computerized research, and the entrance of women and minorities into the profession.

The reality is that technology advances over the last 50 years have been a boon to educated workers. Law graduates and bachelor’s degree holders have seen their earnings increase as the economy has become more productive.

Predicting the future is always perilous, but if long-term trends are predictive, the future probably won’t be just like the past. The future will be better. At least for those who are highly educated.

Post-WWII technological advancement and globalization have tended to boost the marginal productivity and earnings of highly skilled, educated workers while eliminating the most tedious aspects of their jobs. Those with less education are vulnerable because the tasks they perform are more routine and therefore easier to automate or outsource. Globalization and changes in technology increase the value of education over time.

Those with advanced degrees stand to gain from automation, outsourcing, and structural change. Those who enter the labor market under-educated and under-prepared are playing a dangerous game where the odds are stacked against them.