When I was twelve, my girl friend and I were sitting around discussing our futures. Yes, we were very serious children. We both figured that we would be fine if we earned (with our husbands Prince Charming and James Bond) $100K+. We thought we'd be comfortable. We were smart and good in school, it should be attainable. Hell, we ought to be able to earn $100K on our owns.
Well, I did earn $100K+ at some point. And I'll tell you how I felt. I didn't feel rich. For the first time in my life, I felt comfortable. I could save and I could spend. I always had money in the bank. I could buy every Gucci purse I desired, but I didn't need to. I felt squarely middle class (remember that I live in New York City).
So, those days are over and I've plummeted to the lower five figures. I am not sure yet, but I imagine I will earn $35K or $40K this year--if I'm lucky. But I least I felt the luxury of the six figure salary at some point in my life.
On a weekly basis, I encounter at least 1 or 2 0Ls that I attempt to dissuade from attending law school. I'm usually successful too. How do I do it? I focus on the bottom line: you will (most likely) not earn a $100K, or even close--when you graduate. In fact, in all likelihood, you'll earn exactly what you earn now--or less. I am very good with people and I'm very convincing. I tend to focus on this issue because I can see through all the bullshit about life long dreams of law school and the intellectual challenge and see that the 0L is simply not satisfied by the salaries offered to college graduates. Most of these 0Ls have careers. They are medical billers and park rangers and paralegals, and their salaries don't feel like enough. I don't doubt that. In their minds, they are intelligent people--why shouldn't they feel comfortable? Why should they live paycheck to paycheck? Law school is simply a way to boost your resume so that you earn more money, right? It's logical, right?
Well, BIDER readers know that a JD is the new BA. Your salary won't jump up. You may graduate from law school and land a job earning $40K, but you're $150K in debt and you're even worse off. That's the cold, hard truth.
stagnant. We're earning what our parents earned 20 years ago, but life is infinitely more expensive. There's no magic formula that will give you the lifestyle and salary that you (think you) deserve. An education is certainly not the way to make large strides in your net worth. It seems that there is no way to break the cycle of poverty (and trust me that you're poor if you're living from paycheck to paycheck)--outside of owning a company or inheriting wealth. And our generation is not satisfied with being poor. In a way, that's what caused the financial collapse of 2008.
I ran into this passage about the book Saving Capitalism from the Capitalists (by Raghuram Rajan) which explains my point exactly:
In a new book he is working on, entitled “Fault Lines,” Rajan argues that the initial causes of the breakdown were stagnant wages and rising inequality. With the purchasing power of many middle-class households lagging behind the cost of living, there was an urgent demand for credit. The financial industry, with encouragement from the government, responded by supplying home-equity loans, subprime mortgages, and auto loans. (Notwithstanding the government’s involvement, this is ultimately a traditional Chicago argument: in response to changing economic circumstances, the free market provided financial products that people wanted.) The side effects of unrestrained credit growth turned out to be devastating-a possibility that most economists had failed to consider.We have always been a nation of consumers. Now we're a nation of consumers with no money. We're fastly becoming a third world nation, where there are only rich and poor people. What rich people don't realize is that you can't live like a king among paupers without worrying about the paupers killing you and kidnapping your children for ransom. That will be fun.