A Stronger Hand in Job Supply and Demand

The ironic thing in our nation's unemployment crisis is not that there aren't enough jobs, but that there's a terrible mismatch between the people who are unemployed and the current needs in the United States job market. As a recent article stated, all those industries that thrived on the cheap credit of the Bush boom - namely real estate, finance, manufacturing, and state and local government - are still bleak, with little growth seen on the horizon. And the area which is arguably most emblematic of the pain on "Main Street" - manufacturing, is projected to get even worse.

But there are definitely areas of white collar pain, as well. Finance has been hit hard, and so has law. Law has been hit enough to the point that there have been at least two revolutionary ideas that have been put forward:

First, there's the study being led by the Massachusetts Bar Association which is exploring whether “the ongoing relevance of law schools and the cost of law school, (and whether) we should rethink the three-year model." Or put another way, are law schools putting students in harms way by saddling them with $150,000 in debt without reasonable hope to repay these loans given increasingly bleak job prospects.

The second is even more drastic, which is to have law schools rebate law students' first year of tuition if the student decides to quit before the end of the year. This would enable an unprecedented period of "buyer's remorse" in which the law student can decide after the fact that law school is or isn't for them. Gone would be the "sunk cost" problem which faces law students currently, in which they decide a career in law isn't for them, but are compelled to press on because they've already dumped $50,000 of non-refundable tuition into the effort of finding out.

This actually speaks to a broader question around education and how job demand and supply are being managed. I touched on this in an earlier post on whether colleges were effectively tailoring curriculum to have our students compete in a global workforce. Even people without a libertarian bone in their body would shudder to think of an educational system which at let say, age 18, told you, "Given your test scores and education profile and our projections of the job market, we're going to give you a choice of five jobs in which you can make a living and not be saddled with debt for the rest of your life." That's frightening. But is the other extreme of recklessly allowing people to pursue degrees without a feasible job market much better?

Perhaps this solves itself with our own inability to predict economic trends. Clearly each university longs to boast about it's ability to prepare people to become productive members of society. Heck, one of BusinessWeek's Top B-School lists' metrics is the average starting salary of its graduates. If it was so easy to handicap the next big growth job market, we probably wouldn't have as large problems as we do now. But I do wonder if the political will to have governments take a more deliberate and active stance in calibrating the education system to the near-term job market even exists.