In celebration of this law-firm-layoff-free week, we’re taking a break from reporting on the US government’s published unemployment numbers.
We found something far more interesting and relevant: a report on unemployment among the affluent. Serendipitously, “affluent” coincides with BigLaw starting salaries – this study uses $150,000 annual income as the cutoff for the top decile.
Notwithstanding the more than 5,641 lawyers laid off over the past two years, the affluent are doing much better than the general population on the unemployment front as well, according to the report, which we found on the Wall Street Journal’s Wealth Report.
According to a study from Northeastern University’s Center for Labor Studies, unemployment for those in the top income decile–individuals earning more than $150,000 a year–was 3% in the fourth quarter of 2009. That compares with unemployment of 31% for the bottom 10% of income, and unemployment of 9% for the middle decile.
The differing rates of underemployment–including those working part-time for economic reasons–are also notable. Underemployment for the top 10% was 1.6%, while the bottom was 21%.
In other words, the top 10% is experiencing what economists would consider full employment.
The correlation between income and unemployment rates seems strained, though. It seems obvious to us that unemployment would be lower at higher income levels, because employment is what allows most people to generate the active income to qualify for the income bracket. You have to be pretty wealthy to be unemployed and still generate $150,000 in annual income. Similarly, people likely fall into lower income brackets precisely because they’re unemployed.
Even though there were no layoffs reported at major law firms this week, the first such week this year, firms did scramble about trying to adjust to the times. We detail those efforts after the jump.
Our favorite news of the week had to be Sidley’s salary announcement. Actually, it was the reaction to the announcement from ATL’s tipsters. Turns out entitlement ain’t dead after all, as one tipster noted
We’re not getting any money back from last year [when the firm was frozen], so please don’t report this as a good news post for Sidley. The firm is still behind Kirkland and Latham in terms of market salary.
What is it about human nature that causes people to get a raise but then be more upset that they didn’t get a true-up bonus like the small set of associates at Kirkland and Latham? Why not compare fortunes with the 89 associates your firm laid off last year?
Or why not take a four-block walk up Dearborn Street and compare to Winston & Strawn? Associates there are facing a “double freeze.” Or Jenner & Block, where the salary information is muddled but seemingly below market.
Buried in that Winston announcement is something that is going to have some people justifiably annoyed: billing rates for the frozen lawyers have continued to increase. Clients don’t care what associates make, but that’s not the sort of news that will be particularly well received.
Actually, there is something to be said for complaining (or to put it nicely, politely apprising the partnership of best practices among peer firms). It seems to have worked at Vinson & Elkins, where the firm came back with a true-up raise after much ado.
Then there’s the simple dichotomy in disclosure philosophy. Orrick was very transparent with its bonus announcement, showing average, median, and maximum bonuses broken out by role. Of course, even that wasn’t enough for one tipster. But we applaud the transparency.
Morgan Lewis, on the other hand, is trying the secretive approach. Apparently, they’re hoping that every individual will be too embarassed to compare notes with colleagues, thus preventing them from discovering that they’re all being screwed equally. Which is worse, thinking you’re getting treated worse than someone else, or knowing you’re all getting the same bad deal?
One group of people who know they all got a bad deal is junior non-equity partners at Simmons & Simmons. The bonus plan put in place just over a year ago resulted in none of the “participants” getting a penny.
No law firm layoffs this week.
Major firms have laid off
- 94 people this month (29 lawyers, 65 staff)
- 230 people this year (75 lawyers, 155 staff)
- 14,441 people since January 2008 (5,661 lawyers, 8,780 staff)