A few weeks ago I happened to catch Suze Orman’s show on CNBC. One caller had her case analyzed. She had something like $1.5 million in assets and had her home paid off. She is clearly in a very good position and puts her within the top 2 percent of households in the United States. The response that was given shocked me. She was told she did not have enough and had to keep on working for many years. Now think about this. At a 4% withdrawal rate she would be pulling $60,000 a year ($10,000 more than the median US household income). Plus, she had her home paid off which is the biggest expense for most Americans. This kind of logic is at the core of the issues we have with those giving out financial advice. They never correct the expense column assuming it is locked in like a sunrise or having water in the ocean.
The 4% rule recently came under “scrutiny” that it was a good rule under better economic times. As if we haven’t had our share of wars, recessions, and societal issues in the past? The conclusion of some of those in the financial industry is that the new safe withdrawal rate is now something like 2.8% and therefore, you need more saved to retire. Of course, the financial industry survives by fees generated on these balances so to say they are unbiased is an overwhelming understatement. The problem as well is that this industry of experts never bothers to attack the expense side of the equation.
What is interesting is that most Americans never come anywhere close to saving $1 million in their nest egg. Most will end up depending on a Social Security check to get by in their later years. The fact that someone can tell a person with $1.5 million saved and a paid off house that they are far from retirement is amazing. What should have been said is “how can you cut down your expenses to live on $60,000 a year when your house is paid off?” Where is the rest of your money going? Of course, the response is to keep on pumping more money into the financial sector so they can collect more fees along the way. I’m sure you have caught on at this point that many in this consumption based society want to see you part with your money as fast as possible.
The bursting law school bubble: Cash cow law schools are facing 30 year lows in applications as applicants confront high tuition and low wages.
Law school is no cheap proposition. To get into law school requires someone to take three years out of their life beyond the typical 4-year undergraduate experience followed by preparing for and scoring a solid number on the LSAT. There is also the tiny issue that law school graduates will end up coming out with $100,000 or more in student debt and the employment prospects for graduates are grim to say the least. As you would expect many aspiring attorneys do have a good head on their shoulders and they have put the pieces of the puzzle together. Why go into massive debt when the return on the investment is unlikely to pay off? There is a clear reason why law school applications are now down to 30 year lows even though the US has grown to over 300 million people. Many law schools around the country will unlikely last beyond the current decade. Even good programs will likely have to reduce class size or lower tuition to confront the new economic landscape. Yet no school wants to be the first to reduce costs as to appear as an inferior product so they will likely throw aid at qualified applicants.
Employment market for law students
The employment market continues to get worse for new law school grads:
Keep in mind that over this timeframe the economy has been getting better at least as measured by the stock market and also GDP. Yet some areas are clearly in a deep contraction signaling that something else is going on. What is astounding about the data above is that many are not working in fields that require a law degree. Also, the overall unemployment rate for the class of 2011 is actually worse than the overall unemployment rate for the rest of the country. It becomes much more apparent why law school applications are down to 30 year lows.
Yet another thing is the high cost of tuition. It is one thing to go to law school at an affordable price and struggle in the market. That is very understandable. Yet going into the debt that many students are taking on just does not make sense given the above figures.
A big consolidation in the industry has come from places like LegalZoom and certainly the internet has made legal options much more affordable for basic needs and paperwork. So it really doesn’t make any sense why tuition should continue to go up for law programs. Schools are merely trying to get whatever the market can support and with easy financing for student debt, this unbalanced bubble continues to expand. Yet this trend is appearing to hit a threshold.
Even the public is becoming more aware of this. Take a look at the hive-mind of the world, the internet:
There is going to be some serious challenges ahead for law schools.
Fast food American economy: Professor states that low pay jobs part of future. College degree required for McDonald’s job.
It was interesting to hear a Columbia Professor mention that fast food jobs should not be considered as the bottom of the rung of jobs. These lower paid service sector jobs are actually part of the norm and will be growing. As the US economy begins to get more and more bifurcated we can expect to see some major extremes. Recently fast food workers went on strike yet the media seemed not to pay any attention to this. Of course we are seeing some major strains in the economy. Is this simply part of our new economy? Before, being part of the working class was almost seen as an easy road to achieve for most Americans. Now, even the college educated have a tough time going after the American Dream. What the Professor mentioned was extremely harsh but it is simply part of the new economy where many workers have very little protection.
This is why it should be no shock that a McDonald’s in Massachusetts posted a job opening where a college degree was required:
“(Huff Po) Hopefully “Do you want fries with that?” is a phrase they teach in college classrooms.
A McDonald’s in Winchendon, Mass., is apparently requiring potential cashiers to have a bachelor’s degree, according to a recent job posting. The ad, posted on jobdiagnosis.com, also says that applicants should be “friendly” and able to “smile while serving lots of guests daily.”
The job opening is with an “independent franchise,” but it also appears on the McDonald’s corporate site, albeit with no note of the bachelor’s degree requirement. McDonald’s corporate headquarters didn’t immediately return email and phone messages seeking comment.”
Don’t you just love this current recovery? Well at least the food is affordable and healthcare bill is very high but that is a problem for tomorrow.