WSU law school to freeze tuition, offer scholarships

Wayne State University’s Law School will freeze tuition next year and give a scholarship to every incoming student in a move designed to make a law degree more affordable, while boosting sagging enrollment at the Detroit school.

In total, the tuition freeze and additional scholarship money will amount to the equivalent of a 14% tuition cut for all incoming students, the school is to announce this morning.

“For us, it is really important to ensure that everyone has access to quality legal education,” law school Dean Jocelyn Benson told the Free Press in an exclusive interview. “Not only do we want to make sure everyone has access to legal education, but also help with the rising student debt.”

The move will keep annual tuition costs at $28,138 through at least the 2015-16 school year. By comparison, the University of Michigan law school costs $25,490 per semester.

Wayne’s law school will also offer nearly $1 million in new scholarship money to its current students and a minimum $4,000 annual scholarship to all incoming students.

While officials said the move was about affordability, the school could also use some growth in enrollment. There were 419 students in the law school this fall, down from 484 students the previous year.

Enrollment is down at law schools throughout the country and the decrease is impacting schools in Michigan. Earlier this month, Cooley Law School announced it was shutting its Ann Arbor campus at the end of the year. Cooley’s enrollment flourished during the 2000s, peaking in 2010 at 3,931. It dropped more than 40% to 2,334 in 2013-14.

The scholarships for WSU law students will be a mixture of both merit-based and need-based aid, Benson said. The scholarships are being paid for by private donations — largely from alumni, Benson said.

The hope is that by keeping the price down, students will be able to do more internships and not have to work full-time jobs while going to school, Benson said.

It’s also important that students leave law school without huge debt, Benson said.

“We want them to make these decisions (about where to work after graduation) without concerns about how much they have to pay back,” she said.

Wayne law graduates have average federal direct loans of $44,398. That rises to $61,020 when graduate PLUS loans are added in.

Wayne State junior Eric Lloyd, 22, of Detroit likes the idea of a tuition freeze. He’s a business major, but is considering law school.

“It’s so expensive to go to law school and if you go, you almost have to get a corporate job to pay off all that debt,” he said while studying on Wayne State’s campus Monday. “Anything to hold down cost is good.”

Wayne Law is ranked in the top 100 — at No. 87 — in U.S. News and World Report’s list of Best Law Schools for 2015.

Posted in Debt, Law, Legal Education, Student Loans

How to Pay Student Loans Without Going Crazy if You Owe a Six-Figure Amount

October 13, 2014

Student loan debt has reached epic proportions, topping $1.2 trillion, and that figure is on the rise. Today’s grads are stuck trying to pay student loans to the tune of close to $30,000 on average; but for some, the cost is substantially higher.

These so-called “superborrowers” are racking up student loan debt to the tune of $100,000 or more for the sake of an education. While many of them are taking on six figures in loans to earn an MBA or get through law school, others are using the money to fund their undergrad experience at pricey private universities. When you consider that 20-somethings face one of the toughest job markets in history, it’s a big gamble to make.

Figuring out how to organize and pay student loans when the amount you owe is the equivalent of a mortgage can be overwhelming, especially if you’re struggling to get by on an entry-level salary. Bankruptcy is only an option in extreme cases, but there are some other things you can do to ease the financial burden and boost your motivation to keep chipping away at the debt.

Check into income-driven repayment options
If you owe federal student loans, you may be able to get some temporary relief in the form of an income-driven repayment plan. Unlike the standard plan, which caps the repayment period at 10 years, these plans allow you up to 25 years to pay back what you owe. If you haven’t paid off the balance by then, you may be able to have the rest of the debt forgiven.

Income-based repayment limits your monthly payment to 15 percent of your discretionary pay and your payments can go up or down as your income changes. This option is available for students who owe Direct, Stafford, PLUS or consolidation loans. The Pay As You Earn Program calculates your payments as 10 percent of your income and payments are stretched out over 20 years. There are also Income Contingent and Income Sensitive plans that have similar terms.

If you’re just starting out in your job and not making the big bucks yet, choosing an income-driven option can make your payments more manageable until you start earning more. The longer you stay on the plan, the more you’ll pay in interest for the loans but it’s a better alternative than default. Keep in mind that if you end up getting some of your loans forgiven once the repayment period ends, you may have to shell out income tax on the difference.

Streamline private student loan payments
Students often look to private lenders to cover the gap when they’ve exhausted their federal loan borrowing limits. While doing so can give you the money you need to finish up your degree, it usually comes at a premium since the interest rates tend to be much higher. Private lenders don’t offer income-driven repayment plans so if you’re struggling to keep up with the payments each month, your balance could quickly balloon even higher.

If you took out multiple private student loans, consolidating them and refinancing to a lower interest rate can create some breathing room in your budget. You make a single payment each month and you can reset the loan term so the amount fits with what you can afford to pay. The amount you can consolidate usually varies by lender, but some offer limits as high as $250,000.

When you’re shopping around for a private student loan refinance deal, you want to pay close attention to the terms of the loan. You’ll have to decide whether you want a fixed or variable rate for the loan and the one you choose determines how much consolidating or refinancing really costs you in the long run. Fixed rates tend to be higher but your payments stay the same over the life of the loan. Variable rates are usually lower but the amount you pay each month or the number of payments you’re required to make may fluctuate.

Keep your head in the game
Being knee-deep in student loan debt has been linked to poor health and an overall decrease in quality of life and there’s no doubt that it can take a toll on you emotionally and mentally. The financial pressure caused by trying to pay student loans has many grads putting off major life moves, like buying a home, getting married, or having kids.

If you’re staring down six figures in loan debt, it’s tempting to give up on ever making any progress but that’s not the best mind-set to have. You have to consider what kind of sacrifices you’re willing to make to pay those loans off faster. For some, that means moving back home with Mom and Dad or living with multiple roommates. For others, it could be picking up a part-time job or starting a side hustle in addition to their regular 9-5 gig.

Instead of trying to eat the elephant all at once, work on making progress toward smaller goals. Challenge yourself to see how much of the debt you can dump in six months. Treat yourself to a small reward every time you pay off another $5,000. The more you’re able to psych yourself up and make your repayment efforts a game, the less it seems like a crippling financial burden.

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Posted in Debt, Financial Planning, Legal Education, Millennials, Student Loans

How much debt should this single, 52-year-old Torontonian have? A case study

October 13, 2014

Kevin is a 27-year-old Vancouver resident who makes about $50,000 a year as a graphics designer and has $520,000 worth of debt — an amount he feels quite at peace with.

Even someone with a lot of assets can still be carrying too much debt — the amount has to mesh with your ultimate financial goals. Take Juliana, not her real name, a single, 52-year-old Torontonian hoping to retire in eight years
This amount is made up of a $200,000 mortgage on his home, $200,000 in agriculture loans for a farm that he rents out, $70,000 on his line of credit and $50,000 in margin loans or money borrowed from a brokerage to invest.

“If I don’t accumulate enough debt I won’t be able to buy all the things that I want, leverage my investments for growth, and enjoy a meaningful life,” he says. “It allows me to take advantage of cheap credit to fund my hobbies and lifestyle choices. But at the same time it gives me an adequate margin of safety so that I can manage my debts in a safe and controlled manner.”

Canadians have increasingly become more comfortable with debt. Despite the Bank of Canada repeatedly sounding the alarm about household debt levels, calling it the biggest domestic risk facing the Canadian economy, we continue to take on more. But how much debt is too much?

“It depends,” says certified financial planner Jason Heath. “You may have a young lawyer who just graduated from law school with student debt who is suddenly making $300,000 a year and has a big mortgage that he can blow out of the water in 10 years. It might not be a good comparison relative to someone who is self-employed in a volatile industry and who doesn’t know how much money he’s going to make next year.”

If I don’t accumulate enough debt I won’t be able to buy all the things that I want

But there are rules of thumb, or guidelines, that can help determine how healthy your situation is or where you stand. You can start by comparing your debt with the average Canadian’s.

Statistics Canada says that the average level of household credit market debt to disposable income was 163.6% between April and June. That means we owe almost $1.64 for every $1 that we make. Kevin, who asked that his last name not be disclosed, has a debt-to-income ratio of about 1,000%. Economists have said that a more stable ratio would be between 110% and 120%. The ratio was closer to those figures in the early 2000s when the economy was on firmer ground, says Cris deRitis, senior director at Moody’s Analytics.

But consider these two scenarios. A woman who makes $100,000 a year and has a $164,000 outstanding mortgage on her huge Vancouver home versus a man who earns $25,000 a year and owes $41,000 on his line of credit and on credit cards. Both have debt-to-income ratios of 164%; but who is better off?

Obviously, not all debt is equal; the composition of your debt is key to understanding where you stand.

“From an investment perspective, I consider good debt to be real estate or education. Bad debt would be any other consumer debt. Car debt is an inevitable debt that is neither good nor bad,” Mr. Heath says. “From a tax perspective, bad debt would be money borrowed for a non-invested purpose: your house, student loan. Good debt would be money borrowed for an investment purpose: to buy a rental property or invest in a business or stocks and bonds because the interest is tax-deductible.”

As a general rule, your debt load (housing costs, car loans, credit card payments, etc.) should not exceed 40% of your pre-tax income.

“If you’ve got a student loan [and you're paying] $10,000 per year and you make $50,000, that’s consuming about 20% [of your income] already and if you take a mortgage on top of that, it shouldn’t [add up to] be more than than 40%,” says Michelle Snow, associate vice-president of retail products at TD Canada Trust.

To grant you a mortgage, financial institutions also want to see that your housing costs (mortgage payments, property taxes, condo fees, etc.) will be below 32% of your gross income. It’s getting tougher to come under this ratio as housing prices have ballooned. The typical family in Vancouver would need to spend 62% of income on mortgage payments to buy a bungalow, a report Friday from BMO suggests. This jumps to 75% if rates were 2 percentage points higher. In Toronto, it would take 42% of income currently, moving up to 50% if rates were to rise 2 percentage points.

“Thirty years ago, the average house cost three times the average family’s income and now it’s something like seven or eight times; so the cost to purchase a house relative to income, that ratio has gone up hugely,” Mr. Heath says.

While households in the U.S. have been shrinking their debt levels since the financial crisis, Canadians are borrowing more. “Macroeconomic shocks like rising interest rates, a labour market slump or falling house prices could pose a serious threat to the solvency of highly indebted households,” an Allianz Global Wealth Report warns.

Despite the warnings, our total lending volume rose by 4.4% in the course of the year, reaching historic per capital debt levels, the same report said. Also, years of low interest rates — five-year closed insured mortgages are now below 3% and variable rates fell under 2% this year — have lulled us into a sense of security.

“A lot of people forget that as recently as the summer of 2008, the prime rate was 6.25%,” Mr. Heath says. “People need to envision: Here’s what will happen if my mortgage is at 5%.”

Moody’s Analytics predicted this week that interest rates will remain the same until the end of this year and rise next year. The Bank of Canada’s overnight interest rate is forecast to rise to 1.5% by the end of next year from 1% now, where it has stood for four years, according to a Bloomberg survey of economists.

Even a 2% increase in interest rates would spell disaster for many Canadians. A BMO survey released in March reported that, 20% of respondents felt a 2% increase “would hamper their ability to afford their home.”

Even a slight change in the interest rate will push thousands into bankruptcy, adds Frank Bennett, a bankruptcy insolvency lawyer and author of Bennett On Consumer Bankruptcy.

In 1984, there were 22,022 consumer insolvencies; in 2013, there were 118,678, he says.

“What we’re seeing is approximately 10,000 consumers going bankrupt a month in Canada,” he says. “They’re paying exorbitant interest rates on credit cards and household debt. They’re using one credit card to pay another and they’re out of money by Friday night. What you’re seeing is people treading water, they’re just hanging in there and if any one in a couple gets sick or has a problem and stays away from employment, the deck of cards collapses.”

He says to make sure that you have a contingency plan; consider what happens when one person in your household loses his or her job or gets injured and cannot work. Who will continue servicing your debts and paying your bills?

Kevin, with his 1,000% debt-to-income ratio, has done the math and stress-tested his personal finances. “I have emergency liquidity from moving my investments around and selling assets. If interest rates were to increase I will simply lower my debt-to-net-worth ratio,” he says. “The key is to be flexible and have a solid understanding of one’s unique financial situation.”

Financial Post

Posted in Debt, Financial Planning, Salary, Student Loans

Inequality: Age discrimination is the civil rights issue of our time

By Peter Bella
October 15, 2014

A few years ago I did some photography work for a media organization. They were hiring freelance photojournalists for regular work. We were all trained on their filing and content management system. We could work from anyplace we liked. No need to go into the office. After a few assignments I never heard from them again.

Seeing as I am a Chicago guy and know people who know people, I put out some phone calls. This is what I discovered. The people managing the company did not believe I would fit in with the “youthful culture” of their organization.

That is not the first time I was told, “You are too old”. Most places never respond to assignment inquiries when they see my resume.

I talked to other seasoned photographers and videographers who told me the same thing. I recently met an award winning cinematographer who spent decades doing corporate work. He is now working in retail. When he started to look his age no one would hire him.

People are being denied employment or assignments due to their age. None of this is done directly. That would be a violation of state and federal discrimination laws. Most times they receive no response back from people looking for freelance employees.

Having friends in the news, photography, fashion, and event businesses, I made more discreet inquiries. It appears employers, whether hiring staff or freelancers, discriminate against people over 50-years-old. Sometimes they will not hire people over 40. Most of the people doing the hiring are in their 20’s and 30’s. They want to hire their own kind.

There are some exceptions. Sometimes employers cannot get the kiddies to do certain things or go to certain places. I was referred a job to shoot in some of the most violent neighborhoods in Chicago. Why? The kiddies refused to go. The employer heard I was an ex-cop so he figured, rightly, I could get the job done and take care of myself. He was not enamored with my daily rate. I figured if the “youth culture” did not want to do the jobs they were hired for, then he could pay me a premium. He did.

Experience, quality of work, good work ethic and habits are irrelevant. If you are old you are out of luck. Putting retired, your age, or decades of experience on a resume is the kiss of death.

This is pernicious. People should not be judged on their age, any other identity factor, or whether they will fit in with some phony office culture. People should be judged by one thing and one thing only, their ability to work in a professional and timely manner. Can they get the job done?

I meet and talk to people all the time. There are many retirees looking for part time or freelance (contract) work in their fields. They, like me, are not seeking benefits or perks. They just want to be productive and contribute while making a few bucks.

The millennials are the worst when it comes to discrimination. Millennials believe they are the new “Masters of the Universe”. Rules, regulations, and laws do not apply to them. They believe this is their world and they will only hire people who look and act like them.

Recently, I was approached to give an estimate for an event. Part of the job required hiring three or four second shooters and a videographer. The client stated she wanted young people for the job. I sarcastically told her I did not hire anyone under forty years old. She told me that was illegal. I laughed at her and hung up. I do not think she got the point or cared how ignorant she sounded.

An acquaintance of mine spent decades in the food and hospitality business. He is somewhat well known in Chicago restaurant circles. The big ticket restaurant he worked at went belly up. He was turned down time after time for positions. He could not even get a job as a waiter. He looked to old. All his skill, knowledge, and experience were worthless.

Ageism, age discrimination, age inequality, or whatever you want to call it, is the civil rights issue of our time. It is time to put a stop to it. Since no one comes right out and states age is an issue, it is a difficult thing to prove legally. There must be some way for people with experience to fight back and prevail against age inequality.

This is not a fairness issue. There is no fair. This is a civil rights issue. Civil rights are not about being fair. They are the law.

Source: Chicago Now

Posted in Baby Boomers, Freelancer, Law, Millennials

Freelancers are Growing as a Workforce

October 17, 2014

In the workaday world, the word “freelancer’’ carries both positive and negative connotations.

To some, it is a symbol of freedom, the opportunity to work when and where you want. To others, it is a symbol of failure; you call yourself a freelancer when you can’t get a real job.

Today, it is the way of the world. Freelancers are taking over the workaday world, whether by choice or by necessity.

A new research study commissioned by Freelancers Union and Elance-Odesk indicates there are 53 million people doing freelance work in the United States, representing 34 percent of the national workforce. The study, conducted by Edelman Berland, concludes that freelancers add $715 billion annually to the economy.

The advance of freelance is the result of two recent changes in the employment atmosphere in the United States.

When employers began letting full-time employees go in order to reduce personnel costs related to health care benefits, freelancing became a hot topic. So many jobs that are done in offices today can be done out of office because they are accomplished on computer monitors, which can access information via Wi-Fi hookups nearly anyplace that has a horizontal surface upon which to sit your laptop.

The internet also sparked the world of freelance. For those workers who can provide a service to enough employers at a sufficient price to make a living, freelancing is like a dream: working where you want, when you want.

Freelancing is also what some workers do when they cannot find full-time employment.

The study was commissioned by Freelancers Union to determine how freelancers felt about their employment status. Whereas freelancing was formerly a derogatory term, the study finds that freelancers today enjoy their status and have enough work to make a living.

“This is a story about work in America. What we’re trying to say is this is the new reality,” said Freelancers Union founder Sara Horowitz.

Of the freelancers surveyed, 32 percent said they have had an increase in work, 15 percent have experienced a decline. Thirty-six percent of freelancers who have a full-time job have considered quitting that position in order to go independent full time.

Seventy-seven percent say they make the same or more money than they did before freelancing; 42 percent say they make more money as a freelancer.

There are five classifications of freelancer: the independent contractor who works project-to-project; the diversified worker who has a part-time job (or multiple part-time jobs) but freelancers in other hours; the moonlighter, who has a full-time job but freelancers after hours; the temporary worker, who has only one employer that uses him on an occasional basis; and the freelance business owner, who runs his own company but freelances in the same field as well.

For workers forced into freelance, it can be harrowing, looking for more work on a daily basis while trying to complete the tasks already assigned. For those who chose freelance, it is a way to live a complete life while also contributing to the bottom line.

“People are adjusting their expenses and working in the way that lets them have control,” Horowitz said. “Previously, employers had all the control.”

Source: Millionaire Corner

Posted in Freelancer, Millennials


October 16, 2014

Australia’s first study into all forms of freelancing found 30% of workers are freelancing*, contributing $51 billion** to the economy each year

Freelancing is an attractive career choice, with Gen Y and Baby Boomers leading the trend

Australia – Thursday 16th October, 2014: Thirty per cent of the workforce – 3.7 million Australians – are now freelancing, according to a new survey. The study, “Freelancing in Australia: A National Survey of the New Workforce”, was conducted by leading online work marketplace Elance-oDesk and is the first study of its kind to look at all types of freelancing in Australia across all types of professions.

“Freelancing in all its forms – from full-time, independent freelancers to those people doing it part-time or on the side – isn’t something that has been valued before. This study highlights the growth and importance of freelancing in Australia, contributing $51 billion to the economy each year. The data also shows us that freelancing is seen as an attractive career choice. Technology is a key driver here, with over half (59%) of freelancers stating that technology is making freelancing easier. The connected era is removing barriers and liberating our workforce. A more diverse and flexible workforce will be the new norm,” said Kyri Theos, Australian Country Manager of Elance-oDesk.


The economic impact of the 3.7 million Australians who are freelancing is significant – collectively, they contribute more than $51 billion in freelance earnings to the national economy. That impact is expected to grow in the coming years.

Findings show that:
Freelancing is an attractive career – Over half (58%) of those freelancing do so out of choice, and more than a third of freelancers say they are earning more money than before they started freelancing. The top reasons for freelancing are: 1. To earn extra money, 2. To have a flexible schedule, and 3. To have the freedom to choose which projects to work on. 31% of moonlighters – professionals with a primary job who also freelance on the side – have thought about quitting to work completely independently and almost three quarters of non-freelancers would be willing to do additional work outside of their primary job if it was available and enabled them to make more money.
Gen Ys and Baby Boomers are leading the freelancing trend – Over a third of Gen Ys and over 55s are freelancing (compared to 25% for other age groups).
Technology is making freelancing easier – Over half (59%) of freelancers said technology is making freelancing easier, and 64% agreed that social media is drastically changing the dynamics of networking in the freelancer market. Of those freelancers working online (who found and performed the work via the internet), half find projects in three days or less.
The outlook for freelancing is positive – A third of freelancers expect their income to increase in the coming year. Over half (58%) said freelancing as a career path is more respected today than it was three years ago and agreed freelancers offer skills that might be difficult to find traditionally (59%). Also, the majority (71%) of freelancers said the best days for freelancing are still ahead of them.


The study identified five segments of freelancers, covering the diverse range of people who are freelancing today:
Independent Contractors (35% of the independent workforce / almost 1.3 million professionals) – These “traditional” freelancers don’t have an employer and instead do freelance, temporary or supplemental work on a project-to-project basis.
Moonlighters (19% / almost 704,000) – Professionals with a primary, traditional job who also moonlight doing freelance work. For example, a corporate-employed web developer who also does projects for non-profits in the evening.
Diversified Workers (23% / almost 852,000) – People with multiple sources of income from a mix of traditional employers and freelance work. For example, someone who works the front desk at a dentist’s office 20 hours a week and fills out the rest of his income driving for Uber and doing freelance writing.
Temporary Workers (20% / almost 741,000) – Individuals with a single employer, client, job or contract project where their status is temporary. For example, a business strategy consultant working for one startup client on a contract basis for a months-long project.
Freelance Business Owners (3% / almost 111,000) – Business owners with between one and five employees who consider themselves both a freelancer and a business owner. For example, a social marketing guru who hires a team of other social marketers to build a small agency, but still identifies as a freelancer.

Notes to editors
* These are people who have engaged in supplemental, temporary, project- or contract-based work within the past 12 months.
** $51 billion is the estimated earnings for all freelancing work, including those earnings made by people who freelancing part-time or on the side. This figure just relates to the income generated from freelancing, not from other jobs these people receive income from.

About the “Freelancing in Australia” Study:
To learn more about this study, see our results deck here:

For the study, Elance-oDesk commissioned independent research firm Edelman Berland to survey more than 1,049 working Australian adults over the age of 18 between July 19, 2014 – July 31, 2014. Of those, 311 were freelancers and 738 were non-freelancers. Results are weighted to ensure demographic representation in line with the Australian Bureau of Statistics Labour Force Survey. The study has an overall margin of error of ±3.04% at the 95% level of confidence.

About Elance-oDesk
Elance-oDesk is creating the world’s largest online workplaces. Cumulatively, 3.7 million businesses and 9.3 million freelancers have tapped into and to access talent via the Internet.

As an increasingly connected and independent workforce goes online, talent—like software, shopping and communications before it—is shifting to the cloud. This shift is making it faster and easier for businesses to hire for the skills they need, when they need them, while freeing professionals from set time and place work.

Freelancers are expected to earn more than $900 million in 2014 via Elance and oDesk. Elance-oDesk is headquartered in Mountain View, California, with offices in San Francisco, California and Oslo, Norway.

Source: PR Wire

Posted in Economy, Freelancer, Uncategorized

The Freelancer Economy is Here. Should We Celebrate?

By Kate Jenkins
Monday, September 29, 2014

Early this month, the Freelancers Union released the results of an Edelman study [1] which found that an astounding 34 percent of the U.S. workforce is now comprised of “freelancers.”

In considering the results of the co-commissioned study, the Freelancers Union was in an oddly celebratory mood:

But this is more than an economic change. It’s a cultural and social shift on par with the Industrial Revolution. Just as the move from an agrarian to an industrial society had dramatic effects on social structures around civil rights, workforce participation, and even democracy itself, so too will this shift to a more independent workforce have major impacts on how Americans conceive of and organize their lives, their communities, and their economic power.

This and countless other studies [2] make it hard to contest the notion that the “end of jobs” is indeed nigh, and few would argue with the Freelancers Union’s assertion that this major labor shift will have a massive social impact. But whether we should happily embrace this shift is still up for debate.

On one side of that debate is the Freelancers Union, which is eager to proselytize about the luxury of the freelancer lifestyle—even though the organization reports that many of its members suffer economic vulnerability and 12 percent receive food stamps [3]. The announcement of the study comes on the heels of a report they released in July entitled “How to Live the Freelance Life—Lessons from 1,000 Independents [4],” an independently conducted survey of both FU members and non-members that found that 88 percent of freelancers wouldn’t take a traditional job if it were offered to them.

“Regardless of how people come to freelancing, what we see is that there are a lot of commonalities in how they feel about it once they get there,” says the Freelancers Union’s Dan Lavoie. “Once they start, they don’t want a nine to five.”

Without a doubt, many independent workers feel empowered, grateful that the Digital Age has provided them with the tools to make their own way with an incredible degree of flexibility. (Not to mention the highly venerated mid-day naps, workcations, and pants-free meetings.)

But the “we don’t need ‘em anyway” attitude of the Freelancers Union is at odds with a very different narrative [5] about the gig economy which tells us that “independence” from formal employment isn’t so liberating—and that hiring “consultants” or contingent workers is a strategy often used by bosses to better exploit their workforce.

Anyone who has kept up on organizing adjuncts [6] and truckers [7], for example, will be well versed in this phenomenon. In many different industries, desperate workers are wrestling with employers who, in an attempt to avoid paying benefits, categorize them as “contractors” or are careful not to give them full-time hours. Many of these workers are dependent on the whims of their employers for steady work, as they are likely to find identical conditions if they pursue employment with other companies in their fields.

So what’s with the discrepancy? The reported experiences of blissed-out “freelancers” and those of more disempowered, vulnerable, precarious “free agents” are both accurate, but neither paints the full picture of the “post-job” world.

For one thing, there is a definitional problem: What exactly is a “freelancer”? The term generally implies a self-employed worker in a professional, white-collar position, while the same word would rarely be used to describe an unskilled independent laborer. But if a custodian files a W9, is he a freelancer? The lines between “freelancers” and other kinds of independent workers are blurry and somewhat superficial.

Recent studies like the Freelancers Union’s don’t clearly address this difference; they may outline, as the September study did, the different kinds of freelancers and the process for determining whether or not the workers being surveyed were in fact independent from employers (and to what degree they were independent). But most of the studies have failed to specify whether those included in the surveys were white- or blue-collar workers, which industries they focused on or how the sampling was collected.

So when the Freelancers Union conducted an “online survey of 1,186 freelancers” in July and concluded that 88 percent are happier being independent than being formally employed, I get hung up on how “freelancer” is defined. My guess is that those 1,186 people are self-identified freelancers who spend their days in front of a computer—rather than subcontracted construction workers being paid below the prevailing wage by a boss who figured he could pay his workers less by making them independent contractors.

Whereas the September study, which found that 34 percent of Americans are now reportedly freelancers, likely represents a wider swath of the population because it is more generous in its assessment of who qualifies as a freelancer. Of the 34 percent of the population gone freelance, are we to assume that 88 percent think they’re better off without formal employment? Somehow, I doubt it.

This may sound tedious, but we can’t have a meaningful conversation about the “end of jobs” without a complete understanding of the different parties affected. If we don’t know what we mean when we say “freelancer” or “independent worker,” we can misrepresent many workers’ realities—and that can be dangerous.

In a previous article for In These Times [8], Sarah Jaffe wrote, “The rise of the ‘free agent’ worker has at least as much to do with the desire of businesses to have an easy-hire, easy-fire, just-in-time workforce … that absorbs … most of the labor costs, as it does with workers who simply enjoy the freedom of not having a boss. Power is as big or bigger a force as technology in shaping the labor landscape today.” This cuts to the heart of the difference between “freelancers” and other kinds of independent workers: Those with more power relative to their employers are more likely to be referred to as “freelancers,” whereas those with less power are “free agents” or “contingent workers.” But they’re all being lumped into this “34 percent” we’re now recognizing as “freelancers.”

Jaffe points out that the concept of full-time, salaried work with benefits was one invented by blue-collar unions during the New Deal era—and that the conventions of the nine-to-five gig continue to serve some of the needs of lower income workers, even if the jetsetting consultants of the world have deemed it passé. Failing to recognize the widely differing ways independent work is experienced today threatens to sanctify a broken system that contributes to growing income inequality and marginalizes efforts by independent workers to organize and assert their rights. It may be easy for some to celebrate the “end of jobs,” as the Freelancers Union seems to do when it proclaims, “The era of big work is over” and “Freelancing is the new normal.” But those workers for whom the basic guarantees that came with the “job” were most essential in the first place are probably less likely to feel like partying when those meager guarantees evaporate.

To be fair, the Freelancers Union’s targeted constituency is largely professionals rather than the working poor, and its benefits only extend [9] to skilled workers in “professional” fields (childcare providers being the only exception). The FU has also led an important dialogue about “middle-class poverty” that acknowledges that the freelancer life does often come with its own financial challenges and explores possible solutions. But in the context of a heated national discussion about the depressing predicament of precarious workers, it might tread a bit more carefully in its promotion of the unaffiliated lifestyle.

What’s needed in the conversation about independent work is greater nuance and increased sensitivity to high stakes battles that certain unskilled (and skilled, for that matter) workers are waging against exploitative employer practices. We need a thoughtful examination of how different kinds of independent workers will be affected by a gleeful rush toward a post-job world. Because I’ll bet if you ask the freelance truck drivers, most of them would tell you they’d take a full-time job any day.

The Freelancers Union’s attempt to claim 34 percent of the population as mostly delighted freelancers clouds our understanding of the need for reform. While the Freelancers Union is doing important work to support a select group of freelancers, its DIY approach isn’t likely to work for other independent workers; those workers who are more replaceable may still need to go to war against industry leaders if they’re going to access acceptable working conditions.

The Freelancers Union can’t claim to represent 34 percent of the population unless it finds a way to fight for 34 percent of the population—including the adjuncts, the truck drivers, the construction workers and all the others who are currently on their own.

- See more at:

Posted in Economy, Freelancer, Jobs, Marketing, Millennials, Statistics

When Debt Markets Don’t Really Act as Markets

Is the debt market really a “market”? Several recent events, each largely independent from the others, should cause us to ask this basic question.

Start with leveraged loans. In a recent bankruptcy case, traders complained that a bankruptcy court allowed a debtor to “cram down” their claims by paying below-market interest rates.

But is there any reason to think that this leveraged loan market is a “market” that provides reliable information? Indeed, a recent Bloomberg article noted that the market in question is marred by faulty, if not backward, infrastructure. The article makes the loan market seem as if a systemic crisis were waiting to happen.

Then there are the complaints that the “liquidity rules” recently enacted by financial regulators do not consider municipal debt to be all that liquid. Financial institutions complain that this will undermine the ability of municipalities to finance themselves. Maybe, but the Dodd-Frank regulatory overhaul and the Basel III bank regulation are not really intended to address issues in the municipal debt market.

And most traders regard the bulk of the municipal debt market – issued by small towns, school districts and sewer authorities – to not be very liquid anyway. Most of this debt has but a handful of trades at most each day. That too suggests it’s not really a “market,” or at least, it’s not a very efficient market.

Then there is the bond market itself, and the questions that have been raised regarding the pricing of exchange traded funds that hold those bonds. This has special salience given the scrutiny of Pimco recently.

Fundamentally, corporate bond funds often hold large positions in bonds that don’t trade in large amounts each day. A quick liquidation is probably a bad idea, which is why some officials are thinking about whether some of these asset management firms should be regulated a bit more closely. That’s the subject of another column.

But the difficulties in pricing that the firms face again suggests that maybe, just maybe, we have to be too careful about having too much faith in even these markets.

The issue gets even more complex when we talk about the market in distressed and outright defaulted debt. After all, the business of distressed debt funds is to make money on mispriced assets. Doesn’t this tell us a good deal about the markets they play in?

Source: New York Times
October 2014

Posted in Debt, Economics, Psychology

How not to be a lawyer

Bob Collins Oct 2, 2014

“I assumed the more education, the higher salary,” Lisa S. — we don’t know her real name — tells “I was aware that with a master’s degree, in certain jobs you can get a higher pay grade, and that you’d be eligible for more jobs, even with just teaching.”

She’s from Minneapolis and Forbes is telling her story in its report on whether grad school is worth it.

According to the story, she got a master’s in film after getting her undergraduate degree from Minneapolis College of Art & Design.

But the work she was able to get didn’t pay the bills nor the student loan bill.

She had a child and was a single mother.

To delay the student loan repayment and try for a better job, she went to law school, pushing the total loans amount to $275,000.

She graduated in 2009, just in time to catch the recession for lawyers.

She moved back to Minnesota and had to take the Bar, a period during which she ran up $40,000 in credit-card debt.

Now a solo practitioner in a small Minnesota town, where the median income in her field is $50,000 a year, she is just starting out and making about $20,000 per year. Even with that income, and $500 a month in child support, she and her son are on food stamps, and he is in the free school lunch program. She is aware that her low income is affecting the extracurricular choices she makes with him and tries to take advantage of some of the special programs offered by her state for food stamp recipients, such as $9 tickets to the science museum, where the actual price is $30.

Though she has good credit — between 650 and 700 — “I have this big mark over my head because I have too much student loan debt,” she says. Though she once had hoped to buy a home, she cannot even afford the median home price of $150,000 in her small town, where many of the local farmers who don’t have degrees own their homes. She also rues her inability to save for retirement or for her 10-year-old’s college education and doesn’t know what she’ll recommend to him when it is his time to consider higher education.

The debt even affected her marriage this past February. Though they consider themselves married, she and her husband had a ceremony but skipped legally tying the knot for several reasons: Her debt could hurt him financially, plus their combined income would force some of her loans out of deferment. However, though they are nervous about the cost, they did decide to have a baby, due next spring, because of her age.

Forbes says she’s now working in a small Minnesota town making about $20,000 a year. She’s on various forms of public assistance.

The article doesn’t say what conclusion we’re supposed to reach with the choices she made or the system in which she tried to thrive.

Source: Minneapolis St. Paul Business Journal

Posted in ABA, Debt, Legal Education, Student Loans

Student Loans, Moral Hazard and a Law School Mess—Conclusion

By Steven J. Harper
October 3, 2014

My most recent post in this three-part series discussed manifestations of law school moral hazard at Thomas Jefferson School of Law and Quinnipiac Law School. Both institutions have spent millions on flashy new buildings where attentive students will have a tough time getting jobs requiring the expensive JDs they are pursuing.

This series now concludes with two more schools that illustrate another dimension of the dysfunctional law school market. Recent graduates of Golden Gate University School of Law and Florida Coastal School of Law live in the worst of two worlds: Their schools have unusually low full-time, long-term, JD-required employment rates and unusually high average law student debt.

Muddy Disclosure

The recent decline in the number of law school applicants has resulted in many schools struggling to fill their classrooms. When a school depends on the continuing flow of student loan-funded revenues, the pressure to bring in bodies can be formidable. One consequence is especially unseemly for a noble profession: dubious marketing tactics.

By now, most people are aware of ABA rule changes that require each school to disclose in some detail its recent graduates’ employment results, specifically, whether jobs are full time, part time, short term, long term or require a JD. But those requirements don’t prevent Golden Gate University School of Law’s “Employment Statistics Snapshot” page from touting this aggregate statistic for its 2013 graduates: “85.4 percent were employed in jobs that required bar passage … or where a JD provided an advantage.”

The school’s “ABA employment summary” link appears on the same page. But Golden Gate has supposedly made things easier for prospective students by showing its 2013 graduates’ employment results in a large pie chart. According to that chart, nine months after graduation, 38.2 percent of the school’s 2013 graduates had JD-required jobs.

Here’s what the chart doesn’t reveal: Even that unimpressive total includes part-time and short-term positions. Golden Gate’s full-time, long-term, JD-required employment rate for 2013 graduates was 23 percent.

Money To Be Made

I’ve written previously about Florida Coastal, one of The InfiLaw System’s private, for-profit law schools. Florida Coastal’s website includes all employment outcomes—legal, nonlegal, full time, part time, long term, short term and a large number of law school-funded jobs—to arrive at its “job placement rate” of 74.3 percent for its 2012 graduates. That number appears on the program overview pages of the school’s website. But you have to dig deeper, and move into the “Professional Development” section, to learn the more recent and relevant data: The overall employment rate dropped to 62 percent for the class of 2013.

However, those overall rates aren’t even the numbers that matter. Anyone persevering to the school’s ABA-mandated employment disclosure summary finds that the full-time, long-term, JD-required employment rate for Florida Coastal’s 2013 graduates was 31 percent.

The Cost of Market Dysfunction

At Golden Gate, tuition and fees have increased from $26,000 in 2006 to more than $43,000 today. During the same period, Florida Coastal increased its tuition and fees from $23,000 to more than $40,000. That’s why Florida Coastal and Golden Gate rank so high in average law school loan debt for 2013 graduates, with $150,360 and $144,269, respectively.

To its credit, Florida Coastal eliminates any doubt about the trajectory of law school debt for its future students. The median debt for its 2014 graduates rose to more than $175,000, all of it consisting of federal student loans.

Searching for Solutions

My criticisms of current market failures should not be construed as an argument for eliminating the government-backed student loan program for law students. Were it not for federal educational loans, I could not have attended college, much less law school. The program was a good idea when Milton Friedman promoted it in the early 1950s, and it is still a good idea today.

But the core of this good idea has gone bad in its implementation. Shining a light on resulting market dysfunction should generate constructive approaches to a remedy. At the Oct. 24 American Bankruptcy Institute Law Review Symposium at St. John’s University (and my related law review article appearing thereafter), I’ll outline my ideas.

Here’s a preview: Viewing the law school market in the aggregate as a single market obfuscates a reasoned analysis of the problem. It protects the weakest law schools from the consequences of their failures. They should pay an immediate price for exploiting the moral hazard resulting from the current system of financing legal education. At a minimum, the government should not be subsidizing their bad behavior.

The profession would be wise to lead itself out of this mess. The financial incentives of the current structure, along with its pervasive vested interests, make that a daunting task. Even so, human decisions created the problem. Better human decisions can fix them.

Source: The Am Law Daily

Posted in ABA, Department of Education, Ethics, Legal Education, Student Loans

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