Inflation is a b*tch. That’s the takeaway from a new article by Scott Flaherty on American Lawyer which compares the new Biglaw gold standard starting salary — $190,000 — with the 2007 going rate — $160,000, adjusted for inflation. Guess what? Things were better in 2007. Actually, at any point over the last 20 years the buying power of first year associates was greater then it is now, in 2018.
But things really hit a high in 2007. The 2007 $160,000 starting salary translates to $199,185 in 2018 dollars. See, it’s not just your imagination, pre- the mortgage back securities debacle really was the heyday for the legal industry. The money was great, the jobs were plentiful, and it seemed like the good times would never end. (The last one turned out to be a bad miscalculation.)
Flaherty crunches the numbers:
Adjusting 2007’s starting salary for inflation, the $160,000 figure becomes $199,185 in June 2018 dollars. That means, in effect, first-year associates earned the equivalent of $9,185 more in 2007 than those who followed the same path in 2018.
Salaries adjusted to June 2018 dollars remained above that $190,000 mark into 2008 and 2009, even as the global recession set in. As the starting associate pay remained at $160,000 for several years starting in 2007, the CPI-adjusted figures steadily dropped until 2015, when they were equivalent to a little more than $172,500 in June 2018 dollars.
Then came an increase to $180,000 in 2016—the equivalent of roughly $191,450 in June 2018—and, eventually, the 2018 hike to $190,000.
We are early on the train that the salary raises of 2018, while nice for associates, weren’t anything ground breaking. So the next time a client grumbles about all the money that associates make, just remember, Biglaw salaries aren’t even keeping up with inflation.
We Told You The Biglaw Salary Increase Was No Big Deal curated from Above the Law
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