Have you ever thought about getting an MBA?
Apparently, when the economy is down, people go back to school—and BusinessWeek says there will be a flood of applications to MBA programs. Its article, “As Interest in B-School Surges, The Outlook for Grads is Mixed,” also reports current business students are “more pessimistic about their five-year career prospects than their counterparts were last year.”
But looking at the numbers shows that pessimism should all be taken with a grain of salt. The article reports that the pace of salary increases for new MBAs is not as fast as past years—but the expected starting salary of a 2008 MBA appears to be over $85,000. Still healthy and robust.
As for the five-year outlook, the survey seems to have covered ten highly-regarded business schools. The students at half of the schools expected their incomes five years after graduation to be somewhat lower than their counterparts had said, a year earlier. But who knows if they’ll be right—and at these numbers, who cares?
In the 2007 survey, the students at these schools expected to be making $194,764 to $279,275, five years after graduation. In the 2008 survey, the students expected to be making $183,884 to $278,364, five years after graduation. The numbers aren’t all that different, and they are very, very high in the grand scheme of salaries in the U.S. by most any measure.
The survey covered only “top-tier” schools, though it’s not quite clear by whose or what rankings. It would be interesting to see if the numbers change with a broader range of schools. But in any event, an MBA would seem to hold the potential of increasing many people’s income.
Now in many cases, going to business school could mean incurring debt—and would in any event cost money. How might one assess that?
I recall that the blogger at the personal-finance website Free Money Finance has an MBA, so I thought I’d check and see what he’s written and what blog discussions he’s had about getting an MBA. Sure enough, there are plenty! Here are links to a few: The Value of an MBA (at Free Money Finance); Help a Reader: Is an MBA Worth It? (at Free Money Finance); and Help a Reader: Get an MBA? (at Free Money Finance).
My parents both have MBAs and over 20 years of experience. They didn't go to a top tier school, though. At the peak my mom was making $150 to $160k a year. My dad is about the same, but he always worked for non-profits so the benefits were a lot better than my mom's. (he gets 10% employer contribution straight into his 401k for example). Now my mom is working a government job and that pays less than my job as an engineer. They told me that an MBA is a pretty empty degree if you just take all the classes and graduate so some MBA people could have problems finding jobs if they have no skills whatsoever. They focused on finance and accounting because it is more in demand. Anyway, the bottom line is that it's not the degree that matters the most. Where you choose to work and what skills and experiences you have has more of an effect on your paygrade.
Going for further schooling is a tough call because you may never recoup what you paid (at least directly in salary). I think the question is if it's worth doing for personal growth. If you can answer yes, you should try to find a way to do it. Just my opinion...
This is really intriguing. The disclaimer, though, that the survey included only people from top-tier schools rings a little alarm bell.
Sure, if you have an MBA from Harvard and Mom & Dad are heavy hitters with plenty of business and social contacts to help you get a nice internship and then a nice job, of course you'll start at $85,000. You'll live in New York City, Washington, Boston, Seattle, or San Francisco, where 85 grand will go about as far as 40 grand goes in most inland cities.
But what if your MBA is from Arizona State University and you single mom is a schoolteacher? Then what will you earn?
And what if you don't want to live in New York? What if you happen to like the outdoors and would rather live in, oh...say, Boise or Tucson or Denver? Even with a Harvard diploma, what would you earn there? And how would that compare in buying power with $85,000 in NYC or DC?
Thanks for the comments, everyone!
Baglady,
I have heard from others that you don't really learn that much in business school -- but had thought the MBA degree can sometimes be a necessary credential to advance in certain lines of work. But I don't know that much about it. Do others have perspectives on that?
Nicole,
I see your point -- and think it in some ways applies to all levels of postsecondary schooling. If you go to a school where there are interesting teachers and interesting fellow students, I am one who always thinks that I'll end up learning and growing -- so I shouldn't use that barometer (or I'd always go for the degree!).
Funny About Money,
I think those are good points. I don't know that many MBAs. In my experience with other professions with which I am more familiar, the school at which one got the degree is most important at the front end -- right after leaving school. But some years out, my impression is that it evens out -- and that the folks who advance to the next level come from all sorts of schools, Harvards and ASUs and so forth -- and that skill and performance ultimately overcome the school credential as the most important factor. But I'm not sure how accurate or representative my impressions there are.