Is an MBA your ticket to a higher salary? Earning the degree can expand your career opportunities and increase your future income. However, before you start dreaming about that annual seven-figure income, let's take closer look at the facts.
A Master's of Business Administration (MBA) program usually requires two years of study beyond an undergraduate degree; the curriculum includes courses in finance, marketing, accounting and management, as well as coursework in computer science, database administration and related technologies. The number of MBA degrees awarded annually has grown from around 5,000 in the 1960s to more than 150,000 currently. Costs can range from $30,000 at a regional school to more than $100,000 at a more prestigious school.
Yet, even in an economic downtown, companies value the skills that an MBA degree brings to the table. Some employers say they plan to pay those they hire with an MBA degree nearly twice as much as those with only an undergraduate education [source: GMAC]. If that wasn't enough, more manufacturing and health care companies are now seeking out MBAs -- although industries like banking and consulting have typically recruited the most MBA students.
According to the Graduate Management Admission Council (GMAC), salaries for MBAs vary according to the industry where they're employed. The median salaries of MBA graduates are as follows:
- Consulting -- $105,000
- Energy/utilities -- $97,770
- Finance/accounting -- $95,000
- Health care -- $95,973
- Technology -- $95,000
- Manufacturing -- $91,560
- Products/services -- $88,518
- Nonprofit/government -- $70,000
The potential for growth varies within industries, as well: Positions in consulting, finance, accounting and health care offer the greatest potential upside. Median salaries increase as careers move from entry level to the executive suite. Total compensation may climb even higher, especially when bonuses and stock options come into play [source: GMAC].
Before you start filling out applications, keep in mind that these starting salaries are only guidelines. Individual salaries vary depending on a number of different factors, including your school's reputation, geographic location, regional cost of living, prior work experience and undergraduate degree [source: MyMBACareer]. The potential for growth varies within industries as well: Positions in finance and consulting may have more upside in the long run than positions in health care or manufacturing, especially when you factor in perks like bonuses and stock options.
An MBA degree is an impressive credential to put on a resume, but even in this rarefied world, some MBAs are better than others. Who are the crème de la crème? Find out on the next page.
Which MBAs do recruiters want most?
Some of the most highly paid MBAs are individuals who already have an advanced degree in medicine, law or the sciences. They choose to earn a graduate business degree to enhance their business management skills and complement their existing field of knowledge.
Over the course of an MBA's career, the top-ranked MBA programs generally produce the most highly paid graduates. According to a study sponsored by Bloomburg Businessweek that was conducted by employment research company PayScale, MBAs from the top 45 business schools in the United States will make over $2.5 million in base pay and bonuses over the course of a 20-year career. The study found that the median pay for MBAs with less than two years on the job from Harvard Business School is $133,000 a year, with lifetime compensation of about $3.9 million; grads from the University of Iowa's Tipple College of Business earn $62,000 a year, with lifetime compensation of about $1.9 million [source: Harris].
Once an MBA employee gets hired, however, earnings potential varies from industry to industry. Traditionally, some of the highest paying MBA careers have been in investment banking and financial services, but career opportunities and pay structures in those industries are changing rapidly. Health care, technology and energy-related positions are becoming more attractive, as demand for qualified leaders and problem-solvers in those areas increases. Salaries vary even within disciplines: Marketing and human resources executives typically earn less than financial or operational officers.
The good news is that over the last few years, graduates with MBAs have found opportunities in a greater variety of fields than in the past. And entrepreneurs are finding that the skills learned in an MBA program can help them turn great ideas into successful companies [source: Morgan].
What's the bottom line here? The pursuit of an MBA degree can help you put another feather in your cap, build important skills, gain practical experience and make valuable connections that can help maximize your income potential over the length of your career.
For more information on graduate school and careers, take a look at the links on the next page.
- Graduate Management Admission Council. "2010 GMAC Corporate Recruiters Survey."http://www.gmac.com/NR/rdonlyres/57F459C7-48E1-4C77-8A15-B003E04FF8D8/0/CorporateRecruiters2010SR.pdf
- Badenhausen, Kurt. Special Report: The Best Business Schools. Forbes.com. August 9, 2010. (Sept. 2, 2010)http://www.forbes.com/2009/08/05/best-business-schools-09-leadership-careers_land.html.
- DeZube, Dona. "The Value of an MBA." Monster.com. (Sept. 2, 2010)http://career-advice.monster.com/salary-benefits /salary-information/the-value-of-an-mba/article.aspx.
- Gloeckler, Geoff. "MBA Pay: Top B-Schools, Top Dollar." Bloomberg Businessweek. May 24, 2010. (Sept. 2, 2010.) http://www.businessweek.com/print/bschools/content/may2010/bs20100521_243715.htm.
- Hansen, Randall S. "The Master of Business Administration: Is an MBA Worth the Time, Effort, and Cost?" Quint Careers.com. (Sept. 2, 2010)http://www.quintcareers.com/MBA_degree.html.
- Morgan, Sarah. "Graduate Degrees With the Best Futures." Smart Money. November 19, 2002. (Sept. 2, 2010)www.smartmoney.com/personal-finance/employment/graduate-degrees-with-the-best-futures/?page=2