According to a recent article on the Wall Street Journal website, 75% of students who get an MBA change careers. By making this change, many are able to double their salary. However, the news is not all good. According to thousands of grads from dozens of U.S. business schools, the pay gap between men and women continues to exist. The only exception is in the tech industry.
The Wall Street Journal and Times Higher Education polled close to 7,000 alumni from 40 U.S. MBA programs who earned their degrees between 2012 and 2015 about their salaries and opportunities to change careers. Of the 4,400 respondents who work in the U.S., 75% said that they changed careers after receiving their MBA. A large number were hired by consulting firms who hire scores of MBAs, or moved to new jobs in consumer products, healthcare, or manufacturing. The largest move was to the tech sector, with 25% of the new MBAs going there. Approximately 5% of those polled left their full-time jobs and became entrepreneurs.
Grads from top schools including the Yale School of Management, Stanford Graduate School of Business, and Rice University’s Jones Graduate School of Business stated that they earned tens of thousands of dollars more after completing the two-year programs.
The average salary of graduates who went to work at top consulting firms was $162,000/year, which is the highest in any area, and a raise of $82,000 a year. The next highest paid grads were those in finance and tech sectors. They were able to make $150,000 a year if they worked in those areas before getting their MBA
The pay gap remains for women
Before earning their MBA, women, on average, earned 94% of what men earned ($63,000 vs. $67,000). Although both women and men reported post-MBA salaries that were more than double what they earned before, the pay gap persisted ($130,000 vs. $140,000).
However, the gap narrowed for those women that changed their careers after business school. Many tech companies have worked very hard to increase their diversity, and this has led to female MBA-holders earning virtually the same as their male counterparts. Female MBAs who switched to the tech sector earned 132% more than before graduate school (up to $139,000) versus males whose salaries went up 100% to $140,000.
But is it worth it?
Many people question whether an MBA’s price tag, which can now run into hundreds of thousands of dollars, is worth it.
There has been a decrease in the number of applications to U.S. business schools for the last four years, with even Harvard and Stanford feeling the drop. Online MBA programs and one-year masters in finance degrees are becoming more popular among young professionals who don’t want to take a break from their career advancement to study full-time, or increase their debt load for another degree.
Not every MBA shows the huge salary increases. This is especially true for foreign nationals who graduate from U.S. programs and have traditionally been recruited by U.S. companies. The government has made visa requirements more stringent in the past year, making these grads less attractive to businesses.
One grad interviewed shared his story. The 32-year-old came to the U.S. from Kiev in 2016 and earned his MBA at Cornell University’s S.C. Johnson College of Business. He wanted to get into the finance sector after graduating this past May, and submitted more than 200 applications. However, he did not land his dream job in finance, due, he feels to the fact that he does not have a U.S. visa. He is still optimistic. “I think of this as a long-term investment,” he says. Hopefully his investment will pay off before he has to pay back his $100,000 student loans.
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