Ah, an age old question. Let’s dive right in!
Forbes reports on a recent 2010 peer-reviewed study that was published in the Journal of Education for Business in which 550 MBA alumni were surveyed and survey data relating to pre-MBA pay, post-MBA starting salaries, and five years post-graduation salaries.
To make this research relevant to most prospective MBA students, this study is based on salary data from a high-quality business school that typically is ranked in the Forbes Top 50 but is not one of the most elite schools, such as Harvard or Stanford. For salary data on all of the Forbes Top 50 business schools, see the 2013 Forbes business school ranking.
Here are some highlights from the study:
• For full-time MBAs, post-MBA starting salaries increased by 50% compared to pre-MBA salaries. This is virtually unchanged from the 50-60% increase in 1994 and the 51% increase in 1997.
• The five-year post-MBA salary increase for full-time MBA grads was up 80% over the post-MBA starting salaries. Again, there was no significant change in this figure compared to previous years.
• For part-time MBAs, the post- over pre-MBA salary increase was 41%.
• The five-year salary increase for part-time MBAs was 56%.
• The report found little connection between the number of years of pre-MBA work experience and the five-year post-MBA salaries.
• For starting salaries, there was a $2,822 pay increase for each year of pre-MBA work experience – this isn’t very significant.
• Starting salaries were about $1,000 higher for finance majors than for marketing majors, but by the end of the five year post-MBA period, those salaries were identical.
• Women earned about 87% of what men earned for post-MBA starting pay. Five years later, they were earning 88% of what men were making. This is true across all disciplines other than finance and marketing. In finance, women earned about 90% of what men earned straight out of b-school, but five years later were earning only 70%. In marketing, both straight out of b-school and five years later, men and women were earning about the same amount.
• The report found no connection between an MBA’s GMAT score and his or her post-MBA salary.
• 94% of MBAs surveyed answered “yes” to the question: “If you had it to do over again, would you still go for an MBA degree?” In 1992, only 92% responded “yes” to that same question.
According to these numbers, there are substantial pay increases post-MBA, particularly five years later. (The Forbes article points to its 2013 Forbes business school ranking for further confirmation, reporting that almost all of the Top 50 programs illustrate an investment payback period of less than five years.)