The economy is garnering much attention these days as MBA candidates begin work on their business school applications for the coming year. The high unemployment rate, lowered forecasts for US economic growth, dismal state of multiple European economies, ongoing economic effects of the Japanese earthquake, downgrade of US debt, and wild volatility of stock markets have all understandably led applicants, like Rolipolli, to ask, is this truly the right time to pursue an MBA?
That’s a good question, because no one wants to graduate into a worsening economy. Trust me, I’ve been there, and it’s no fun: I received my MBA at the onset of the dot-com bust and, like many classmates, was laid off the following year as the recession kicked in and the student loan payments came due. Just before the most recent recession, the portion of top business school graduates still unemployed three months after graduation was just 6%; the following year, the portion was 18%—and many who found employment did not find the kind of employment they expected. Studies show that graduating into a recession and taking a below-standard first job adversely affects earnings for the rest of one’s career. So, the timing of an MBA, to the extent that it can be controlled, is important.
In the past, the answer to Rolipolli’s question was straightforward: during a recession, train; go for the MBA, especially if a layoff is on the horizon. The thinking was that by the time you apply, matriculate, and graduate, three years will have passed, the economy will have improved, and you will have positioned yourself perfectly for higher employment with your higher qualifications. Many applicants successfully followed this line of thinking. (Too many, actually: all those applicants to business school increased competition for the fixed number of seats, lowering everyone’s chances of admission to a top school.)
The current downturn, however, is different. Those who applied to business school when the recession started have now graduated into a poor economy. Those who apply now will graduate into an economy that has improved little, if current forecasts hold. For the time being, the heady days—when your career choices, your employability, your job offers, your compensation, and your return on business school investment were all-but-guaranteed to increase massively upon your graduation from a top business school—are gone.
So, my advice on whether or not to pursue an MBA in this economy stresses the basics.
If you are working toward a firm career goal along your current career path or on one close to it, then apply. That is true regardless of the state of the economy. However, if you plan to pursue a new career path very different from your current one, or if you have no career goal in mind other than something that pays very well, and you want an MBA simply to help you switch careers, then reconsider—because in a troubled economy, recruiters in your new field will likely not hire you without previous related experience and you may find yourself unemployable.
If you truly need a top-level MBA degree to reach your goal—because it’s required, or because most people in that position have one—then apply. However, if most people in the position you seek have no MBA, then reconsider—because in a troubled economy, your MBA may render you overqualified or misaligned with the kind of position you seek.
If your previously-stellar professional growth is stagnating due to a lack of opportunities at your company, or if your new job responsibilities are heading you in a direction you do not want to go (implying once again that you have a firm career goal in mind), then apply for an MBA. However, if you currently have a successful career that leaves you room for professional growth (particularly at a company doing well in spite of the economy), or if you are just a year or two along your career path with few experiences so far (one of Rolipolli’s concerns), then reconsider—because in a troubled economy, you will likely have a difficult time graduating into a job situation as good as the one you have now.
If your company is sponsoring your MBA, then apply; you’ll graduate debt-free into a job position. However, if you will be paying for the MBA yourself, and you have no significant savings tucked away, then reconsider—because in a troubled economy, few things are worse than being tens of thousands of dollars in debt when you’re unemployed or underemployed.
In short, if you have very good reasons to attend a top business school, then apply; nothing has changed for you. If you do not have very good reasons, then reconsider, because everything has changed for you.
By R. Todd King, an MIT MBA, who has worked with MBA applicants since 2001. Todd can help you make the most of your strengths and mitigate your weaknesses.
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