The MBA Bump: How Much To Expect?

by John A. Byrne on

It’s called the MBA Bump: the increase in pay you can expect after you get the degree.

And for this year’s Class of 2012, the bump is bigger than it has been for many years. Graduates of full-time MBA programs are reporting average increases in their pre-MBA base salaries of 81% this year to a median of $90,000, according to the Graduate Management Admission Council (GMAC). That’s better than last year’s reported 73% bump and significantly better than the 63% increase reported for the Class of 2010 when the economy was in the tank.

Full-time, two-year MBA programs delivered the biggest increases. Graduates of part-time MBA programs, for example, reported a 53% rise in pre-MBA pay–28 percentage points lower than full-time MBAs (see table below).

The survey, released last week, found that MBA graduates with less than three years of work experience saw the largest bumps of any: a whopping 120%. That compares with 75% for graduates with three to six years of experience and 46% for grads with more than six years of work experience (see table on next page). The more years a person has been in the workforce also is more likely to mean that the graduate went for the degree part-time.

What’s more, the GMAC numbers are for MBA programs overall and not merely the top-ranked business schools whose graduates typically double their pre-MBA income. The study is based on 5,366 recent or soon-to-be graduates of business schools.

PERCENTAGE CHANGE IN ANNUAL BASE SALARY, BY SURVEY YEAR AND PROGRAM TYPE

Source: GMAC 2012 Global Management Education Graduate Survey

Of course, these increases vary greatly by a number of factors, including industry, work experience, and gender. Interestingly enough, the MBAs who reported the largest bumps were those who were hired by companies after doing a summer internship with the same firm. “Participating in an internship while in school typically produces an additional 28 percent increase above the baseline salary increase a student receives who does not participate in an internship,” according to the GMAC study. “After graduation, the benefits of an internship are even greater. Those who participated in an internship and received an offer of employment from that internship more than doubled the salary increase received by graduates who continued working for the same employer during and after business school (see table below).”

PERCENTAGE INCREASE IN ANNUAL BASE SALARY, BY JOB STATUS

Source: 2012 GMAC Global Management Education Graduate Survey

1 2 Next
  • guest

    I mean, what’s the “so what” here? It’s common knowledge that most post-MBA jobs carry an expectation of ~$120K in salary, so it makes sense that the difference is going to be larger for people in the early stage (2-3 years) in their careers rather than the later stage (6+ years). The same thing goes for career switchers, who are probably coming from industry and switching into a higher-paying role in consulting or investment banking. 

  • MBA2k15

    My bigger concern that I’m pretty certain isn’t addressed here: Do these same % salary increases apply to individuals with a higher pre-MBA salary, or should they expect a lower % post-MBA salary increase? In other words, if you’re entering a program with a salary at/around the median post-MBA salary, should you buy into these increases? I know it’s likely industry and company-specific, but in most cases, I’m assuming the expected % increase in pay would be lower, right?

  • JohnAByrne

    Brian, 
    Yes, they apply but note the diminished percentage increases as candidates go to business school with more work experience. Presumably, this includes part-time MBAers (who tend to be older) and also those with higher pre-MBA salaries. So the increases are not quite as large based on the GMAC data.

  • http://www.facebook.com/profile.php?id=1000650258 Aaron Solganick

    So, you get a jump in salary from when you intern with an employer and complete an MBA. I believe it took an MBA to figure this one out.

  • MBA2k15

    Thanks John! I appreciate the insights.

  • http://twitter.com/financialsamura Financial Samurai

    It’s worth it.  My total income more than tripled within 7 years after I got my MBA.  Education is priceless, it’s with you for LIFE!

    And thanks to my MBA, I retired by 35 and wrote a book, “How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye”. 

    Get an MBA from a top 10-15 school.  It’s worth it!

  • James Correa

    Why are people who comment on MBA forums so cynical?

  • RealAssetsFTW

    Because most of the people who get an MBA are at least a little bit egotistical and narcissistic (I’m not going to exclude myself here so don’t bother trolling).

  • chirag bhatia

    mitro sareyan nu mere valo sat sri akal..MAI TA MBA TA HI KARUUU JE MENU PIASE JADA MILAN…APPPPAA KARNI NAHI NYI TA…HAHAHAHAHAHHAHAHAHAHAHH…BYE BYE DOSTO…ADMIN chirag bhatia n biti kaur

Partner Sites: C-Change Media | Poets & Quants for Execs | Tipping the Scales | Poets & Quants for Undergrads