Bouncing Back From The Great Recession

by John A. Byrne on Print Print

With the exception of the Great Depression, the Great Recession wrecked havoc on the world economy like no other economic downturn. No industry was immune from the devastation, including business schools which saw placement stats plummet along with starting salaries and bonuses.

Though the start of the Great Recession can be placed in 2008, the graduating class of MBAs that year went through relatively unscathed, in part because the worst of it occurred after they started their new jobs in August and September of that year.

Not so for the Class of 2009. Average starting salaries and bonuses fell dramatically at some of the best business schools. At the Wharton School, MBAs saw their starting pay and bonus fall 9.5% in 2009 to $123,741 from $136,676 in 2008. At Harvard Business School, the drop was 9.0%, to $131,219 from $144,261, and at Stanford Graduate School of Business it was 5.7%, to $132,769 from $140,771.


The more relevant question now is which schools have been able to recover those losses in pay and which have actually gained ground on their 2008 numbers. For this analysis, we’re examining data through 2011, even though most schools have reported their 2012 numbers which show continued improvement in the MBA job market.

The reason: the statistics come from the schools as reported to U.S. News & World Report for its annual ranking. U.S. News adjusts these numbers, accounting for graduates who do not receive starting bonuses so that they are true averages. The schools report average salary and average bonus numbers separately and fail to adjust the bonus averages for graduates who do not get a starting bonus. We’ll update the analysis once U.S. News publishes the 2012 numbers in April.

As of 2011, not all the top schools have completely bounced back. Some 12 out of the top 30 schools in U.S. News’ ranking reported lower average salary and bonus for its graduating MBAs than they did in 2008, including Harvard, Washington University’s Olin School and Cornell University’s Johnson School.

In 2011, for example, Harvard MBAs were making nearly 4% less than the Class of 2008 made at the starting gate. The school having the most difficult time recovering up until 2011? Georgia Tech. Its MBAs in 2011 were still down 7.5% on average starting salary and bonus from 2008.


The remaining 18 schools out of the top 30, on the other hand, have not only recovered the losses from the Great Recession; they have reported gains over that pre-recessionary year. Leading the pack is Emory University’s Goizueta Business School which had been in the midst of implementing a strategy that focused on student outcomes (see Emory’s Goizueta School: Anatomy of a Turnaround Few Knew Was Needed). Average salary and bonus at Goizueta not only recovered from the recession but were up 18.2% in 2011 from 2009. As noted earlier, further improvements occurred for the Class of 2012.

(See following page for our table of the top 30 schools and how they’ve recovered from the recession)

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  • MrPhysics

    I agree with you completely. Tuck seems like it should consistently be top 5. It’s small size and location are probably the main factors keeping it out of the top 5. Tuck does at least as good a job at developing business leaders as the other top 5 schools. In terms of student satisfaction, Tuck beats all other schools hands down.

  • YourAnswer

    Here are the ranking criteria for US News:

    In summary, while Tuck does well (~3rd as you mentioned above) on employment/salary measures accounting for 35% of the rank, 40% of rankings are a “self-fulfilling prophecy” (in my opinion) based on peer school and recruiter opinions (Tuck ~8th), and the remaining 25% are made up of class profile data (where Tuck is indisputably in the 7-10 range)

    Breaking it down by criteria and how they relate to Tuck:

    – Peer assessment score (25%): B-school administrators “were asked to rate programs on a scale of 1 (marginal) to 5 (outstanding).” My guess is that these administrators’ assessments are heavily influenced by prior year rankings. I’d bet Tuck is 8th on this metric, right behind the M7.

    – Recruiter assessment score (15%): They simply ask recruiters the same question – Tuck likely comes in 8th on this metric as well as they were also likely influenced by prior year rankings.

    …so 40% of any school’s rank is essentially a self-fulfilling prophecy…

    – Mean starting salary and bonus (14%): more objective, but still only based on self-reported data. As you mention, Tuck does well here – 3rd or so. Likely driven partially by northeast location.

    -Employment rates at graduation (7%) and three months after graduation (14%): same as above – more objective, but still only based on self-reported data. As you mention, Tuck does well here – 3rd or so.

    – Mean GMAT scores (16.25%): Objective measure. Tuck ranks 7th.

    – Mean undergraduate GPA (7.5%): Objective measure. Not sure where Tuck ranks on this, but there average is around a 3.5…my guess is that it is close to the GMAT ranking (7th)

    – Acceptance rate (1.25%): Tuck’s acceptance rate is 18% now, I believe. That puts the school in the 8-10 range. This is at least partially driven by reduced application volume due to its location.

  • kingfalcon

    FYI, the data you are making assumptions about (assessment scores) was reported by John here: It looks to me that Tuck is ranked 11th by peers and 10th by recruiters. Irrespective of whether these rankings are right, I think your explanation is spot-on.

  • YourAnswer

    Aha – great find! Thanks for sharing that.

  • avivalasvegas

    I like Tuck students. They’re friendly, dont have an arrogant vibe and are somewhat capable of competing with students from higher ranked schools like Kellogg and Booth. Its just that if you gave a Tuck admit the option of attending either of the other schools I mentioned, most wouldn’t go to Tuck. I guess the location has something to do with it. I’d rate Tuck as on par with the post Great Recession Columbia University as a great school, but not quite on the same league as the top 5 b-schools.

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