Bouncing Back From The Great Recession

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)

  • 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.

  • YourAnswer

    Aha – great find! Thanks for sharing that.

  • 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

    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.

  • 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.

  • T’13

    I actually wasn’t trying to pick out any schools in particular I could just have easily gone for the ones you mention. I’m more interested in finding out mechanically where it is that Tuck drops.

  • WLbyTuck

    Tuck was my top choice this application cycle for the same reasons (though I put enjoying my two years at the top since I think all top schools will be career enhancing).
    In a lot of the magazine rankings, smaller schools can’t keep up with the sheer numbers other schools pump out. HBS ~900, Wharton ~850, Tuck ~280. I can’t remember what the exact metrics are, but these same rankings penalize Stanford too for its smallish class size, which of course makes me question the rankings as a whole.
    The following thoughts are just my opinon and may or may not have an impact on rankings:
    I think Tuck’s small applicant pool could hurt it. HBS seems to draw every top applicant due to it’s brand and as a result has a pool of 9000 applicants to pluck it’s class from knowing almost everyone will come. This means every class at HBS is pretty damn strong, and passing through the screen takes a certain level of awesomeness. Meanwhile many of these applicants balk at the thought of even applying to Tuck because of it’s location, so Tuck doesn’t even get a chance to evaluate some of the most qualifed applicants out there due to self-selection.
    Related to this is Tuck’s yield of about 50-55%. It seems like some admits apply to Tuck because of it’s strong reputation, but if accepted by Wharton or Columbia, will matriculate there instead. This could be due to the Urban locations, or because the other programs are “ranked” higher. I would tend to think it’s a combo, because anyone that applies to Tuck but applies to HBS, Wharton, Columbia, Sloan, etc and not Johnson, Darden, Duke, etc, is clearly impressed by Tuck’s reputation but isn’t necessarily sold on going to school in the boonies with such a small class, and probably subscribes to the theory, go the the “best” school you can get into. Among the top northeastern schools, Tuck is definitely the black sheep – but IMO, in a good way. As a result, a good chunk of attractive applicants say “thanks, but no thanks” to Tuck.
    At the end of the day, who cares what the media rankings say? If you had a blast at Tuck and scored a sweet job, nothing else matters. This is why I think schools ranked #4-9 should be viewed as peer schools as opposed a ladder type ranking where #6 is better than #8.
    /End Ramble

  • mbaalum

    I seriously think you should pick on MIT, Columbia, and Berkeley before you bring up this case with Booth and Kellogg.

  • T’13

    FYI, I know that the above sounds a bit whiny and I don’t mean it to.

  • T’13

    OK So I’m a Tuck’13 so consider the following comments very biased.

    I’m amazed that Tuck is ever ranked outside of the top 5 schools. For me the three most important factors when I was choosing which school to go to was a) Likelihood of getting a job, b)Expected salary, and c)How much will I enjoy my two years.

    Tuck is consistently in the top 5 on each of these metrics, in this article we are behind only Harvard and Stanford in terms of average salary (and this has been true since ’09). We always have one of the best job placement records, and our alumni giving rates clearly indicate that people love their time here.

    I’d really like to see an article on P&Q that shows what factors are causing Tuck to be ranked lower than schools like Booth and Kellog. Is it the lack of PHD program? The small class size?

    I don’t mean to gripe, but objectively if you are only interested in money, wouldn’t you choose Tuck over anyone but HBS and Stanford?